Northern New England Corridor: Big Lessons from the Big Dig

New England has some hard learned lessons for the rest of the country when it comes to infrastructure. Boston is home to the nation’s biggest highway project, the Central Artery/Tunnel Project (a.k.a. “the Big Dig”).

The Big Dig has become synonymous with corruption, cost overruns, delays, shoddy workmanship and waste. It is a model for what not to do when building national infrastructure. High speed rail planners should review it step-by step and formulate a plan that is an exact opposite of the Big Dig.

Why was the Big Dig such a calamity? Many reasons can be singled out, but the primary one is that it’s the way we Americans do business: contract the work to the private sector that seeks maximum profit while giving minimum return. A Byzantine system of contractors and sub-contractors gets a windfall of taxpayer money while providing work that is so terrible it has already caused a fatality. This system begs for corruption. Just ask Carmen “The Cheeseman” DiNunzio, Boston mob boss who has been convicted of bribery charges in connection with the project.

The market fundamentalists who took over during the Reagan years and pulled the strings for George W. Bush deserve the lion’s share of blame for letting America’s infrastructure crumble. They advocated an inferior model for building infrastructure because it is designed for profiteering and not the public good. When it comes to infrastructure Gipper, government is the answer.

It is as clear as day when looking at the world’s best transportation networks in Europe and Asia that the government has taken the lead to build the rails, highways and other transportation links itself. In some cases a public/private partnership (P3) is acceptable, but only when dealing with one firm (e.g. the German federal government and Siemens).

Just some of the companies contracted out to construct the Big Dig were Jay Cashman, Modern Continental, Obayashi Corporation, Perini Corporation, Peter Kiewit Sons’ Incorporated, J.F. White, the Slattery division of Skanska USA and the mob. Dole out $6 million here, $10 million there, and the bookkeeping starts to get a little fuzzy, leading to ballooning costs.

One part of the Big Dig story is right out of “The Sopranos,” but with a Boston accent. The largest concrete and asphalt supply company in New England got its fat check and supplied the state of Massachusetts with at least 5,000 truckloads of sub-standard concrete. The result: The private contractor pocketed some extra cash and motorist Milena Delvalle was killed by a 40-foot ceiling section of the tunnel that collapsed on her car.

The Northern New England High Speed Rail Corridor is a chance to fundamentally change the way things get built in America. The new way will eliminate the unscrupulous profiteering that can be deadly and replace it with a non-profit system focused on the public good.

The developed countries already have their high-speed rail systems built and the up-and-coming world powers (such as China and Brazil) are surpassing America in terms of their rail networks via government initiatives.

New England can prove to be a critical catalyst for high-speed rail development in the States by doing it for New Englanders and not private businesses.

[photo credit: Flickr, Federal Railroad Administration]

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One comment on “Northern New England Corridor: Big Lessons from the Big Dig

Joe Donohue

Perhaps the author, Alex Lennartz, would be surprised to learn that the Soviet Union has collapsed due to its economic incompetence. The infrastructure communism left behind was shoddier than the Big Dig, and the system was riddled with corruption from top to bottom. And remember: the system founded on principle that private profits could not generate public goods. A system based on Stakhanovite self-sacrifice and heroic intentions was wiped away by cruel indifference and cynicism.

Perhaps Alex would also be surprised that the private sector is more involved in European infrastructure projects than in the US. Much of the roads being built in Europe are built by private companies — and run by private companies. Known as Build-Operate-Transfer (BOT), these companies have an incentive to do a good job because they will have to eat their own cooking: any construction problems will be operation problems — and will eat into the bottom line. We should get used to the idea since one of these companies runs a toll road around Chicago.

The Big Dig only proves an old Navy adage: you don’t what you expect; you get what you inspect. No one was in charge of the Big Dig. No one had ownership of the whole project — until Gov. Romney took it over. Then and only then did accountability return to the project. Any project that is based on lowest bidder requires someone to be in charge to see the project through. Contractors are not evil: they have perverse incentives. They are supposed to complete the project at the lowest cost — that is the whole purpose of rewarding the lowest bid. If no one seems to care how something gets built, that is a regulatory problem. If the contractors low-ball a bid and try to recoup their losses through expensive variations, then that is the fault of the customer. Such sloppiness can’t be legislated away. You get what you pay for. And the system usually works: the Golden Gate Bridge was built this way and so did most of our infrastructure. When it does fail (as it did in the collapsed bridge in Minnesota), public sector indifference is usually to blame.

The prescription Alex gives is worse than the disease. He wants to fight corruption — which I agree is a big problem — by having one main general contractor: in his example, Siemens. Siemens is involved in several corruption and price-fixing cases. Perhaps I am being a little hard on Siemens: after all, bribery was a tax-deductible expense for many years in Germany.

Alex believes that human behavior is the product of motivation. If only we can get people who will work for the sheer love of it, then we will have projects like the Big Dig come out on time and under budget. If we had lots of people who are independently wealthy and who have nothing better to do than to build tunnels, then maybe he would be right. We can build utopia on charity.

Unfortunately we don’t have lots of people who don’t need the money. We have lots of people who have mortgages to pay and children to feed and work jobs they don’t like because those jobs pay better — and that is OK to me. I believe that human behavior is a product of incentives — to change behavior one must change the incentives. Let’s say the Big Dig was a Build-Operate-Transfer project. Would the general contractor try to build it as cheaply as possible? Of course he would: a cost is a cost after all. However, he would also know that no one would use the tunnel if he thought it was unsafe — and he would lose money. He knows that, if he used the cheapest materials, the tunnel would not last as long and require expensive repairs — at his cost. He also knows that all delays mean lost revenue from operating the tunnel and that operating the tunnel — and not building it — pays the bills.

Is BTO perfect? Absolutely not. No system is. But it would be nice to see the shareholders of Bechtel paying for its mistakes rather than taxpayers.

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