Friday, March 26, 2004

 Glimpse of the future?



The Iowa City Press Citizen Reports "Supporters of last year's $39 million Iowa City schools building bond referendum said Wednesday they were surprised by reports that the projects are coming in $5 million over budget."



Interesting quotes:



"Irene Klinzman said she had thought the land for the new schools already had been purchased. 'They should've known that and planned for more," Klinzman said. "Had (voters) known ahead of time, (the bond) wouldn't have passed.' Tim Borchardt also opposed the referendum, which was approved by 71 percent of voters in February 2003. He blamed the cost overruns on 'slipshod work.' 'This whole thing ... was nothing but smoke and mirrors," Borchardt said. "I think they've misled us at almost every turn.'"



"District officials said they have figured out how to make up most of the $5 million overrun, using a federal grant, energy rebates and scaling back several projects. That would leave the district to make up about $1.7 million, officials said."



"Lisa Murray, who has children at Weber Elementary, said she supported the bond referendum. She said she hoped the unexpected costs would not "compromise" any of the projects. 'It's a bit disappointing, but it's understandable,' Murray said. 'It was a large project, and that happens. I'm sure there was reason (the extra costs weren't) taken into consideration.'"



Now gaze into the crystal ball at the future meeting regarding the cost overrun of the fake rainforest in Coralville:



Does it look like the Animas-La Plata Project?

The Big Dig in Boston?

The Space Station?



Check out this article regarding a 2002 study in Denmark that confirms what we all knew instinctively. The survey of "megaprojects" in 20 countries examined 600 completed projects, ranging from $1.5 million to $8.5 billion. After compensating for the possibility of hikes being unpredictably caused by technical snags, the study showed that 90% of them entailed cost overruns.



The conclusion, according to this article? "The most likely motivations for cost-benefit deceptions are economic gain or political leverage, suggests the team. Economically, the cause could be corruption or the less base urge to attract investment to a particular region. But the researchers have been unable to unearth precise reasons. 'You have to go out and make in-depth interviews [and] it's very difficult to get people to talk about this,' says Flyvbjerg."





This article on the study goes further, stating:



"The study concluded that lying, or intentional deception, by public officials was the source of the problem: “Project promoters routinely ignore, hide, or otherwise leave out important project costs and risks in order to make total costs appear low.” Politicians use “salami tactics” whereby costs are only revealed to taxpayers one slice at a time in the hope that the project is too far along when true costs are revealed to turn back."



The Danish study has been published as a book: Megaprojects and Risk: An Anatomy of Ambition, and is available at Barnes and Noble.



But if anyone thinks the fake rainforest in Coralville, Iowa is only going to cost the projected amount, I would be happy to acquire a fake bridge in Brooklyn, New York and sell that to you as well.

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