Tuesday, May 01, 2007

Those freeways

Jim Rowen asked a very sensible question the other day: did the Southeastern Wisconsin Regional Planning Commission and its consultant, HNTB, deliberately low-ball the cost of freeway expansion back in 2003 when they put the cost of their regional freeway plan at $6.2 billion?

In a word, yes.

At the very least, SEWRPC did not project any inflation, even though the plan envisioned construction over several years. SEWRPC's report was released in 2003, but cost estimates were based on year 2000 dollars. That $6.2 billion now is $7.4 billion, just based on the CPI, according to the Bureau of Labor Statistics inflation calculator.

In addition, there has been a huge run-up in road building costs since then. Take that cost $7.4 billion estimate, and add 20% to 30% to account for that. Now we're looking at $8.9 billion to $9.6 billion. Add the odd hundreds of millions of dollars to account for the project creep that is inevitable with these projects. On the North-South I-94 project, for example, WisDOT is considering building on- and off-ramps at Drexel Ave., something not envisioned in the SEWRPC plan.

WisDOT did increase its estimate for rebuilding the North-South corridor to $1.6 billion a few years ago, but that reflected general inflation, and not the extraordinary inflation in road-building costs. Confident that state legislators are idiots, the governor is requesting that they approve in the state budget whatever plan WisDOT comes up with for the project -- even though there is no plan, no price tag, and no funding source. The gov also wants the legislature to approve WisDOT's reconstruction plan for the Zoo Interchange, even though studies for that project haven't really even started yet.

Will WisDOT provide new cost estimates before the Legislature votes on the matter?

And after North-South I-94 and the Zoo Interchange comes east-west I-94, US 45, I-894, and I-43. Global warming? Oil dependency? Transit funding? Don't worry about it. SEWRPC didn't. And WisDOT isn't letting those little issues slow down its road building agenda, either.

Back to the SEWRPC study. The study committee -- WisDOT Secretary Frank "Father of the Miller Park Roof" Busalacchi was a member, back when he was a Teamsters official -- that conducted the freeway study was so conflicted that the entire report that it produced should be viewed with a great deal of skepticism. Its membership included a lobbyist for a road building organization; consultant HNTB stood to make millions from the reports recommendations and is now doing so; and the president of the above mentioned road-building organization was a high-ranking official at HNTB.

Yes, the study was cooked. The burner, unfortunately, is still on.

1 comment:

geoff said...

I suspect the original number was doen as part of the "scientific evaluation of alternatives". It is standard practice in benefit-cost analyses to use current year costs on the presumption that future dollars are "cheaper" due to the very same inflation that causes prices to rise and the net effect is that cheaper dollars offset the higher prices. That technique is good for comparing alternatives but not so good in real world financing. A truly complete analysis should have done it both ways.