Last week, I took an empirical look at construction cost overruns for recent road projects in New Zealand, concluding that NZTA and regional transport agencies systematically underestimated the costs to build roads by an average of 34%. These findings are in line with Oxford professor Bent Flyvbjerg’s international work on infrastructure cost overruns. They obviously pose a challenge for people writing business cases – how can you be sure that you’re choosing a good project?
However, Flyvbjerg’s thesis has considerably broader implications. He suggests that infrastructure costs are low-balled (and benefits are overestimated) due in large part to “strategic misrepresentation”. Or, in plain English, when planners and politicians lie about a pet project to ensure that it gets built.
Coincidentally, I happened to be reading Paul Mees’ brilliant book Transport for Suburbia when thinking about this issue. Mees, who died last year at far too young an age, does a fantastic job communicating the theory and practice of high-quality public transport networks. The book is based on case studies of a number of cities, including Auckland.
In chapter two, Mees takes a look at the fateful decision that Auckland made, in 1954, to scrap its comprehensive public transport system, fail to invest in a regional rail network (as had been promised for over two decades), and build an urban motorway network. Interestingly – or disturbingly – the decision seems to have been made on the basis of two big “strategic misrepresentations”.
The first strategic misrepresentation was that Auckland wasn’t dense enough for good public transport. As this was easy to disprove by looking at the facts on the ground – which showed that 58% of motorised trips in Auckland were taken by public transport (and only 42% by car), and that the average Aucklander took 290 PT trips a year – it was necessary to lie with statistics.
In an MRCagney working paper on population-weighted densities that I published in September, I showed that Auckland is a relatively high-density city by New World standards – certainly dense enough to sustain high-quality public transport. My colleague Nick Reid used the same data to demonstrate how pro-sprawl think tank Demographia is still using misleading statistics to make its case. But Mees shows that the misuse and abuse of population density was even more rampant in the 1954 decision:
The Committee carefully sifted the Fooks table, deleting all the anomalous cities, such as Vienna and Zurich, that might have alerted readers to its real purpose. The Committee then added its own density estimate for Auckland, calculated using the very same methodology Fooks wrote his book to debunk, namely dividing the population of the region by the gross area under the jurisdiction of the Auckland Regional Planning Authority. This was not an inadvertent error either, as the same Technical Committee (with much the same membership) had only four years earlier estimated the urbanized area of the region at 30,000 acres, instead of the 113,000 used for the Master Plan’s calculations. This gave a density of 15 residents per acre not 4 (37 per hectare not 10), double the figures for Australian cities cited in the Master Plan and triple the figure given for Los Angeles.
The second strategic misrepresentation, which would be familiar to Flybjerg, was that motorways would be relatively cheap. While both rail investment and road investment carried a substantial price-tag, the decision to choose roads was made on the basis of the fact that they wouldn’t be that much more expensive than rail. But Mees finds that was simply not true:
The Auckland Technical Committee’s cost estimates proved to be no more robust than its density calculations. It had claimed that the rail scheme would cost £11 million [according to the RBNZ’s inflation calculator, this is equivalent to $560 million in today’s dollars], almost as much as the £15 million price tag [$760 million] for the motorways. In 1962, an engineer named Joseph Wright claimed that both figures has been distorted to favour motorways. Motorway costs had been underestimated, with the true figure closer to £40 million [$2 billion today], while rail costs had been inexplicably inflated from the  Halcrow estimate of £7.25 million [$370 million]. ‘Where did the figure of £11 million come from?’ he asked. ‘I understand that the committee which produced the Master Transport Plan had 26 members, only three of whom had any experience of handling public transport… The whole Master Transport Plan has a motor car complex’… Wright was no car-hating train-spotter: he was the Ministry of Works engineer in charge of the Auckland motorway project.
In short, Auckland was sold its motorways on the premise that they would be quite cheap. But within a few years, it was apparent that the true cost would be much, much higher. Even Wright’s estimate of £40 million, or $2 billion in today’s dollars, to complete Auckland’s road network now seems laughably optimistic. These days, transport agencies can easily spend $2 billion on motorway expansions in a few short years.
When the government announced, at the last budget, that it would be spending an additional $800 million on a package of Auckland motorway projects, few people batted an eye. It’s evident at this point that a mere $800 million isn’t enough to complete the network, or even do anything more than provide a temporary fix. But remember: the designers of Auckland’s motorway network claimed that it would be finished for that sum.
Cock-up or conspiracy: What do you think happened here?