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 [1950] 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?

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  1. A conspiracy that produced Auckland’s current transport system is a cock up. So I would say both are true.

    I imagine at the time, the people in charge thought it was necessary to twist the truth so people would willingly give up the great public transport system they were using. There was a lot of passionate protest in NZ about getting rid of the trams.

    I imagine they thought they were doing Aucklanders a favour by delivering to them the amazing future we would all have once everyone was driving their car on these wide open and free flowing motorways. Which was probably true for a few months.

  2. Amazing. How different Auckland would be!

    All easy to see in hindsight of course. Back in 1962 cars were all the rage and rail must have looked backwards to many people.

    1. Maybe, but you’re talking “steam powered” railways.

      If the Government back in the ’20s hadn’t yanked the rug out from under Auckland and built the electric underground – so called “Morningside deviation” then Auckland would have had a electric underground system (and above ground system too) that would have not needed to have been ripped and replaced by motorways..

      But I guess things could have been worse – they may have implemented Monorails instead as was mentioned as an option by Joseph Wright 😉

      As usual the powers that be picked their statistics to frame their argument, ignoring the mounting evidence against such as how urban freeways were not the sole solution – as evidenced by the Los Angeles experience in 1962.

  3. It’s amazing we’ve heard nothing on transportblog about the $6 million cost overrun (on a $16 million project) incurred in building the Grafton cycleway.

    Just amazing how these things slip by when they are the golden project for the enlightened.

    1. Well perhaps you could include a link and there it would be; on transportblog. Things are only here when somebody makes an effort to put them here, this is an open forum with light moderation and no paid staff. Here’s your big chance, but it would mean you’d be contributing instead of complaining about the blog… is that possible?

    2. As they say on Wikipedia, [citation needed]. Newspaper articles and press releases right up to September talk about the project having a cost of $11m. So your $16m is already questionable, right from the outset, never mind the alleged overrun.

    3. I think you’ve got a reasonable point, which is that big infrastructure projects of all types are subject to poor cost estimates. I’ve only looked at roads in NZ, as we have good data on that due to NZTA’s fine post-implementation reviews. Based on overseas experience I’d expect to see something similar if looking at rail projects, but there simply isn’t enough data to say.

      That being said, cycleway cost overruns are never going to be a major problem for NZ’s transport budget, because bicycle infrastructure is cheap. Remember, a 100% cost overrun on a $10m cycleway is a hell of a lot better for the taxpayer than a 10% cost overrun on a $1bn motorway!

  4. Good to see Flyvbjerg’s work starting to make an appearance here!! I read his stuff about 5 or 6 years ago. Strategic Mis-representations = Lying, plain and simple but of course we can’t say that!

  5. Meh. It’s what I’ve been saying all along. Engineers aren’t the problem, it’s the politicians and upper management who make the decisions, for good or bad.

    1. I tend to stress “optimism bias”, “desire to please others”, and “desire to not look stupid in front of one’s peers” as the key reasons for poor planning and decision-making. These are all very human traits, and the people who display them are not necessarily bad people.

      I would definitely say that both engineers and politicians exhibit these traits. To say nothing of the rest of us. The only antidote, I suppose, is regularly “ground truthing” your ideas against the data.

  6. I wrote a review of Paul Mees book that was published on Transport Blog back on 12 May this year. The review was entitled ” Read This – Transport for Suburbia – Beyond the Automobile Age.
    Paul’s book is still worth buying and reading especially because it deals in large measure with our Auckland.

    Now off topic and especially for Patrick……….I have just finished reading your article in the December Metro Magazine. What a fantastic article you have written. For ‘newbies’ to the transport field it is all there in logical order and most elegantly and persuasively expressed. Hopefully it will reach an expanded and wider audience than the blog and I have high hopes you will gain many converts to the cause. Very well done……..!

    1. Absolutely… I should have linked to your piece as I think that might have been what spurred me to buy the book.

      One thing I found particularly interesting about Mees’ comments about Auckland’s institutional failures in the PT space is how dated they now seem. Changes to the PT contracting and network design model implemented by the last two governments have made it possible to plan and deliver an integrated, frequent network. That’s _streets_ ahead of what Auckland was doing in the 1990s!

      Hmmm, now that I think about it, that could be a post in itself…

  7. The reason things happen as they do is obvious. Politicians know best! Just like managers. I think they go away on special courses to learn how to be right all the time. Didn’t you know that all those in charge of making major decisions that affect all of us are ALWAYS right?

    I mean, take Steven Joyce and Gerry Brownlie. They tell anyone with a different viewpoint that they are wrong, so by inference they themselves must be right. And we help to bolster their sense of infallibility by continuing to vote them in. This is how it works and always has worked. And as we know, nothing really changes.

    So as you can see, there is a perfectly reasonable explanation for why public transport in New Zealand was trashed in the 1960’s. This was because the leaders at the time knew what they were doing, and were not wrong, so must have been right. And why the CRL is still getting delayed today, and why billions of dollars are still being thrown at motorways. . . You guessed it! – Because the people who make these decisions are unquestionably always right, and never wrong. They’re in charge so that’s that. There’s no mystery to it.

    Akshully the only time they are wrong is when a huge disaster unfolds because of their decisions. Occasionally. But then they simply put out lots of Special Propaganda In the News (S.P.I.N.) so that everyone can see they are still right. Tickety-boo!

    Now I’m not sure about this new bloke, Simon Bridges. He’s still quite young so he may only be 95% right. But give him time. He’ll get there.

  8. S.P.I.N. describes so much of what we hear from councils and gorvernments, and Dave B of Wellington, YOU ARE RIGHT!!! but don’t hold your breath waiting for the circus that has thousands of overseas workers in Christchurch while thousands of our own young go untrained, and unemployed, feel forgotten by Joyce ,Brownlee and key. Meantime, Auckland’s problems worsen, with over the top housing costs,clowns for mayor, and NOBODY dares step up to bring them down! oh except the lady who refuses to pay her rates. Self interest in roading vs light rail,smoke screens, and super-sizing the cities, cost billions!!! IT IS WAY PAST TIME PEOPLE WITH A BIT OF DIRT UNDER THER NAILS STOOD AND WERE ELECTED AHEAD OF THE BANK’S BROWNS AND MONEY MEN WHO CURRENTLY RUN THIS COUNTRY!. Meanwhile we will all be hearing of how its gonna cost to fix Auckland. YOU CAN FIX A LOT TODAY;; BUT YOU CANNAE FIX STUPID!


  9. Most stupid people suffer from hubris. Which is half the problem, those too stupid to see their own limitations are the most likely to stand for positions of power…

    1. agreed. The smartest people understand not only their own limitations, and subsequently second-guess their own judgement, but they also understand the hidden limitations to so-called positions of “power”. And in turn decide that their quality of life really would be maximised by forgoing the baubles of power …

  10. There is another political economic element to play here. The 1950s was the height of the British-NZ re-colonial system (Read James Belich’s -NZ history books). Belich described how all the institutions of state and our very culture was being moulded into a system that facilitated the exported of protein to Britain and the British acceptance of the same because we were trustworthy ‘family’.

    Transport in NZ fitted into that system. NZ has one of the longest amount of road miles per capita. It is all about getting protein from the hills to the port.

    City orientated transport systems and urban development challenged this model. All that economic agglomeration challenged the re-colonial system. New industry might develop. New constituents with new needs might develop. The state might need to change its focus. 1950s NZ wasn’t prepared for that and quietly in backrooms change was stopped.

  11. The National governments of the 50s to 80s limited change to allowing a little bit of automobile based sprawl while promoting that NZ lived of the sheep’s back and the cow’s teat. In other words they combined the constituents of provincial farming NZ with the newly affluent sprawl suburbs (but not the hardworking constituents of South Auckland, East Christchurch and so on). National cleverly kept tight central government control on transport spending and made sure the split was always 90:10 roads versus PT. NZ urban economies were never allowed to go there own way. If the urban working class demanded something different, they could be arm twisted with the only affordable housing options being automobile based sprawl.

    Unfortunately for NZ this meant we were completely unprepared for the loss of the British market when ‘mum’ ran away to Europe. Resulting in the political economic crisis years of Muldoon, Douglas and Richardson.

    65 years later (a whole lifetime) and we are still trying to fix up the mess.

  12. There is a country a little bit similar to NZ that has successfully left the British re-colonial system -Denmark. It too is a smallish populated country with a constitutional monarchy, a long history of democracy and human rights. “In 1900 Britain took 75% of Denmark’s food exports and 60% of its total exports” (‘Replenishing the Earth’ by James Belich p.447). Denmark’s institutions were being moulded for this market -building new ports for example. But somehow over the last century Denmark has developed a diverse range of industries and brands such as Lego and Bang & Olufsen.

    How come Denmark has managed this and NZ hasn’t?

    I would suggest decentralisation. 30% of taxes go to local government. Small and large urban areas in Denmark can go there own way.

    1. Interesting. The proximity of the rest of europe as a market would have helped, and in our case the refocussing on the more proximate [if not actually proximate] markets of, first Australia, and now China offers the possibility to achieve the same thing?

      But we’re still the wrong shape and still have too much central control; is that your thought? Transport; still on the Polish Shipyard.

      1. I think that Denmark was greatly helped by being able to copy (in its own way) the local institutional arrangements of neighbouring countries like Germany. Especially post WW2 the local long term thinking political economic supports for the Mittlestadt Which has been much more successfully than the centralised and short term thinking industrial policy of Britain.

        Northern Europe has greatly benefited from focusing on many local specialised niche players that rise up to being a top exporter in its particular area of expertise.

        Australasia could go down that track. We have the intellectually capability, combined our markets are quite sizeable. Institutionally we would only need a few tweaks. But instead we are doing the same old thing of commodity exports to big markets.

        In NZ the constituents of new urban based economies do not get a look in.

      2. Transport and housing NZ is some horrible combination of a third world Polish shipyard. We cannot expect our urban economies to be competitive when wages are being ratcheted up to pay for unaffordable housing (while disposable incomes fall). This being a transference from the productive to unproductive economies.

        Despite the way that Demographia is interpreted we know that all sorts of urban development not just automobile sprawl can be affordable. Germany shows us this. Transport policy is big part in all of this.

    2. Assume by decentralisation you mean decentralisation of power/responsibility to those local authorities. I personally would like to see Auckland at least, if not all regions get more bulk funding and decision making authority over what transport is built.

      1. Unfortunately the problem is systemic.

        We had the right idea with the Ministry of Works, who tended to look at the whole picture instead of treating the component parts. No doubt the shareholders of the privatised entities it created are quite happy though.

      2. Yes that is what meant Matt L. Exactly what form the decentralisation takes is debatable. Local taxes, bulk funding, all powerful Majors, local boards, constitution changes like Federal government systems are all examples used around the world to devolve power.

        I agree that Auckland plus others regions should have the capability to democratically decide for themselves what transport is built and by extension what sort of urban environment locals live in.

  13. Yes, conservatives are ersatz ‘decentralisers’ in the sense that they are happy with sprawl, but not the decentralisation of power and authority. You cannot tell Brownlee to let the people of Christchurch make up their own minds eg just give them the money and let local authorities resolve the issue. As I understand it, Napier was a much better rebuild because of local, not central, initiative.

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