The freeway project Oregon and Washington want to build across the Columbia River has already cost taxpayers $136 million.
This cost comes
largely from paying consultants to design, plan and push for the
project, known as the Columbia River Crossing, or CRC.
The cost of the project has been reported before. But for the first time, it’s clear why those costs skyrocketed.
Documents reviewed by WW show that a single contract initially estimated at $20 million has climbed to $105 million.
The contract grew
because Oregon and Washington officials kept rewarding the contractor,
Portland-based David Evans and Associates, even though the firm had
burned through its money long before finishing the work.
The costs
include the price of working for years on a bridge design experts later
said was unbuildable. The result: We now have a project that’s 18
months behind schedule and costs more than five times the original
estimate.
Records show Oregon
and Washington officials sent the cost of the original David Evans
contract soaring, from $50 million to $95 million, with a single change
to the deal. That change was done quietly and with little public
scrutiny.
WashDOT Deputy
Secretary David Dye insists both states’ transportation agencies
monitored costs carefully and only approved expenditures after
identifying specific, necessary tasks. “We have very rigorous internal
processes,” Dye says.
He says the complexity of the planning process made sticking to the $20 million estimate impossible.
“The environmental
process up front has so many variables, and there is so much that can
happen,” Dye says. “It is very volatile and very difficult to estimate.”
The hidden story of this deal, called the master contract, doesn’t bode well for the $3.5 billion freeway project.
The CRC calls for
building a new Interstate 5 bridge, widening the freeway, adding a
series of ramps, and extending light rail from Portland to Vancouver.
The project is aimed at reducing the traffic congestion that now plagues I-5 near the Oregon-Washington border.
But as WW has
reported, the CRC’s own documents show the project won’t solve traffic
problems, and that state officials based their cost estimates on
inaccurate traffic projections (“A Bridge Too False,” WW, June 1, 2011). WW
has also reported that state officials continue to mislead the public
about the number of jobs the project will create (“Not True, Times Ten,”
WW, June 15, 2011).
Oregon and Washington officials pledge the project will be completed on time and on budget in 2022.
But if the early stages are any clue, the CRC will take far longer and cost far more than officials are telling the public.
Here’s what has driven the costs so high already:
A
project of such scale requires years of planning—costs paid for equally
by Oregon and Washington taxpayers. The key document that comes out of
this work is the Environmental Impact Statement, the size of a couple of
Manhattan telephone books, filled with traffic, environmental and
financial information.
In February 2005, planners went looking for a consultant to manage the planning.
“The WSDOT/ODOT
Project Team anticipates the total cost of the environmental phase to be
in excess of $20 million, with an initial agreement to be in excess of
$6 million,” the original solicitation read. “The total dollar figure
will vary upon project requirements and funding.”
Only one company,
David Evans and Associates, responded. In May 2005, Evans signed the
contract to: “Deliver the EIS [Environmental Impact Statement] and
Record of Decision; develop a framework and strategy to deliver the
project.”
But something had
changed behind the scenes. The $20 million-plus cost had somehow jumped
to $50 million, the amount written into the David Evans contract.
It’s unclear how or
why the figure grew so much. “I wasn’t here then, but as they realized
what the scope was, it was more than anticipated,” says Lyn Wylder,
David Evans’ current CRC project manager. “There were more alternatives
examined and more work to be done.”
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Contrary to what state officials are saying, the CRC is way behind schedule.
Project documents from 2008 show they were hoping to start construction in 2010, and for years said it would be completed in 2018. Now they're saying it will start in 2013 and end in 2022. That's already 3-4 years behind, and they haven't secured any money for construction.
Instead of sinking more time and money into this unwieldy megaproject, isn't it finally time to work toward an affordable, buildable Plan B?
The state should implement a five year hiatus on further bridge construction planning. Use those years to learn the effect of higher car prices, rising fuel costs, and any economic changes to reassess probable traffic counts, Replace the present very crude estimates of tolling effects with a real-life pilot trial of tolling on the present bridge. Every currently posed comment and opposition should receive a thoughtful and complete response based on knowledge. Cost estimates in particular should receive a thorough review. So should contract contents. Oregon should do all it can to prevent a new economic blunder on the scale of Washington State's notorious WHOOPS disaster. The present go-go bridge propaganda has a distressing similarity to what was pushed during WHOOPS.
"We pride ourselves on providing for the well-being of DEA employees and their families. To do so, we prepare adequate budgets and work within them in order to produce the profit needed to attain financial security. "
from Core Ideology - David Evans and Associates
IMO, this statement of corporate philosophy contains the essence of what the Occupy Movement is trying so very hard to convey.
I believe Occupy participants and sympathizers agree that there is something inherently wrong with business-as-usual ethics of today's corporate model.
Here, DEA states, as one of it's core values, "we prepare adequate budgets and work within them" while plainly operating outside this self-stated parameter - at least as far as CRC is concerned.
"in order to produce the profit needed to attain financial security" - is stated in the same breath.
We see here a breakdown of ethics and are left to wonder - ok - if this contract was entered into honestly, the reasons for budget inflation should be forthcoming. Instead we get - "But something had changed behind the scenes. The $20 million-plus cost had somehow jumped to $50 million" Taxpayer developer welfare.
"in order to produce the profit needed to attain financial security"
Executive bonuses, taxpayer "bailouts" and out-sourcing jobs for cheap labor seem to be the norm as corporate "entities" get greedier , feeding on the carcass of downsized America - through the shills bought and marketed as "elected leaders ".
Cognitive dissonance is what is fueling the Occupy Movement.
We are told by, what used to be, people we trusted that they have our best interests in mind - all the while - they are stealing - in broad daylight - the level of the living standard in America.
Where's The Bridge ?
It only exists as a taxpayer cash cow for DEA to "produce the profit needed to attain financial security"
This is the sunk cost fallacy in action, and it's a small-scale crystal ball of what's to come in the construction of the CRC.
Naturally the planning stage and the construction stage are two different things - apples and oranges, even. But with regards to the discussion of unexpected costs, they're mainly different in the sense that it only gets worse in the construction stage. That's when you have to face real-world crisis after crisis, and it costs so much more to find out you didn't know what you were getting yourself into.
That's only my hunch, though, and not being in the construction industry I can't say that's the way it is for sure. That's why I'd love to hear, as a follow-up to this story, some perspective from development experts who can say whether or not this assumption is correct, that the construction stage is more unpredictable than the planning stage.
My background is more in the software industry, where I've seen similar things happen there. A developer will often low-ball an estimate, only to be nowhere near done after having sucked up the initial contract amount provided by the publisher. It could be argued that the developer knows exactly what it's doing when it does this. Because once the money runs out, the publisher, not wanting to see that initial investment go to waste, feels compelled to keep coughing up money.
Again, it's the sunk cost fallacy and loss aversion at work. And it makes it so the money keeps going to the developer that makes the emptiest promises, making the lowest bids and providing the most sluggish performance over time.
And this is the private sector we're talking about, that paragon of efficiency antigovernment zealots speak of in worshipful tones. But I don't think the private sector does it any better. It's just a fact that poor project management can happen anywhere, in any sector.
Note to webmaster: in the editing window for these comments, the paragraphs have nice breaks between them, but when the comment gets posted, the paragraphs get all mushed together. It would be great if what you see in the window was an accurate preview of the post. Maybe change the paragraph gaps in the final posts? Or offer a preview button?
Anyway, it's painful looking at the lack of breaks in that last post. So below is a repost attempting to make it look the way I expected it to look (please forgive the double-post, or feel free to use the below to fix my previous post):
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This is the sunk cost fallacy in action, and it's a small-scale crystal ball of what's to come in the construction of the CRC.
Naturally the planning stage and the construction stage are two different things - apples and oranges, even. But with regards to the discussion of unexpected costs, they're mainly different in the sense that it only gets worse in the construction stage. That's when you have to face real-world crisis after crisis, and it costs so much more to find out you didn't know what you were getting yourself into.
That's only my hunch, though, and not being in the construction industry I can't say that's the way it is for sure. That's why I'd love to hear, as a follow-up to this story, some perspective from development experts who can say whether or not this assumption is correct, that the construction stage is more unpredictable than the planning stage.
My background is more in the software industry, where I've seen similar things happen there. A developer will often low-ball an estimate, only to be nowhere near done after having sucked up the initial contract amount provided by the publisher. It could be argued that the developer knows exactly what it's doing when it does this. Because once the money runs out, the publisher, not wanting to see that initial investment go to waste, feels compelled to keep coughing up money.
Again, it's the sunk cost fallacy and loss aversion at work. And it makes it so the money keeps going to the developer that makes the emptiest promises, making the lowest bids and providing the most sluggish performance over time.
And this is the private sector we're talking about, that paragon of efficiency antigovernment zealots speak of in worshipful tones. But I don't think the private sector does it any better. It's just a fact that poor project management can happen anywhere, in any sector.
Thanks again WW for the excellent reporting. Still little or no word from the leftist MSM or rightist fair and balanced news sources.
If the 'Occupy Portland' people had minimal intelligence; this is a relevant, specific cause to protest against.
I have self inflicted brain damage trying to fugure how the CRC folks could spend this much money. For nothing so far.
WW, can you get a work sheet from a David Evans invoice? Is Evans related to Kitz?