Seattle City Councilmember Mike O’Brien has a blog post up on the likelihood of cost overruns on the Big Bore tunnel. The conclusion?
- 40% chance of any cost overrun
- 30% chance of a cost overrun greater than $90 million
- 20% chance of a cost overrun greater than $150 million
- 10% chance of a cost overrun greater than $290 million
- 5% chance of a cost overrun greater than $415 million
And these are WSDOT’s estimates, not O’Brien’s.
So I guess the question is, are you comfortable with these odds? And if not, do you feel lucky?
I won’t be voting for any city council members who vote for the current plan; if Seattle stays on the hook for cost overruns.
I will actively campaign against them.
Normally I do not make threats like this, especially on single issues.
But this one is just too big to ignore.
This is a massive state highway project. The state should pay for most of the cost overruns.
If I were a contractor, I wouldn’t submit a bid until I knew who was on the hook for the inevitable design changes and cost overruns, and had their financial statement, a bank letter of credit, and a payment bond on my desk.
I’m from Everett, but I agree that the City of Seattle shouldn’t be the only ones on the hook for cost overruns. It’s a state highway, and a regional transportation issue. It should be treated as such.
I thought the comment to the blog post was just as interesting as a data point:
“These sound like pretty serious underestimates. I’m living in NYC right now, there are two major tunneling projects going on in the 4 billion dollar ballpark, the 2nd Avenue Subway and the East Side Access Project. They are both already over their budgets by around half a billion each, and they’re only halfway done; actually they only just started digging the 2nd Ave subway tunnel. Nothing terrible has happened to cause these overruns: there’s no stuck TBMs (yet) or anything, this is just from underestimates of the cost.
“Are the chances of this turning into Seattle’s Big Dig (with costs doubling or worse) really less than 10%? Right now my median estimate of overruns (just looking at projects I’m aware of, such as the Seattle bus tunnel) is about $300m.”
Then you think about Brightwater and the Beacon Hill tunnel and you wonder whether these risk assessment models don’t underestimate the risk for big tunneling projects.
These cost overrun projections will drive us all crazy. We need some levity—
No.
What? No black swans with thick tails?
@2: If it is a state project, the Owner is committed to pay contractually allowed “over-runs”. That would be us.
The idea that the Contractor could ‘demand’ a bank letter of credit or a bond from the state is simply absurd. That’s what that little thing known as “taxing authority” is for.
Can you “Chicken Littles” name me one major capitol project in the last twenty years anywhere that didn’t have cost overruns? This is a red herring. What you really want is to continue to “milk the mouse”so you can all hear yourselves endlessly yak this thing to death. Seattle has become a city of do nothings, who cannot shit or get off the pot. This community has lost the ability to have big ideas and make them a reality. Nothing but endless whining followed by more excuses and studies. This horse has been whipped to death by small minded elitists who moralistic bullshit is constipating the potential greatness of the whole city.
@8: The Three Gorges Dam in China ($30 billion)is nearly complete and expected to come in 12% under budget due mainly to lower than anticipated inflation.
The steadfast and resolute working peoples of the great People’s Republic of China thank you, Masters of the Universe, fro wrecking your economies and blessing us with low interest rates!
What do the overrun odds for every other conceivable replacement look like?
The contigency is $300 plus million. So it appears the Seattle’s overrun concern is only at 10% or less.
Seattle has a 90% plus probability of not paying for any cost overruns.
What are the odds for a complete failure?
@11
The contigency is $415 million. So it’s a 95% probability Seattl will not pay cost overruns.
http://www.wsdot.wa.gov/Projec.....timate.htm
Don’t know how this will finally pan out but this is not the first transportation tunnel built in the area. In fact the oldest the BNSF tunnel under downtown Seattle is still in use after 105 years.