Finally. After months of wrangling and tortuous back-and forth, Congress finally passed our big infrastructure bill, and the President signed it. Thank goodness.
The Infrastructure Investment and Jobs Act, also known as the IIJA, holds much promise for a nation that had been woefully short on maintaining its transportation, environmental and utility infrastructure. But there is a long history of major infrastructure projects that have gone awry, falling years behind schedule and running millions, if not billions, over budget. These are cautionary tales to the engineers and planners who will be wringing their hands in anticipation of getting their mitts on more than $1 trillion.
The poster child for these types of projects that spiral out of control was the famous Central Artery/Tunnel Project in Boston, popularly known as the Big Dig, designed to facilitate traffic flow through Boston across the Interstate 90 and Interstate 93 corridors. Initially budgeted at $2.8 billion, work began in 1991 and was expected to be completed by 1998. Through all manner of twists and turns, brought about by the sheer magnitude of a project in the heart of congested Boston, it was finally completed in 2007 at a cost of $8.08 billion—nine years behind schedule and 190 percent over budget. And to make matters worse, six executives from one of the ready mixed concrete suppliers were charged with a variety of crimes, and all were either convicted or pled guilty, leaving a stain on the reputation of our industry.
It goes without saying this isn’t the only example of a major infrastructure project run amok. The popular press has had a field day since the passage of the IIJA, reporting on other big projects that sound like their own version of the Big Dig.
One of the best known is the California High Speed Rail, an ambitious project approved in 2008 for a bullet train from Los Angeles to San Francisco; the project was supposed to cost $33 billion and be completed by 2020. The job is now projected to finish in 2033 for $100 billion, though those estimates are dated—and there is an $80 billion funding gap. The project has encountered serious delays because of land acquisition issues, environmental litigation, permit setbacks, employee turnover and significant design changes.
And there are others: As Honolulu sprawled into new suburbs west of Pearl Harbor over the last two decades, city planners proposed an ambitious rail transit line that would sweep riders 20 miles into downtown. The $4 billion estimate in 2006 was hardly cheap, amounting to $200 million per mile. But concerns over Native Hawaiian burial grounds stalled early construction, then problems with welding and cracks in the tracks appeared. Earlier this year, engineers realized that in some sections, the wheels were a half-inch narrower than the rails. The launch dates slipped forward and the cost estimates crept upward: At latest count, $11.4 billion, with a target completion date of 2031.
And it goes on and on. Lengthy delays have also affected New York’s East Side Access extension of the Long Island Railroad, which is supposed to cut up to 40 minutes off commuter time on the last segment, from Queens to the Grand Central Terminal, with up to 24 trains per hour at peak times. The construction contract was awarded in 2006, and was supposed to be completed by 2011. Early estimates put the cost at $2.2 billion, then $4.3 billion in 2006, and $6.4 billion in 2008. The Metropolitan Transportation Authority now envisions completion in December 2022 at a cost of $11.1 billion. And another debacle of particular note is the former Hanford nuclear weapons site which has been underway in central Washington State for decades. Since 2013, major construction has been stopped at two partially built plants to treat and vitrify 56 million gallons of radioactive sludge.
While the IIJA is a boon for the concrete industry, we can’t throw caution to the wind as we plan the major projects this legislation will fund.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected]. Follow him on Twitter – @allenvillere.