A five-year study of 946 metro projects found a 12x cost difference per km between the most and least expensive countries.
The most efficient metro building countries (Portugal, Spain, Italy, Turkey, Sweden) can build one kilometre of tunnelled metro for $100-300 million. The least efficient builders (English speaking countries like USA, UK, NZ, HK, Singapore cost $800-1200m per km.) What accounts for the difference in costs? English-speaking countries have less in-house expertise:
Eric Goldwyn, NYU asst Professor, Program Director Transportation and Land Use, lead author of the Transit Costs Project study: “Among the cheapest builders there’s a wide variety of delivery models. But what they all have in common is a sophisticated state client who can manage the project.”
Paul Lewis, Policy director at Eno centre for transportation, lead author of Rail Transit Project Delivery Around the World: “You’ll never find a perfect apples to apples comparison. But you can find some universal truths. The staffing piece is really critical. In the US what happens all too often is they say ‘we don’t have experience’ and they bring in consultants to do it for them.”
Dr Marco Chitti, researcher on Transit Costs Project: [Expensive countries’ bureaucracies] have too many managers. Instead of engineers, they have many people that are good at processes. It’s like someone going to buy a car and having no idea if the car should cost 1,000 or 10,000. It’s fundamental that the government keeps this minimal knowledge.”
A realistic range for the total cost of the Metrolink project is €9.5 billion to €24 billion.
TII’s team has no experience delivering a project of this complexity. What would it cost to appoint experienced people to TII to run the project? The team in charge of the project would number 10-20. The market rate for engineers with experience on projects of this scale is €300-400k per year.
The annual cost of a team would come to about €6m. Over an eight-year build, that would be €52m. About €15 billion is at stake – the realistic range for the total cost of Metrolink. Experts say the single most important factor when it comes to controlling costs is the state’s level of in-house expertise. The total cost of acquiring that expertise is €50m.
Paul Lewis: “It seems jarring to say ‘we’re going to spend all this public money on these highly-paid public servants’. But the alternative is to have somebody inexperienced managing a megaproject worth ten billion euros.”
To deliver Metrolink North, TII should be designated a commercial state body
The procurement, design and project management of complex projects is specialised work. It’s too specialised for officials. The state needs the in-house capability.
Having experienced people is only half the battle. They also need autonomy to make decisions.
The state already has such a body in TII. It has a track record delivering infrastructure projects.
TII is constrained by how much it can pay its senior staff (relevant to megaprojects like Metrolink North). But also constrained by how many staff it can hire, how much salary it can pay on aggregate.
TII should be designated a commercial state body. TII should have greater levels of autonomy. It should have greater latitude to hire and to pay its most senior people.
There are many examples of successful state-owned infrastructure agencies across Europe: the Metropoliano Milanese in Piedmont, Trafikverket in Sweden, TfL in England, and InfraTo in Turin.
Hiring experience into TII would ensure the experience gained from one project would not dissipate. It would cultivate a generation of skilled engineers and project managers for future projects.
Building up Ireland’s state capacity has worked in the past. In 1990, Ireland’s great national challenge was staying solvent. It was struggling to manage the national debt. The government resolved to create a new debt management agency and staff it with specialists. In the Dáil at the time, Ivor Callely said: “Specialised financial personnel have proven very cost-effective and create massive savings for the private sector where they are working, and we should avail of that in the public sector. We should not be the losers. We must attract the right personnel by offering the right package. [The NTMA is] being set up to ensure that we can, without public service restrictions, recruit and attract the expertise to work under the Minister for Finance but with increased flexibility.” Ireland should execute this manoeuvre once again, saving billions, and delivering the infrastructure it needs.
