Can We ‘Handle the Truth’ About Cost Overruns?

January 20, 2012

For immediate release (678 words with optional cuts)

“The truth? You can’t handle the truth.” — Jack Nicholson as Marine Col. Nathan Jessup on the witness stand in “A Few Good Men.”

Perhaps politicians believe we can’t “handle the truth” about the costs of building and public works projects. They rarely put all the facts and figures on the table from the start. We are forced into the role of cynics, negativists and obstructionists, suspecting that every government project will have cost overruns and expensive delays.

This is not the way the process has to work. Private contractors will tell you that those  “unexpected” contingencies should have been expected.

So what’s exactly going on here?

The cleverest politicians know that if the true costs were revealed upfront the public would rightly question the worth of a project and the ability to fund it. Sadly, there is a stack of evidence and anecdote documenting government cost overruns. Indeed, The Journal of American Planning published a study of almost 300 government projects over 70 years. Nine out of 10 exceeded their cost estimates.

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Some overruns are infamous. The Big Dig, a mega-tunnel rerouting Boston traffic arteries, was estimated to cost $2.6 billion but finished at $22 billion. And as Reason.com noted in “Congress’ Phony Price Tags,” pulling the wool over the taxpayers’ eyes is an old problem as well as a universal one.

In a suburb of Portland, Oregon, the money spent on a bus-shelter project could have built a three-bedroom house. As a councilman there noted, “What we should do is build a house at each station, and if you miss your last bus, you can stay overnight.”

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We need look no further than our own back yard. In Fort Wayne, my hometown, the purchase of an old downtown building, now known as “Citizens Square,” was supposed to be a straightforward renovation project to create arguably needed government office space. It turned out to be anything but that.

The mayor pointedly selected the same architectural firm that had worked on the building previously so its ‘institutional knowledge” would give credibility to the administration’s project estimates. A whopping $300,000 in annual contingencies was built into this building project’s budget up front. And even so, the project is now almost $2 million over budget — a more than 25 percent increase over the original renovation estimate.

Why? Two reasons: 1) Either government officials knew what dollar limit would pass public muster, revealing expenditures only up to that amount; or 2) they were careless and unrealistic in their expectations, not bothering to perform due diligence.

Our representatives often kick the tires but don’t look under the hood. “Ask before you buy” should be their mantra. And if they don’t ask, we taxpayers should. For when we don’t, the costs of these public projects grow out of proportion to their worth.

The new Public Safety Academy in my city, a $ 36-million project meant to pay for itself, now costs municipal taxpayers more than a half-million dollars a year.  

Officials would have us believe that such overruns are incidental to progress, something that nobody can anticipate. Thus we are expected to share their “surprise” that asbestos is found in a building built in 1971 or that an elevator in a building built more than five decades ago will need to be overhauled.

Not surprised are the private contractors who work on these projects, who often are used by elected officials as scapegoats. It is our elected officials, though, who either deceived us or asked the wrong questions. They are the ones who should be held accountable.

As a city councilwoman, I knew that if I hoped to find out where tax dollars were going I would have to ask. It was my job. We elect our officials to ask those questions for us. And once they commit to a project, we should be sure that they are not acquiescing to an oversight process that tolerates far more than initially approved.

So can we “handle the truth” — that public works projects go over budget?  This is the government we are talking about, remember, a historically troublesome entity that can raise taxes, add fees or simply stop plowing your streets in order to increase revenues to fund its own cost overruns and misjudgments.

But if we expect the worst of government we should demand more of elected officials. The next time a great economic-development or “stimulus” project is brought to your city council, someone there will undoubtedly ask, “How much?” That is when you should make like a Missourian and add the imperative, “Show me.”

Elizabeth Brown, an adjunct scholar of the Indiana Policy Review Foundation and a graduate of Notre Dame Law School, served four years on the Fort Wayne City Council in an at-large seat. Most recently, Mrs. Brown was a candidate for mayor in the GOP primary.



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