Why are professional services *alone* for Chicago's elevated Red Line extension—in a low-density area—now costing $1.24 billion for 5.4 mi ($230 million/mi). Toulouse Metro C, under construction mostly underground in a dense urban environment, is €3.45 billion TOTAL for 16.7 mi (€207 million/mi). - ThreadSky

yfreemark.bsky.social • 35 days ago

Why are professional services *alone* for Chicago's elevated Red Line extension—in a low-density area—now costing $1.24 billion for 5.4 mi ($230 million/mi).

Toulouse Metro C, under construction mostly underground in a dense urban environment, is €3.45 billion TOTAL for 16.7 mi (€207 million/mi).

Reposted from Alex

High level summary on Red Line Extension cost growth here is:

- Hard costs come out mostly flat

- Professional Services (Engineering, Construction, Project Management) increased over 4x

- 15% contingency added in

- Financing Costs added in

Comments

bedwardstiek.bsky.social•35 days ago

Isn't the short answer that this is the price of farming everything out to consulting firms, rather than building capacity within the staff of public entities?

omlt.bsky.social•34 days ago

Yuuuuup.

That and you have to rely each time on consulting firms because of building 1 line every 30 years 🙃🙃🙃

chittimarco.bsky.social•34 days ago

Professional services are often factored in as a % of hard costs. As the latter rises,the former does

I don't know how deliberate this is from consulting firms and project owners, but this is a trend that can be observed throughout Cancada and the US, which share similar project budgeting practices

dingbattitude.bsky.social•34 days ago

I don’t know how you’d get enough detail but I’d love to see detailed breakdown of what all this is going to, both on construction and prof services, and see comparisons to other countries

chittimarco.bsky.social•34 days ago

Getting details about costs is very hard in the US for budgets. It's almost impossible in Canada. The details I've seen I can't talk about because, guess it, of an NDA...

dingbattitude.bsky.social•34 days ago

I’ve heard it is very secretive in Canada (and other Commonwealth realms) but in the US I would think you could FOIA invoices if they were anonymized? It’d be a huge pain in the ass.

chittimarco.bsky.social•34 days ago

You can definitely track payments and contract's awards. In Canada, too. But it's a long and painful process.

nikhunder.com•34 days ago

In Illinois, you can get unredacted invoices via FOIA. It's easy to monitor spending on this project (if CTA FOIA issued timely responses).

ndhapple.bsky.social•34 days ago

Idk why it’s so different between the UK and the other common-wealth countries. Between the Audit Office and the ES filings, you can get a pretty comprehensive analysis of a project’s budget pretty easily.

micahlohr.bsky.social•34 days ago

Yeah that seems to be the case with public procurement but why? I assume because it's easier for a non-expert official to rely on. But why aren't AECOM, Kimley-Horn, Arcadis etc competing on price to win? The transit engineer on my project was 2nd highest paid and had the fewest drawings by far.

micahlohr.bsky.social•34 days ago

When I am putting private work out to bid, there is a competitive negotiation between firms. When I bid public work, they absolutely do not budge in the slightest and they ask for Add Services fastest

zmapper.bsky.social•34 days ago

I've noticed that there's a trend for super high level rules of thumb to be extrapolated well beyond the intended use case.

Ex: new hire salaries are 1x, wage+tax+benefits are 1.3-1.5x, supplies are .3x, profit is .2x. This... works, but doesn't mean that staplers cost more after a pay raise.

chittimarco.bsky.social•34 days ago

That's my impression, too. A lot of project budgets in NA are made of a base of very detailed analytical estimations of items, + way too many rule of thumb add-ons that nowadays accounts 4/5 of the final budget. That's not how it's done in France or Italy, for example.

toondreessen.bsky.social•34 days ago

It’s a trick; you read the rfp for a project which says budget is $90m but you read the subtext and know it’s really going to cost $200m to do what’s asked; you bid a low % rate and are asked to include staff billing rates (but this isn’t scored). All changes in scope (an extra meeting, 1/

micahlohr.bsky.social•34 days ago

This is not my experience in the US. The consultants do not low ball their bids because they aren't selected that way. They are happy to stick you with add services at the slightest change, nevertheless.

toondreessen.bsky.social•34 days ago

In Canada ethical ones don’t either. But bc we’ve gerrymandered procurement so now only a few firms qualify, the pool has shrunk. https://www.theglobeandmail.com/opinion/article-the-problem-with-public-architecture-in-canada/

toondreessen.bsky.social•34 days ago

…change in scale, delay in planning approval, etc) are given an extra scope breakdown and priced at high hourly rates; as budget rises to address what is actually wanted, incentivized by proposals for better thru schematic design work and public input, the budget goes up (ex, rfp says building 2/

toondreessen.bsky.social•34 days ago

Will be LEED silver but in design you float that it could be net zero bc that’s better and of course client and public agree, this is both added scope AND budget increase so you win 2x). And if you’re a big firm, you make sure you max your position by demanding unpaid overtime from staff 3/

toondreessen.bsky.social•34 days ago

Which is 100% legal in ON. So your scope change of, say, 1000 hours of time can be backed by time sheets but you’re only paying the employees for 600 hours of work with the rest as unpaid OT. You win twice bc that original % fee continues to apply. What’s the way around this? 4/

toondreessen.bsky.social•34 days ago

Reform procurement. Repeal ESA exemptions that amount to legalized exploitation. Transparent negotiations of fees and scope at outset based on published fee guidelines. Transparency on fee budgets and scope. Reform procurement

christofspieler.bsky.social•34 days ago

It's easier for both agencies and consultants to think of fees in percentage of costs -- you have one number you can look at and say "yeah, that seems reasonable" as opposed to a long list of hours for specific tasks none of which are easy to compare to other projects.

chittimarco.bsky.social•34 days ago

Professional costs estimated as a % of hard costs is how it is done in Italy too. With a complex formula enshrined in the procurement law. But, there are coefficients that mitigate the rise of professional service costs as hard costs grow and professional service contracts are lump sum.

christofspieler.bsky.social•34 days ago

The private sector does the same thing, and it's often the owners (not the consultants) pushing it.

micahlohr.bsky.social•34 days ago

The private sector uses percentages as a heuristic for *budgeting* not awarding. They never simply accept a proposed fee just because it's "in range". They negotiate, threaten to get other bids, etc. And they may do this at multiple stages of a project with or without warning the current consultant

christofspieler.bsky.social•34 days ago

Absolutely, though I've worked with private sector clients who accepted on offer because it was within range. But I think the percentage remains a really big part of how most private sector clients think about fee. And most clients are smart enough to know the cheapest firm is likely not the best.

christofspieler.bsky.social•34 days ago

But it does create a backwards set of incentives if we care about minimizing constriction cost (which we should.)

christofspieler.bsky.social•34 days ago

Also, in most of the US, consultants for engineering and architectural services are not selected on the basis of cost -- in fact it's illegal for agencies to do that. (And I think that's generally a good thing -- the cheapest firm is rarely going to do the best work.)

zmapper.bsky.social•34 days ago

Is there some sort of law for A&E that makes hiring by cost illegal? It may be unwise for an independent transit agency that sets its procurement rules to weigh cost at 80, 90, or 100%, but I can't think of a rule or law against it.

christofspieler.bsky.social•34 days ago

What that means in practice is that the agency sets a professional services budget and the consultant has to fit within it. But agency staff tends to fear cost overruns far more than they fear high costs, so those budgets can easily be generous.

matttttttttb.bsky.social•34 days ago

Who do you mean by owners here if you don’t mind saying?

chittimarco.bsky.social•34 days ago

The agency/institution promoting the project, commonly referred to as "project owner"

matttttttttb.bsky.social•34 days ago

Ty I misunderstood, thought it was distinguishing private vs public owner somehow

jeancochrane.bsky.social•34 days ago

If that’s the case, then how do we account for the hard costs staying flat while professional services increase 4x between the 2024 and 2025 budgets for this particular project?

matttttttttb.bsky.social•34 days ago

If I remember from someone else’s post they literally seem not to have included major categories of necessary professional services in the first set of estimates…?

jeancochrane.bsky.social•34 days ago

That seems plausible, and also like the type of thing that I assume should trigger an investigation by the inspector general

warrenjwells.bsky.social•35 days ago

The consulting industrial complex hard at work.

yfreemark.bsky.social•35 days ago

Toulouse is getting 21 stations—of which 3/4 will be subway stations—on a 16.7-mile automated line that will run every 2 minutes all day, for €3.45 billion.

Chicago is getting 5.4 miles of an elevated viaduct—mostly adjacent to an existing railroad right of way!—with 4 stations, for $5.7 billion.

hugofitz.bsky.social•35 days ago

By the sound of things an inflationary race to milk the tax payer for everything they can get away with.

It isn't illegal or corrupt, but it is an immoral and inexcusable waste.

omlt.bsky.social•34 days ago

That's the price of never building new rail, having 0 inhouse skills and having everything up to the private sector

You fucking bet that companies will have a FIELD DAY in the US

"Triple the numbers John, they can afford it anyway, and we gotta pump those quarterlies"

(Glad for Toulouse tho!)

ndhapple.bsky.social•35 days ago

Adjusted for inflation, those professional service costs are basically what SAS cost. That's the design (15%, I believe) and EIS work for all four phases; plus engineering and CM for Phase 1.

babyshoes4cash.com•35 days ago

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