Cost Overruns For Seattle-area Tunnel Projects

(Editor’s note:  The following post was copped from Sightline with permission from the author, Eric de Place, who, as is generally the rule with the whole Sightline crew, has a brain that is far too big for his own good.)

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Will the deep-bore tunnel – the current choice by the city and state to replace Seattle’s Alaskan Way Viaduct – go over budget?

One way to answer that question is to look at what’s happened with other tunneling projects in the Seattle area. In a new report — Cost Overruns For Seattle-area Tunnel Projects — Sightline examines the cost history of four recent tunneling projects: the Mt Baker I-90 expansion tunnel; the downtown Seattle bus tunnel; Sound Transit’s Beacon Hill tunnel; and the Brightwater sewage tunnels.

 

Opinions about the likelihood of a cost overrun for the deep-bore tunnel tend to fall in a pattern. Those in favor of the deep-bore project downplay the chance of going over-budget, and point to a 22 percent cushion in current budget that is set aside for unforeseen problems. Those opposed to the tunnel tend to less sanguine, pointing to international research suggesting that major infrastructure projects rarely stay within budget, even when they include such line items. 

There’s a lot riding on the current cost estimates. If the project goes over budget, Seattle taxpayers foot the bill — a curious result, considering that Seattle voters rejected a tunnel replacement option by a 39 point margin. A cost overrun as small as $100 million (just 2.4 percent of a $4.2 billion project) works out to about $167 per Seattle resident — or almost $700 for a family of four. For a city struggling to avoid deep cuts to basic services, even a relatively small cost overrun could be challenging.

Of course, it is impossible to know in advance whether any project will stay on budget. And that’s especially true for a project as complex, daunting, and unknown as this one. It would be among the widest-diameter bored tunnels ever built, through a seismic fault, directly underneath some of the densest and most valuable urban real estate on the West Coast. Besides, when engineers first made the $4.2 billion cost estimate for the entire Alaska Way Viaduct replacement project — with $1.9 billion price tag for the deep-bore tunnel — they had finished only 1 percent of the design. So the current cost estimate is little more than a placeholder.

It goes without saying that no two tunnels are alike. The deep-bore tunnel will be unlike any other tunnel that has been constructed locally. Nonetheless, we can learn something by examining recent local projects, each of which grappled with specific geographic and historical issues. It is only reasonable to believe that the deep-bore tunnel will face its own unique problems. But, speaking personally, the fact that the deep-bore tunnel is something new and different makes me more pessimistic than optimistic.

Importantly, the cost estimates I’ve included here are very conservative — that is, they tend to paint the projects in a favorable light — because they use initial cost estimates that were relatively well thought-out, usually when the contracts were ready to be sent out for bidding. In some cases, the earlier and less-planned-out cost estimates were much lower; using those rougher estimates could have resulted in a much worse accounting for the cost overruns.

Will the deep-bore tunnel prove to be as inexpensive as the Mount Baker tunnel? Or will it look more like the downtown Seattle bus tunnel? Only time will tell. In the meantime, Sightline’s report, “Cost Overruns For Seattle-area Tunnel Projects,” can help inform public understanding about the actual costs of similar projects nearby.

12 Responses to “Cost Overruns For Seattle-area Tunnel Projects”

  1. David Schraer

    This post fails to mention:
    A. The deep-bore tunnel has a 35% contingency.
    B. The over-budget example tunnels were bid during times when construction costs were rising so rapidly that public and private projects were routinely going over budget. That’s why these projects have a 35% contingency.
    C. Construction prices are now falling rapidly. Since construction prices won’t be depressed forever, delaying the viaduct replacement decision is the surest way to increase its cost.
    D. Additional tunnel comments at http://lightandair.wordpress.com/

  2. Bill B

    Note also commentary from Publicola on the cost overruns and Seattle’s liability:

    http://publicola.net/?p=16368

  3. The Tunnel, Again - Seattle Transit Blog

    [...] de Place of Sightline says local tunnel projects almost always have serious overruns.  As before, I’m leery of these anti-everything fear, uncertainty, and doubt (FUD) tactics, [...]

  4. Eric de Place

    David and I have been clashing in comment threads all over town for the last few days. So I just wanted to clear up this thread too. Quickly:

    The correct number for contingency is 22%. Wash DOT’s tunnel cost estimates are here: http://www.wsdot.wa.gov/Projects/Viaduct/TunnelCostEstimate.htm. The $418 million line-item for “risk” is 22% of the tunnel’s $1.913 total estimated price tag. That’s why everyone uses the 22% number.

    David is right that construction costs have fallen recently (and this is one reason why the Mt Baker tunnel comparison is interesting). But it is only one factor among many that affects the final cost of a megaproject. We should also not ignore technology, geology, urban environment, or the degree-of-readiness of engineering estimates. It’s all stuff that I address in more detail in the report.

    – Eric de Place, Sightline

  5. Don’t Worry, It’s Probably Nothing | hugeasscity

    [...] tunnel project, see Cary Moon’s recent Crosscut piece.* And this is why megaprojects so often go over budget. And this is why being on the hook for cost overruns [...]

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