Editor’s note: This article appeared earlier today on the national urban affairs website Urbanophile. It is reposted here with permission of the author.
By Aaron Renn, Urbanophile
Here’s a small gem for you.
Remember that $260 million tunnel under the trees in Louisville? It’s part of the boondoggle Ohio River Bridges project. Would you believe the price went up by almost $80 million at the same time Indiana claimed it “saved” $209 million on it through design changes?
Of course you would.
In 2010, the Kentucky and Indiana departments of transportation were saying that the tunnel would cost $260 million. (See “The $260 Million Home.”) Keep in mind, this is back when the project scope called for a six lane freeway in the East End and when the entire project was supposed to cost $4.1 billion. The East End approach that included the tunnel was estimated at $753 million.
Then in 2012 the two states revised the project to reduce the number of lanes in the East End bridge to four among other changes. This reduced the total project scope to $2.6 billion. The Kentucky approach (including the tunnel) was estimated at $795 million (over $100,000 per foot, incidentally), which was actually an increase. Even if we assign 100 percent of the cost increase in the approach to the tunnel, which would make it $302 million. Keep in mind that media reports continued to describe the tunnel as being in the $255-260 million range.
Yesterday The Courier-Journal reported that the actual tunnel was cost $338 million – that’s a $78 million increase over 2010 and a $36 million increase over our max burn scenario in 2012.
Yet the Indiana Department of Transportation is claiming that they saved $209 million on the tunnel.
From the C-J article:
Design changes for the tunnels earlier this year cut about $209 million from the initial $547 million estimate made before bids were submitted. The tunnels have been shortened 200 feet, to a total of 1,800 feet. The number of initial lanes to be constructed was reduced in 2012 to a total of four with eight-foot shoulders on both sides, allowing for expansion to the original six lanes if eventually needed.
I googled “drumanard tunnel 547″ and got 19 hits. There was nothing I could find prior to January 2014 (after the bid was let) with an estimate of $547 million listed for the tunnel cost in this or other searches. Ditto for the $209 million savings. The two figures appear to have come into existence at the exact same time.
Or did INDOT actually know all along this tunnel would be $547 million, but kept the info from the public?
Even at the original price, they were under huge pressure about building it because it was so self-evidently ludicrous. For example, the lede in a 2012 investigative story in the Indianapolis Star was “All that stands between Indiana taxpayers and $200 million in savings is 11 acres of woods in Kentucky.”
This was not long after the bridges project manager was claiming it would cost money to remove the tunnel. According to the News and Tribune, “[Bridges Project Manager John] Sacksteder said removing the tunnel is not an option and would actually cost the project too much time and money.”
Can you imagine them actually getting away with building the tunnel if they admitted to the public it was going to cost over half a billion dollars?
At this point I’d have to say it looks like either 1) INDOT created a ludicrously inflated estimate for the tunnel right before construction that was used for the purpose of generating bogus claims of savings, or 2) They were suppressing knowledge that the tunnel was vastly more expensive than they were telling the public.
Take your pick.
In any case, only in the world of state DOT land can costs that escalate from $260 million on a six lane road to $338 million on a downscoped four lane road translate into a “savings” of $209 million.
PS: INDOT has been crowing that they saved $228 million during their contracting for the East End bridge. The tunnel was $209 million of that. So 92 percent of their claimed total savings are bogus right there – costs actually went up.
What are the chances the other $20 million are bogus too? I know where I’d place my bet. I noted over six months ago that the amount of money flowing into this project – including increased taxpayer subsidies – indicated that costs were going up, not down.
This is just more confirmation. That’s why INDOT has been frantically trying to land the plane by cutting scope and looking for “value engineering” like radically changing the architectural design of the East End bridge. That’s what project managers should be doing, actually. But let’s at least be honest about what’s going on.
About Aaron Renn: Aaron M. Renn is The Urbanophile, an opinion-leading urban affairs analyst, entrepreneur, speaker, and writer on a mission to help America’s cities thrive in the 21st century. In the Urbanophile he has created America’s premier destination for serious, in depth, non-partisan, and non-dogmatic analysis and discussion of the issues facing America’s cities and regions in the 21st century.
Renn, based in Providence, R.I., is also the founder and CEO of Telestrian, a data analysis platform that provides powerful data mining and visualization capabilities previously only available in very expensive, difficult to use tools at a fraction of the cost and with far superior ease of use.
More on the Louisville Bridges Project:
Hoosiers to Pay 70% of Local Tolls on Ohio River Bridge Project
Media Finally Wakes Up to Louisville Tunnel Boondoggle
Bridges Project a Financial Fiasco
Hoosiers to Pay Even More With Tolling
A Mini-”Big Dig”
A Better Bridges Plan
The Case for 8864