Largest Public Works Project in America Scrapped

New Jersey governor Chris Christie has cancelled a proposed $8.7 billion tunnel under the Hudson connecting his state with New York City.

In a statement, Gov. Christie announced that the tunnel "costs far more than New Jersey taxpayers can afford, and the only prudent move is to end this project.""

New Jersey was on the hook for about 1/3rd of the project, $2.7 billion, while The Port Authority and the Federal Transit Administration were pitching in the rest. But Gov. Christie, a Republican, announced that in this current fiscal climate he can't support the project. Christie also predicted significant cost overruns.

CNN describes what the project could have been: "The tunnel, dubbed the Access to the Region's Core project, was aimed at doubling the number of commuter trains between New York and New Jersey and increasing the number of Amtrak trains serving the Northeast Corridor." "

Full Story: N.J. governor kills Hudson River tunnel project



Christie's Politics: Narrow, Shortsighted Self-Interest

That is what Paul Krugman calls it.

Charles Siegel

Irvin Dawid's picture

But who would have paid for the huge cost over-runs?

It's easy to criticize Christie. Yet there is one legitimate question that lends respectability to his audacious decision - who pays the over-runs? Bloomberg said NYC wouldn't in The Times today.
The $8.7 billion pricetag could have gone to $14 billion, a state review found.
It's clear this was NOT a rash decision - he had stopped work almost a month ago.

Yes, I think it was, ultimately, an 'anti-transit' decision by a governor claiming to have his constituents best financial interest in mind. On a larger level, it touches on the country's refusal to upgrade its infrastructure and to raise the funds to pay for it - from both a federal and state perspective.... (while the Feds would have paid their share - they have yet to raise the gas tax...the same criticism that all note of Christie)
Irvin Dawid, Palo Alto, CA

Paying for cost overruns.

What is the %age of infra projects that go over budget? How many of those are stopped?



Here's a dated study but...

Cost overrun is common in infrastructure, building, and technology projects. One of the most comprehensive studies ( of cost overrun that exists found that 9 out of 10 projects had overrun, overruns of 50 to 100 percent were common, overrun was found in each of 20 nations and five continents covered by the study, and overrun had been constant for the 70 years for which data were available.

Spectacular examples of cost overrun are the Sydney Opera House with 1,400 percent, and the Concorde supersonic aeroplane with 1,100 percent. The cost overrun of Boston's Big Dig was 275 percent, or US$11 billion. The cost overrun for the Channel tunnel between the UK and France was 80 percent for construction costs and 140 percent for financing costs.

Here's the trick, we have to pay for this stuff somehow, and continuing to borrow from China to fund massive infrastructure investment as Krugman advocates is not sustainable in the long run. We have to look very closely and make some hard choices about our tax structure, gas tax, and so forth and begin to balance the budget. Knee jerk opposition to taxes is no solution, but neither is continued deficit spending without real alternatives.

Study numbers.

Yes, thank you for the hard numbers. I've seen similar European numbers, and I seem to recall a Cato paper that praised roads for not going over as much as trains, therefore trains are bad.

Nonetheless, the point is (thank you for reinforcing) that this stoppage is an anomaly and likely politically driven.



Irvin Dawid's picture

ARC stoppage, Ben Flyvbjerg, and the case for 'Optimism Bias'.

Thanks for pointing to the work of Danish Prof. Ben Flyvbjerg. I had come across his name in AltTransport (Planetizen: High Speed Rail Is Not Primarily About Economics). I take it he is an authority on this topic.

In American High Speed Rail Explained (8/5/10), he explains the case for "optimism bias":
"Bent Flyvbjerg is an Oxford Professor who studies the decision-making process in major projects. He says it is in politician’s best interest to overstate the potential benefits of a megaproject–jobs, investment, environmental–while downplaying any risk. Fully 90 percent of public works projects in the U.S. are late, over budget or both. In an interview with KALW, Flyvjberg lays out the case for optimism bias."

He's also referenced six times here in Planetizen - once by me, which I entirely forgot!

Returning to what I believe is the main point of the comments, stopping ARC was clearly politically driven, an anomaly, and my guess - reflective of anti-transit bias.

Irvin Dawid, Palo Alto, CA

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