Massive infrastructure project cost overruns should be viewed objectively
Monday Vibes
The author is a news editor for China Daily Hong Kong
After nine years of construction, the mega Hong Kong-Zhuhai-Macao Bridge — the world’s longest sea crossing — finally opened to traffic on Oct 23. But controversies rage on.
One of the most contentious issues is the mammoth project’s cost overruns. With the estimated 70-billionyuan ($10 billion) bridge ending up at a cost of 120 billion yuan instead, critics said the builders could have built two bridges instead of one. They accused the Hong Kong SAR Government of “draining the city’s fiscal reserves” and “loose management” of public works.
They may have a point though. A price that had been agreed upon and then having it nearly doubled would undoubtedly stir some rumbling noises. But, this isn’t daily shopping. Things can be more complicated when major infrastructure projects, like the HZMB, are involved.
First, let’s admit that when preparing a budget, it’s almost impossible for the government and experts to come up with a precise estimate of potential hikes in material and labor costs, particularly when the project’s construction was spread over almost a decade. The unpredictability in inflation has an even greater bearing on the ultimate cost of such gigantic infrastructure projects. Therefore, the longer such a project takes, the bigger the over-expenditure risk is.
This problem, perhaps, could be overcome by using more effective data analysis technology in the future. However, on the engineering side, some risks are impossible to avoid.
I had been to the HZMB construction site on various occasions in recent years, talking to a number of key engineers and designers. Each time, we were bound to touch on the problem of possible over-expenditure. Eventually, I realized that a “no over-spending” scenario would be more ideal in the construction of mammoth infrastructure projects.
In the past, there had not been a single major maritime infrastructure project over the Lingdingyang in the Pearl River Estuary. This means there had been more than insufficient hydrogeological data for the bridge designers — it almost blinded them.
Take, for example, the HZMB tunnel — one of the most technically complicated parts of the sea span. In an interview with the chief designer of the artificial island and tunnel project Liu Xiaodong, I was shown thousands of pages of design sketches piled up in his office. They had been amended several times during the construction. Some parts had been redesigned even after being installed due to unpredictably complicated geological conditions and a persistent pursuit for quality. Those changes have pushed up the costs to a great extent.
Moreover, in 2010, an elderly Lantau resident filed a high-profiled judicial review over the HZMB’s environmental impact assessment. Although she lost the case, the action caused work to be suspended for less than a year. During my interview, one of the core engineers of the bridge admitted that the suspension came during the most crucial period in terms of cost overruns.
According to official statistics, the suspension period alone had cost the SAR government an extra HK$6.5 billion, let alone the cost increase after construction work was prolonged.
Moreover, the Lingdingyang is the natural habitat of the Chinese white dolphins. The construction teams were only allowed to carry out limited work from April to August each year – the breeding season of the precious intelligent creature. On top of unpredictable animal behaviors, which led to temporary halts, the HZMB has paid the price of environmental conservation.
In fact, Hong Kong is not the only victim of project over-expenditures. It’s now a worldwide issue.
According to a study by Oxford University researchers on a total of 58 major railway projects globally, apart from inflation, the actual costs are, on average, 45 percent higher than originally estimated costs.
Germany is hailed as the nation of craftsmanship. However, large-scale public projects in that country have been proven, on average, 73 percent more expensive than originally estimated, according to a study by the Hertie School of Governance on 170 large public infrastructure projects in Germany. Project over-expenditure varied across sectors — the highest overrun shot up by up to 394 percent.
Moreover, according to France’s national independent auditing body Cour des Comptes (CDC) — the “Grand Paris Express” — France’s plans for a massive expansion of the metro network in and around Paris, and one of Europe’s biggest infrastructure projects — could eventually cost 38.5 billion euros ($43.78 billion), or more than 12 billion euros higher than the 2013 estimate.
What’s worse, the CDC also had “serious doubts” about the project’s ability to open in time for the 2024 Olympics.
Project over-expenditures vary, but the reasons are quite similar. Hong Kong people believe in international standards. Cruel as it may seem, these are international standards.
As a Hong Kong resident, I earnestly hope that any local infrastructure project in the future can be completed within the budget. However, reality is always beyond our control. It’s to be hoped that Hong Kong society can take an objective and rational look at cost overruns in the case of massive infrastructure projects like the HZMB.