Case Selection

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Eric and I recently sent in a list of criteria for case selection. We’re currently funded for 6 detailed case studies, of which one is the Green Line Extension in Boston due to funding from a different grant. My guess is that we need about 15-20 different cities to have near-perfect information about the institutional and geographic factors that influence infrastructure construction costs. Because different subway lines in the same city tend to cost the same to build, and even in the same country, our 500 lines in the database are more like 50 independent observations, and there are even identifiable clusters of countries.

These clusters are important, because ideally we should have 2 cases per cluster. With 6 cases in total, we’d like to have a case for at least one per cluster, even though it’s unlikely, depending on where we can find the most detailed information and the most people who will talk to us.

Clusters

1. Very low-cost countries

The first cluster is the success cases. These really come in two flavors: one is Switzerland and the Nordic countries, and the other is everywhere else with costs lower than $150 million per km, that is Spain, Portugal, Italy, Greece, Bulgaria, Turkey, and South Korea. The difference between the two flavors is that the first one consists of very high-wage countries with populations that trust their institutions, and the second consistent of countries with wages at the bottom of the first world or top of the second with populations who don’t believe me when I tell them their infrastructure construction is cheaper than in Germany. Even then, there are some important differences – for example, contracts in Turkey are lowest-bid, using the country’s high rate of construction and multitude of firms (a contract must have a minimum of 3 bids) to discipline contractors into behaving, whereas Spain instead has technical scoring for bids and only assigns 30% weight to cost.

2. Middle-range countries

This is countries close to the global average, which is around $250 million per kilometer for underground construction. China has about the same average cost as the rest of the world, and since a slight majority of our current database is Chinese, it falls in this category. France and Germany are definitely in this category; Austria, Czechia, and Romania are also in this category but have fewer distinct metro tunnels; Japan may be in this category but it’s unclear, since the few tunnels it’s building nowadays are both more expensive and more uniquely complicated, rather like regional rail. Big parts of Latin America fall into this category too, though they bleed with the high-cost category too. There’s a good case for separating China, France, Germany, and Japan into four separate categories (Austria should probably be institutionally similar to Germany), each of which gets different things right and wrong.

3. Countries with recent cost growth

This cluster consists of places that have high costs but didn’t until recently. Canada and Singapore are both competing for worst construction costs outside the United States but were not until well into the 2000s. Australia may be in this category too – it’s unclear, since Melbourne is extremely expensive to tunnel in but Sydney isn’t. New Zealand’s regional rail costs suggest it might be too – initial electrification was cheap but the regional rail tunnel is expensive. All of these countries share the characteristic of extreme cultural cringe toward Britain and the US, adopting recent British and American ideas of privatization of the state, and it would be valuable to follow up and see if this is indeed what happened with all of their infrastructure programs.

4. Rich countries with very high costs

This cluster is dominated by the US and UK. Taiwan is there too but is much smaller and likely has completely different institutional reasons – one person told me of political corruption. Hungary and Russia might be in this category too – they have very high costs (Budapest is scratching $500 million per km), but their wages are at the first/second world boundary, rather like Bulgaria or Turkey.

5. Countries on the global periphery with very high costs

This cluster consists of the high-cost world that is too poor or peripheral to be in cluster 4. This includes ex-colonies like India, Pakistan, Indonesia, Egypt, and Vietnam, but also the never- or more-or-less-never-colonized Gulf states; these two categories, the Gulf and the rest, must form two distinct flavors, but I lump them together because both seem to have extreme levels of cultural cringe and to associate bringing in European and East Asian consultants with modernity and success. (Meanwhile, parts of Europe, at least in the less self-assured East, bring in Turkish contractors.) The higher-cost Latin American countries, like Brazil and possibly Colombia, belong here too, and may form a distinct flavor. Thailand is on the edge between this cluster and cluster 2, which may befit its liminal colonial status before and during World War 2.

Where we struggle

We’ve been sending feeler messages to people in a number of places. This is far from perfect coverage – so far none of these countries is poorer than Turkey. In general, we’ve had early success in the lower-income range in cluster 1 (Italy, Spain, Korea, Turkey) and in cluster 4. Cluster 3 seems reachable too, especially since Stephen Wickens did much of the legwork for Toronto’s cost growth; we may be able to look at Sydney as well, and Singapore and Auckland seem like it shouldn’t be too difficult to find sources, nor to get people to listen if our conclusion ends up being “your government reforms in the last 15 years are terrible and should be reversed.”

Within the rich world, so far getting sources in Germany and Scandinavia has proved the hardest. I don’t know if it’s random or if it’s the fact that in countries that believe their standards of living are higher than those of the US and UK people are less likely to be forthcoming to someone who writes them in English. I’ve seen a decent amount of written material about rail capital construction projects in Germany, though not about the one I’m most interested in, that is the U5-U55 connection here in Berlin; but the rail advocates I’ve talked to are not quite in metro construction, though I have learned a lot about public transportation issues in Germany from them.

In Scandinavia things are even harder. Costs there seem pretty consistently low. A common explanation is that the rock in both Stockholm and Helsinki is gneiss, which forms a natural arch and makes tunnel boring easy, but a short tunnel in Oslo, the Løren Line, was even cheaper in softer rock. Moreover, the planned Helsinki-Turku high-speed rail is currently budgeted at €2 billion for 94 km of which 10 are in tunnel, so maybe equivalent to 140 km of at-grade line; this is noticeably below French costs, let alone German ones.

The low-income world is an entirely different situation. My suspicion is that the same cultural cringe that makes India build turnkey Shinkansen at something like 3 times its domestic cost (correcting for tunnel length) would make India eager to talk to us – if we were covered in the first-world discourse first. People in India, Nigeria, etc. know their countries are poor and are desperate to absorb the knowledge of richer places; they don’t understand the US as well as Americans do, but they understand it better than Americans understand the third world.

Cluster curiosities

The reasons I’d ideally like to have 20 case studies are that there are a lot of questions about internal differences, and that things that look like clusters from cost data may not actually be similar. There are a lot of questions that doing more cases might explain.

  • South Korea and Japan share many institutional similarities, and many of those are also shared with Taiwan. How come South Korea near-ties for lowest costs in the world, Taiwan near-ties for highest costs in the non-Anglophone first world, and Japan is somewhere in the middle?
  • What explains why different Eastern European countries with similar histories and institutions have such cost divergence?
  • Why does Italy have low metro construction costs (more in the North than in Rome and the South, but Rome is at worst average) and high costs of high-speed rail construction?
  • Why does Japan have high metro construction costs where it builds and low costs of Shinkansen tunneling?
  • Turkey seems similar in costs to Southern Europe, but it does things very differently – for one, it uses lowest-bid contracting. To what extent this is about Turkey’s very high rates of construction recently, and does this generalize elsewhere? Of note, there are extremely high construction rates all over middle-cost China, and also decently high rates in high-cost India, Singapore, and California.
  • The Netherlands is institutionally within the same range of what’s seen elsewhere in Northern Europe, and yet its construction costs are high. Is this just a matter of alluvial soil tunneling? If so, why did HSL Zuid cost so much?
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