California’s High Speed Rail Project Suffers Increased Costs and Delays

The planned route of California’s High Speed Rail project.

This is probably the most unsurprising headline of the week.  California’s planned high speed rail line between San Francisco and Los Angeles (with eventual extensions to San Diego and Sacramento) has never enjoyed a smooth path from planning to operation, and indeed still remains almost completely unfunded, even though money is being spent on a first phase of the project, which involves building a stretch of line more or less in the middle of nowhere (ie 119 miles between Wasco and Madera, places most of us would struggle to find on a map).

The cost and expected completion date of the project have both been rather nebulous targets.  The cost started at $33 billion when voters authorized $9 billion in bonds to get things started in 2008 – the balance was, rather optimistically – hoped to come from the federal government and private investors.  Within a year (ie 2009) the cost estimate had increased to $43 billion; a year later it was being estimated at $65 billion, and in 2011 it was generally viewed as being a $100 billion project, with some estimates going as high as $117 billion.

That is astonishing – although still in the planning stages, but after a formal proposal had been presented and approved, the project cost trebled in three years.

In 2012, the Californian High Speed Rail Authority finally conceded that yes, maybe costs had increased, but said their revised estimate was ‘only’ $98 billion.  They then waved a magic wand at the plans, and said the new cost had become $65 billion, which was only twice the voter approved $33 billion.

I wrote about these various and varying versions of the truth at the time, in 2012, here.

I was always very suspicious of how the HSRA managed to trim costs back ‘down’ to $65 billion, and regularly since then, independent groups have suggested that costs have been going up again.  Two years ago, in 2016, the HSRA was sticking to its guns and claiming the $65 billion figure remained accurate, but now they’ve finally conceded that costs have inched up ever so slightly to a possible $77 billion project cost, and then in a quieter voice said that costs could rise further, back up to $98 billion again (although the revised scheme would now be getting less for the $98 billion now than was the case prior to the scaling back of the project to ostensibly dial the cost down to $65 billion in 2012).

Not only has the public acknowledgement of the possible total cost increased again, but the lead times for getting trains actually operating has also extended.  The new timeline would have the first trains operating on a short segment of track between San Francisco and Bakersfield in 2029 – four years later than earlier promised, and the total system would not be operational until 2033 (a date which has little credibility but much optimism attached to it).

To put that into context, in 2012 the HSRA was promising completion of the entire system by 2029, and in 2014, it was anticipating initial services on a limited stretch of track by 2021.  So, now, six years later, the four-year delay in project completion means that we’ve effectively moved the project two years forward in six years of elapsed time – a rate of progress one-third that anticipated.

How can we get the costs and lead times so enormously wrong?

Keep in mind that many millions of dollars have been paid to high-priced consultants and high-salaried full-time staffers.  Also consider that one of the excuses for the delays and cost overruns is ‘the difficulty in weaving through mountain passes between Silicon Valley and the inland Central Valley’ (see, for example, this article).  But – excuse me – isn’t the route’s topography and the presence of hills and other obstructions something that has always been present and never changed?  How is it only now – ten years after voter approval – that this is being raised as a new issue?

Who has lost their job as a result of these enormous mistakes?

It is also an interesting coincidence that these disclosures are only being made now, a month after the California legislature voted for a comprehensive audit of the project.  There is speculation that when the audit is finally concluded, the result will be an unavoidable conclusion that the entire project should be abandoned.  This would be unfortunate, as would be all the money that has been spent to date which would instantly become a total and complete waste.

So, a project that was first formally investigated back in the 1990s, and of course, first thought of some long time prior to then, and which was given the go-ahead by voters in 2008, looks like it might not be operational until 2033.  And that is assuming that the next 15 years will all see progress adhering to the revised schedule, an assumption that is probably woefully optimistic.

Meanwhile, in China, more new high speed rail track is constructed every year than the entire Californian 800 mile system, with its vague but 25+ year development time.

Oh, the latest projections also avoid a careful study of the current funding shortfalls, and hopefully assumes that $50 billion or more of needed funding will miraculously appear from somewhere.  The earlier desperate hopes for funding from the federal government failed to materialize, even during the eight years of a sympathetic Obama administration, and seem massively less likely during the current Trump administration.

As for private investors, they sense blood in the water, and don’t want it to be their own.  They are only willing to invest into the project if they are guaranteed to make a profit, with zero risk.  Of course, we’d all love zero risk opportunities to make money, but even the most starry-eyed supporters of the high speed rail project can’t help but acknowledge that the business case and profit projections supporting the future operation of the line may turn out to be no more accurate that the capital cost estimates.

Maybe California’s high tech billionaires could help out.  Could California’s favorite son, Elon Musk (who has certainly benefitted from enormous amounts of funding via Californian incentives) be persuaded to stop dreaming of Mars missions and boring tunnels, and instead, put some of his $21.1 billion of estimated net worth into the high speed rail project instead?

Why not convert the project from a standard highish speed rail project to a hyperloop project?  Why is California pressing on with a mature technology that may be about to be obsoleted, instead of showing the world its leadership by adopting the new hyperloop concept?

In the real world, you don’t start spending money on a project that you’ve no vision of how you can afford to complete.  That is not only foolish, but to willfully commit to costs you can’t pay for is criminally fraudulent.  In California, and for public authorities spending taxpayer’s money, apparently different rules apply.

More details here.

4 thoughts on “California’s High Speed Rail Project Suffers Increased Costs and Delays”

  1. California is by no means the only governmental body to operate this way. Plus the federal government regularly establishes unfunded requirements and state and local taxpayers have to figure out how to pay for them.

    Not to mention that Congress regularly delete funding from ongoing projects with no regard for the impact to a project’s schedule or the people who live around or work on the project.

    It also is wise to remember that China can make rapid progress on their projects because China doesn’t play by the same rules as the United States and comparing the two is apples-to-oranges.

    China doesn’t have to worry about environmental impact statements, schedule and conduct public meetings with affected citizens, get funding bills passed by the legislature, etc, etc, etc. China’s leadership says “Go” and the dirt flies that afternoon. If progress isn’t satisfactory, a new manager is found who can make the progress satisfactory. Lack of funding simply doesn’t occur, let alone worrying about managing a public-private partnership.

    If you want to see a successful US passenger rail project, look at Florida. A totally private venture is creating a new passenger service from Miami to Orlando. More information here:

    I am not in any way affiliated with this project and will likely never use it, but it does demonstrate that private enterprise is alive and well in the rail transportation domain.

    1. Hi, Loyd – Don’t you think it is well past time we stop making excuses for America’s inability to match not just China but much of Europe and other parts of the world too when it comes to creating high speed rail? Should we be proud of how we’ve created a nightmare of legislative roadblocks that makes it impossibly slow and expensive to do the simplest thing?

      As for the Florida venture, it is behind schedule and currently has no new track and no high speed operations. You might think these two ‘accomplishments’ demonstrate that private enterprise is alive and well in the rail transportation domain, but I’d disagree.

  2. David, I am not trying to make excuses for anyone or anything. I was observing that the “rules of the road” are very, very different in the two countries. While I am envious of the speed of rail development in China, I am certainly not interested in adopting the governmental approach they use to achieve those accomplishments.

    It appears to me that European governments have more latitude in their approach than in the US because their citizens generally appreciate that progress requires change, sometimes very inconvenient, expensive and messy change. US citizens clamor for change everywhere, except when it impacts their own lives, and then they hamstring any project that does get started with interminable reviews and investigations and construction of unrelated side-projects extorted during the approval process.

    How long did “The Big Dig” take? How many decades has it taken for NYC to plan and begin to execute the new tunnel under the East River? It has been awhile since the I-5 tunnel project in Seattle made national headlines but I don’t recall that it has been completed yet. Right now in Boston, there is a surface-level trolley car extension project that was first proposed in the 1980s, finally started construction last spring and will take at least another 3 years to complete. Total distance? Less than 6 miles.

    US citizens also have been trained by WalMart and the like to expect everything on the cheap, including their taxes. We US citizens love shiny new things but don’t pay to maintain them without huge battles.

    We will continue to be comparative laggards when it comes to rapid development of infrastructure projects, until we change attitude of the average US citizen or adopt a directed central planning model of business and governance.

  3. Pingback: Weekly Roundup, Friday 23 March, 2018 - The Travel Insider

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