So why does it always JUST go over?

Read the following from the New York Post-

 

Giant projects such as the reconstruction of 1 World Trade Center, or Freedom Tower (pictured), always end up costing more than the original estimates because “that’s just part of the way the world works,” Mayor Bloomberg said yesterday.

“It would be really naive on any big project to say it’s never going to come in for more,” Bloomberg said.

“It always does. I don’t know how many times you have to watch it to understand. That’s just part of the way the world works, and I’m not sure there’s anything wrong with it.”

The mayor’s comments came in response to a report in The Post that the Port Authority failed to include the $1 billion cost of moving tenants into 1 World Trade Center in its original 2008 estimate of the construction tab.

Wayne Carrington
 
 

Bloomberg has been a staunch defender of the Port Authority under its previous director, Chris Ward, and the mayor said nothing’s changed his view.

“The big story was that there was an expense of $1 billion that they put into for fitting out for clients and that should have been in the budget,” Bloomberg said. “But that should have been in the budget a long [time ago]. The real world is nobody knows what the costs are for complex things, whether it’s a building or a computer system or building a building or educating kids.”

-------------------------------------------------------------------------------------------------------
Which raises the question- 'nobody knows what the costs are for complex things...'- so why do the costs almost always go over estmate?
 
Is it 1)if more accurate costs were stated up front, there wouldn't be the support for the project and thus it wouldn't get off the ground, 2) it is standard for it to go over budget, so the costs rise as the contractors know they can milk more out of the system?
 
Either way, it's a little disconcerting that a public official sees nothing wrong with the fleecing.  The solution is simple- bids with no room for overruns and bonds in place so a contractor cannot do part of the work and then skip out when he realizes it isn't profitable (and no change-orders from the government- I've heard of one company that bids large projects at cost, knowing there will be change orders and thus profit).
-Zjabs (Rochester's Official Columnist)

 

© 2012 Zjabs - 4/9/12

add as favorite