Cost overruns are a given when dealing with large public works projects. The Chicago-area based Daily Herald has a lengthy story today about the subject, and a study that says Chicago officials are underestimating the true cost of expanding O’Hare International Airport. If true, O’Hare expansion would follow in this tradition:

  • The Big Dig, a road project underneath Boston Harbor, quadrupled in cost, to $15 billion.
  • The new Denver International Airport, which doubled in cost from the six years from voter approval to startup.
  • Other projects in Chicago that have had significant overruns, including the renovation of Soldier Field.
  • In his book, “Megaprojects and Risk,” Bent Flyvbjerg studied multibillion-dollar construction projects worldwide and found about nine out of 10 went over budget, with many running 40 percent over original estimates

    A consulting firm hired by suburbs that oppose O’Hare expansion says that the cost of the project will be $16 billion; the city of Chicago says the true cost will be closer to $6 billion. The differences come from the way that the suburbs and the city label different projects. The suburbs count some projects as part of the expansion (and thus, presumably, optional), while the city says the same projects would have to be done with or without the expansion going forward. These include

  • $3.8 billion for the “World Gateway Program” to expand current terminals and add two more.
  • $2.1 billion for an ongoing capital improvements programs.
  • $2.7 billion for additional operating costs that would be required during the expansion process.

    Finally, the Illinois Department of Transportation estimates that road projects, including laying in an access from the west (I’ve lived in the western suburbs, and think this would be a great idea) will cost another $2.3 billion. The city says this shouldn’t be part of the expansion numbers either, since that’s a state responsibility. But clearly, the utility of those projects depends heavily on whether or not O’Hare is expanded.

    The Herald digs out an academic who give us the obvious (but necessary to hear, again) truth: big projects get out of control. Alan Altshuler, a professor in the Kennedy School of Government, says that when (as is usually the case) they face uncertainty, project boosters pick the most optimistic figure. “There are such powerful political incentives to underestimate costs when you’re trying to sell projects, that people just come in low.”

    The suburbs have a bias towards inflating the numbers; the city has a bias towards lowballing the estimate. I’m inclined to go with the suburb’s numbers.

    Does O’Hare needed to be expanded? Probably. But Illinoisians–and airline passengers generally–ought to know what they’re getting into ahead of time.

    By the way, the Reason Public Policy Institute reports on a proposal to turn the operation of Atlanta Hartfield Airport over to a private contractor.