Onward and upward

The estimated cost of the proposed big city amalgamation has recently been adjusted upwards from $184 million to $210 million. Given the history of large scale projects one would have to be a great optimist to think that the upward revisions will end here.

The literature on mega-projects suggests that large projects frequently fail to achieve their intended financial and operating objectives. Nine out of ten mega-projects have cost-over runs:

1. Miller and Lessard (2000) studied 60 large. Almost 40% of the projects performed very badly and were abandoned totally or restructured after a financial crisis.

2. Merrow et al. (1988) found that only four of the 47 megaprojects they studied came in on budget – the average cost overrun was 88%. Of the 36 projects that had sufficient data, 26 failed to achieve their profit objectives.
Flyvbjerg et al. (2003) analyzed 258 large projects (toll roads, bridges, railways, etc.). Cost overruns of 50% to 100% and revenue shortfalls of 20% to 70% were common.

Is there anything to suggest that the Local Government Commission will do any better?
Regarding the proposed amalgamation obvious problem lies in the imbalance of town and country representatives. Let’s face it, two rural councillors would be very hard pressed to get nineteen city based councillors, enmeshed in all their city problems, to be spending much time considering rural problem areas.

One only has to read the newspaper to realize that city councillors have a completely different set of agendas and seem to think that money does indeed grow on trees. The Wellington City Draft Annual plan has a proposed rate rise almost three times the rate of inflation. I shudder to think of having some of the current gang of Wellington councillors running an amalgamated district.

A recent NZ Listener editorial discussing the amalgamation proposal also worried about ‘a striking lack of political talent available’ describing those currently putting themselves forward as potential leaders as neither charismatic or forceful but probably, come election time, again not having strong competition. The writer also sets sights on current councillors, going s far as to say that ‘they are usually a collection of independent individuals with no set policy or agenda outside of particular interests, who seldom get anything done’. A harsh but probably fair judgment.