Bullet train in vain: As Cali rail project skids, consultants blamed

21 May 2019 Consulting.us 5 min. read

“You know, a town with money's a little like the mule with a spinning wheel. No one knows how he got it, and danged if he knows how to use it,” con artist Lyle Lanley tells the denizens of Springfield in the celebrated “Marge vs. the Monorail” episode of "The Simpsons." Lanley goes on to bilk the city of Springfield out of its $3 million windfall, while still delivering a shoddy, cut-corner monorail.

Eleven years in, and California’s high-speed rail project would probably be happy with Lanley’s “crappy” transit system – at least he delivered it in some semblance of a reasonable timeframe, and on budget.

In 2008, California voters approved a $9.95 billion initial bond funding for a high-speed rail route with 520 miles of rail bed stretching from LA to San Francisco. The agency responsible for the project, the California High-Speed Rail Authority, reported it would be finished in 12 years at a cost of $33 billion.

Today, estimated project costs have ballooned an extra $44 billion, while completion has been pushed back 13 years. The spiraling costs and snail’s pace construction forced California Governor Gavin Newsom to indefinitely postpone most of the bullet train project in February, preserving only the in-progress 171-mile Bakersfield to Merced stretch (with an estimated cost of $16-$18 billion).

Bullet train in vain: As Cali rail project skids, consultants blamed

Going off the rails on a gravy train

A report last month in the LA Times linked the project’s failings to a foundational error – an overreliance on “a network of high-cost consultants who have consistently underestimated the difficulty of the task.”

The rail authority had just 10 employees to oversee the project in 2008, and decided they could reduce overall costs by shifting duties to consultants instead of building a large permanent workforce. Today, a network of engineering and management consulting firms form the bulk of the project’s workforce, including WSP, Aecom, Mott MacDonald, Arup, Arcadis, EY, and KPMG.

The rail authority currently has 180 employees in comparison to main consultant WSP, which has about 470 employees working on the bullet train project. According to state budget documents from 2010, the rail authority’s contract consultant engineers cost an average $427,000 per year, versus the in-house salaries of $131,000 per engineer. The typical refrain from the consulting industry is “our engineers and project managers are better and do better work faster,” or something to that extent. A lot of good it’s done for the project so far, though.

At the center is Montreal-based global engineering consultancy WSP, which has an estimated $666.4 million in contract value on the project. According to the LA Times, WSP developed the estimate that the LA-San Francisco line would cost $33 billion and take 12 years to construct. The consulting firm holds the lease on much of the office space at the rail authority’s headquarters, while supplying the proprietary software which rail authority employees use, as well as the servers that store the project’s data.

Though it’s very common for consultants to be enlisted to work on infrastructure projects, the degree of “consulting capture” on the California bullet train is particularly heavy.

A November 2018 audit from State Auditor Elaine Howle savaged the project, citing the role of consultants multiple times. She noted that the rail authority is dependent on WSP staff to fill jobs, and that it even relies on consultants to manage and oversee other consultants.

The audit also found significant problems in invoice reviews and documenting of completed work.

Hate to say I told you so

An editorial last month from the Orange County Register (OCR) found the high-speed train boondoggle to be an unsurprising development. The paper opposed the proposition that launched the project in 2008, characterizing it at the time as a “nice dream” that veered into “fantasyland territory.”

As for the consulting capture, the OCR noted that contracting and engineering firms poured $837,000 in contributions to the proposal campaign to secure voter approval, second only to the $1.6 million spent by various unions.

According to the OCR, “The entire concept was based on grandiose visions from Europe and Japan rather than practical considerations of California’s geography.” The engineering problem of tunneling through the Tehachapi Mountains, for example, was a big impediment to progress.

There was no Lisa Simpson to ask the California state equivalent of “I'd like you to explain why we should build a mass transit system in a small town with a centralized population.” A monorail didn’t makes sense for Springfield, and maybe high-speed rail never made sense for California, at least in the way the project was developed.

Same old song

There’s a good deal of public discomfort when consultants get called in to do government contract work. They’re ultimately expensive, and profit-motivated. Consultants “may not always have the state’s best interests as their primary motivation,” State Auditor Howle wrote in the November report.

You worry that consultants will tell agencies and the public what they want to hear to get a project to launch. You worry, in the end, that they are Lyle Lanley – with Brooks Brothers suits, fake smiles, and dreams to sell.

California probably should have spent that money to fix up its crumbling Main Streets.