Why the New Bay Bridge Cost $6.4 Billion
Wednesday, September 04, 2013 - 12:08 PM
In 1996, the California Department of Transportation announced the state would spend seven years and just over $1 billion to replace the eastern span of the San Francisco-Oakland Bay Bridge. But the bridge that opened this week costs several times that amount -- and took ten years longer than originally projected. So...what happened?
The story of the new Bay Bridge really began in 1989, with the Loma Prieta earthquake. A lot of things collapsed -- including a section of the bridge’s eastern span. California officials realized they needed to do something drastic to protect during the next inevitable quake.
“They talked about renovating the existing bridge and that was going to cost in the hundreds of millions of dollars,” says William Ibbs.
Ibbs teaches construction management at UC Berkeley. He’s also an engineer, and has worked as a consultant on huge infrastructure projects around the world. He’s studied the Bay Bridge, and has some thoughts on how it went from a pretty big infrastructure project to an enormous one.
“The longer it takes to build something, the much more expensive it becomes,” explains Ibbs. It’s a phrase that could almost be a mantra for the megaproject: Time equals money. And in large-scale construction projects, a lot of time equals a lot of money.
Here's the backstory.
In the beginning
After the ‘89 quake, Caltrans, the state's transportation department, rebuilds the collapsed span in a month. But it’s a short term fix. Over the next few years, they develop a plan to retrofit all the state’s major bridges, including the eastern span. But in 1994, another devastating quake prompted engineers to take another look at the Bay Bridge. “About 1995 they decided it would be prudent to rebuild, or to build a new structure rather than fix the old one,” Ibbs says.
In 1997, the state legislature passed a bill funding a replacement bridge, and state estimates put the new span at $1.3 billion. The proposal was for a simple skyway, like the San Mateo Bridge.
“Just a plain vanilla type of structure,” Ibbs says. “What was called ‘the viaduct.’ Or what some of our elected leaders disparagingly referred to as ‘the freeway on stilts.’”
This “plain vanilla” bridge did not go over well. Politicians panned it, and East Bay residents protested that they deserved something better.
“People decided they waited some iconic structure in the East Bay, to kind of go with the Golden Gate Bridge,” Ibbs says.
There was an option for a prettier bridge -- if the region raised tolls and picked up the tab on the difference. In 1997, the Metropolitan Transportation Commission, or MTC, decided to go for it. They scrapped the original plan and announced their intent to choose a new, more aesthetically pleasing design.
But things got complicated. The mayors of Oakland and San Francisco at the time both had things they wanted. In Oakland, Mayor Jerry Brown didn't think the design was pretty enough. And then-San Francisco Mayor Willie Brown contested the alignment of the new bridge on Yerba Buena Island -- he thought it would interfere with plans to build an entertainment center and casino. Meanwhile, the US Navy and Coast Guard wanted to preserve an historic structure: the house of WWII’s Admiral Nimitz.
All in all?
“We really lost about two years of construction because of the wrangling over the alignment and touchdown on Yerba Buena Island,” Ibbs says.
“The longer it takes to build something, the much more expensive it becomes.”
It’s all about the support costs, Ibbs explains.
“All the inspectors, all the bookkeepers, all the engineers that you need to keep around for this project get paid on a day by day basis,” he says. “So if you extend the project by 30 days, 60 days, 180 days, you’re adding up the costs.”
A signature span
In 1998, the MTC chose a design for the bridge: it would be a self-anchored suspension, the longest span of its kind in the world, and it would have a 525-foot tower. A signature span.
Caltrans estimated that adding this span will cost an extra $141 million, bringing the total cost to about a billion and a half. Tolls went up a dollar to cover the extra costs, and the estimate was that the bridge would be finished by 2004.
But by 2001, construction hadn't even started -- and somehow, the cost has doubled to $2.6 billion, and Caltrans told the legislature the bridge wouldn't be done until 2007.
Hold on. Before construction even started, the cost of the replacement span doubled. How did that happen? Ibbs offers an explanation.
“When you go to build something for the first time, you don’t have a track record for estimating, you don’t have a good reference point to estimating the cost of this one-of-a-kind event,” he says. “So one legitimate explanation is that people just thought they could do the project and cheaper, this one-of-a-kind structure faster and cheaper than they really could.”
There’s a name for this: it’s called optimism bias. And it affects big projects big projects the world over...again, and again, and again.
“The more they dug into it,” Ibbs says, “they realized there were a lot of complications.”
Like bickering politicians, not to mention national increases in construction costs. “And the economy was very hot at that time," says Ibbs, "and contractors had a lot of opportunities to bid on other projects.”
The state legislature passed a second funding bill -- on September 14th, 2001.
Ibbs says 9/11 also had a big impact on the cost of the bridge. “After the terrorist attack (on) September 11, 2001, the insurance industry was on the hook to pay for the damages associated with the World Trade Center towers,” he says.
Meaning: premiums went up. The extra insurance costs, plus the time that comes with a new design, tack another quarter billion onto the project.
Back to square one?
By 2004, the delays -- and the cost --continued to pile up. Steel prices shot up almost 50 percent, and the then-booming economy pushed construction costs even higher. In just two years, the bridge cost doubled again -- to $5.6 billion.
The single biggest culprit for the jump was the signature span. Caltrans received just one bid for the project, and it was a $1.4 billion estimate. That’s almost $800 million more than the 2001 estimate of the span’s cost. So the department had e to go back to the legislature and ask for more money.
But by 2004, then-governor Arnold Schwarzenegger said the signature span was just too expensive. Remember, the bridge was supposed to cost just over a billion dollars and be finished in 2004. But by that date, it was five times that price and construction had barely started. So instead of moving forward, the legislature sent Caltrans back to the drawing board.
They went back to reviewing alternate designs, including the original simple skyway.
But the same problems came right back-- local politicians did not want a viaduct bridge. Remember the ‘freeway on stilts?’
Finally, by the summer of 2005, a compromise was reached. The signature span design was back on the table, and regional bridge tolls went up another dollar to pay for it. The new cost estimate: $6.3 billion.
A Bay Area icon
Finally, construction began on the signature span. It seemed so real, the Golden State Warriors basketball team even incorporated it into their new logo.
The bridge started to take shape and became a part of the region’s skyline. And over the next seven years, the cost estimate increased just $100 million. But that’s not to say there weren't problems…cue the bolt fiasco.
But today, the bridge is open. And for the record, Ibbs says he has total faith in its safety. So does the Federal Highway Administration, and other independent engineering firms. And they all agree the old bridge is very unsafe.
The bridge’s story isn’t over. The bolts need their permanent fix, and the project isn’t technically over until the last bit of foundation from the old bridge has been carted away. So while $6.4 billion is the total projected cost, it’s also possible the price tag could still rise.
Which brings up the last, and perhaps most important question: who paid for all this? The answer, for the most part, is the residents of Bay Area. Tolls are estimated to cover almost 70 percent of the total cost -- nearly $4.5 billion.
Although he doesn’t personally think the bridge is worth the steep price, Ibbs says there’s more than one way to look at that cost.
“I think when we get 10 years out, 20 years out, we’re going to look at this bridge and say this is a remarkable engineering work,” Ibbs says. “It will rival the Golden Gate in terms of appearance.”
The new bridge is supposed to last 150 years -- so Bay Area residents will have until at least 2163 to decide if it was all worth it.