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» babble   » from far and wide   » bc, alberta, saskatchewan   » Millennium Line: Budget-Buster or On The Dime?

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Author Topic: Millennium Line: Budget-Buster or On The Dime?
Babbler # 490

posted 08 July 2004 10:20 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
Over here we had started talking about the Millennium Line. To summarize:

It is my recollection that the total cost of the project was budgeted at $1.2 billion in 2001 dollars, and was intended to cover the cost of building the trains and the elevated tracks as well as the cost of conversion for the older Expo line to link it to the new line.

It has been alleged that Translink has been messing with the numbers in order to obscure the fact that they are deeper in financial trouble than their statements say. Given that another fare increase is scheduled for this year, I suspect that Translink is trying to find money to cover cost overruns on the M-line without owning up to that, because they know fare increases are unpopular moves at the best of times, and if the justification for the increase is solely to cover a megaproject dumped on them by the provincial government, it will be an absolute nightmare for the Translink board, particularly the left-leaning members such as Larry Campbell and Derek Corrigan.

From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
West Coast Lefty
Babbler # 3697

posted 10 July 2004 01:20 PM      Profile for West Coast Lefty     Send New Private Message      Edit/Delete Post  Reply With Quote 
West Coast Lefty
I understand the delay. My "impatience" is perhaps explained by the fact that I joined this forum not because of the election but because of this thread. (I believe I found a link to it on Tyee)

I've been interested and working on the subject since shortly before the "referendum" re the Olympics as you can tell by my website to which I linked in one of my posts.

Your answer astounds me though. Let me tell you why.

You appear to be an astute political observer and I'm surprised that you take the word of the company charged with implementing the project (and hence a vested interest in it being successful) at face value.

According to you they claim it includes the 60 cars. According to my contact at Translink this was not so.

SGW, remind me to never respond to your research requests on babble threads again

I never said that "I took the company's word for it." I made a passing reference to having heard that the Millenium Line came in under budget, you asked me for some supporting information, and I did some digging to provide that to you and other babblers. Period. End of story.

If you think the Translink numbers are wrong, fudged, misleading, whatever, fire away - they aren't my numbers. I never said that they were gospel or used them to support an argument - my posts were about RAV and I just made a brief comment about the Millenium Line in passing. I don't appreciate being drawn into your long-standing grievance about this project when I was just passing on information that you requested.

From: Victoria, B.C. | Registered: Feb 2003  |  IP: Logged
Sir George Williams
Babbler # 6119

posted 20 July 2004 02:01 PM      Profile for Sir George Williams        Edit/Delete Post  Reply With Quote 
West Coast Lefty

I only just noticed this thread; otherwise I would have responded earlier.

This is a long post, partly because we are -to some extent- turning in circles- and since it took me a long time to write I hope you will have the courtesy of reading it all and hopefully respond.

A few typos remain. Sorry about that. This took me way too long and my message is comprehensible in spite of those typos.

It was no 'passing' reference IMHO. You spoke of 'strict cost controls etc.' but I'm not going to waste my time digging up the quote.

What a tempest in the tea pot!

Originally posted by West Coast Lefty:

SGW, remind me to never respond to your research requests on babble threads again

I NEVER REQUESTED you do research for me

I can do my own research and have done so for decades. I reacted to a statement you made and challenged you (correctly or incorrectly)about its factual basis.

I challenged you on some points and I admitted that I was wrong on some of the contentions I had made.

Perhaps I made this statement because I have done more research than you (this is NOT intended to
be a boast) about megaprojects and if you did consult the links to academic works than you would probably agree that I wasn't unreasonable in making these assertions, even if ultimately proven wrong.

There are some financial figures which are fudged. Example: Contentions about integration costs. The claim of "on time and on budget" when one station remains to be built is -at the very least- premature. Don't you admit this?

If you hadn't gotten your knickers in a twist over one little statement (expressing surprise that you would take the figures of the promoters at face value) you might have learnt something. My, my my, one can't be careful enough in choosing one's words on internet forums and maybe I just 'offended' again.

Check out at least the study (origianlly linked on the other thread) by the Danish academic who concluded that statistically the 'strategic' misrepresentations can only be explained as lying

Now I grant you that this statistical "average" spanning over a hundred years does not say anything about the Millenium line. Or the other massive study the same author did (with different collaborators); also linked on the other thread and again here at the bottom of this page.

There is still a lot which is murky, notably about the treatment of interest costs. I gave up working on this since it is not my top research priority at the moment; itis about different subjects. (As I mentionned around the Olympic referendum I worked on megaprojects and the often dubious claims the promoters make and I only ended up here because of a link on Tyee about the RAV thread.)

I find it very suspicious (but not necessarily an indication of 'wrongdoing') that after four calls to Translink and/or RPT 2000 I still don't have a clear picture of the way interest costs are being treated. They did not return any of my calls. (BTW these huge amounts will continue to have to be paid for many decades. Since you indicated somewhere that perhaps estimates of ridership had been overly optimistic -don't attack me if this wasn't the exact way you put it- you have one possible source of lying right there. because it would mean deficits (possibly offset by fare increases as DrConway has indicated as a possibility.) will result.

There are many ways of skinning a cat, the saying goes, and there are many ways of 'ripping people off', i.e. transfer something from all of us to business interests.

Now, one can quibble over the inclusion, or exclusion, of interest costs in the total cost figure.

RTP2000 claims that the interest costs during the construction phase are included in the final cost figure of the project (by being capitalised). One assumes that after the start of operations these interest costs are treated as operational costs.

From an accounting point of view this is legitimate. On the other hand -I submit- it would be equally legitimate to include all interest costs for the construction until they are paid off as part of the cost of construction. If you agree with this, there goes the claim of 'on budget'.

If you look at Note 8 in the Financial Statements and Balance Sheet (the link is on the other thread and after the umptieth edit here too) you see that indeed the interest during construction is capitalised.

One assumes that after operations began interest would be treated as a current expense, deducted from current revenue.

However, if you have a look at the most recent (unaudited) Fin Stmnts for three months ended Sep 30, 2003 you will notice that there is some more interest capitalised.

Why? The line was already in operation.

I don't know why -because RTP 2000 didn't call me back to clarify- but given the history of such large projects I remain suspicious. I gave up calling RTP 2000 about this partly out of frustration (I still have the intention of just going to their offices some day and put them on the spot, because I want to know the truth)

On a not totally unrelated note have a look at the cartoon Aislin drew a long time before the 1976 Olympics for the Montreal Gazette about a pregnant Drapeau phoning Morgentaler. I only came across it yesterday when I did a google search with Malouf -a judge who heade an inquiry into the costs of the 1976 Olympics- and had to chuckle for a long time. (Drapeau is on record as saying that "no more can a man have a baby than can the Olympics make a loss", or something like this.) Yet a McGill Chancellor (Dick Pound) claimed in the Vancouver Sun before the referendum that the Montreal Olympics didn't make a loss. (McGill students take note about your Chancellor lying! See: Vancouver Sun Feb 12, 2003) Malouf thought it was -if memory serves- around a billion and a half.

Don't you see the webs of lies and equivocations surrounding such projects?

You can find the cartoon at the link to Max Fergusons' comedy piece about the 1976 Olympics.

Look at no 3 "Olympic Satire":

Again, this does not prove anything about the Millenium Line other than that a critical attitude is needed when assessing claims the promoters make.

(And that's all I really meant when I made the statement which cause your eyes to roll. It was not meant as a personal attack. I have posted on too many forums to so this, except in very rare circumstances, e.g. Eric Pool shortly before I stopped addressing him, when I called him racist.)

For all I know the Millenium Line may have come in on budget (or sort of) and I may have been wrong in my contentions. But rather than getting your knickers in a twist over one sentence out of pages and pages I posted on this subject you might have taken my 'advice' (albeit not expressed in the best way) and be a little more critical about the promoters' claims.

I can't remember the exact amount of interest costs capitalised after operations began off the top of my head but you can find them in the three months statement ended September 30, 2003.

Please tell me one thing though:

If you buy a car on credit and the sticker price is 15,000 bucks, the interest cost over the three year financing term is, say, 5000 bucks: Did the car cost you 15,000 or 20,000?

I would say 20,000. The RTP 2000 accountants would say 15,000. Both are acceptable and I don't claim to have the "truth".

What do you say? If it is 15,000 how would you classify the 5,000 expense if you kept a set of personal accounts?

If you say 20,000 then it follows that the Millenium Line did definitely not come in on budget even if none of the figures are fudged.

One additonal point to illustrate further:

In the case of non-revenue producing public works one would have to include the interest costs in the total cost. Right or wrong? If right why a different treatment in the case of a revenue producing project? How about a project which cost over a billion dollars ("The Big Owe" in Montreal) and produces small revenue from rock concerts, monster truck shows etc and Expo games?

What do you say? Just don't tell me please that me giving examples of other large public works projects in general and the Montreal Olympics in particular, is irrelevant. They are not. That's where the Danish academic (who published a highly technical book after his path breaking study) and the others linked on the other thread (and here again) come in.

There is a systematic pattern of lying in large scale projects studied over a hundred year period by promoters and others invovled in such projects. That should put you on guard, I suggest. That's all I meant.

Megaprojects And Risk

The Changing Politics of Urban Public Investment

For the article about the "Chunnel" see the old thread; I reproduced extracts there:

I apologise for having 'injured' your sensibilities.

[ 20 July 2004: Message edited by: Sir George Williams ]

From: Vancouver | Registered: Jun 2004  |  IP: Logged

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