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 ]