Cost Control cp
*****Critical 2NC Blocks***** 2NC ‘Punishment key’ (must read)
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*****Critical 2NC Blocks*****2NC ‘Punishment key’ (must read)And, failure to institute cost controls BEFORE the project begins means the stimulus advantage is a disad to the aff – negative repercussions for going over cost MUST be a part of the planFlyvbjerg 2k9 (Bent, professor of planning at Aalborg University, Denmark. He is founder and director of the university’s research program on large-scale infrastructure planning, “Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it,” Oxford Review of Economic Policy, Volume 25, Number 3, 2009, pp.344–367, pg online @ http://www.sbs.ox.ac.uk/centres/bt/Documents/UnfittestOXREPHelm3.4PRINT.pdf //um-ef) Whether stimulus infrastructure spending will improve or worsen the global economy will be decided by how well we deal with these main trends. Thus the efficiency of project delivery is both particularly important at present and particularly challenged. The major challenges are (i) not to lower standards as the project pipeline rapidly expands, (ii) to navigate the particular risks of doing more projects in emerging economies, and (iii) to harness the bull in a china shop that is ICT in major projects. Three main ingredients will help meet the challenges. First, we need honestly to acknowledge that infrastructure investment is no easy fix but is fraught with problems. For this purpose, President Obama was immensely helpful when at a 2009 White House Fiscal Responsibility Summit he openly identified ‘the costly overruns, the fraud and abuse, the endless excuses’ in public procurement as key problems (White House, 2009). The Washington Post (24 February 2009) rightly called this ‘a dramatic new form of discourse’. Before Obama it was not comme-il-faut to talk about overruns, deception, and abuse in relation to infrastructure spending, although they were of epidemic proportions then as now, and the few who did use such language were ostracized. However, we cannot solve problems we cannot talk about. So talking is the first step. Second,we must arrive at a better understanding and better management of the long, fat tails of financial and economic risks—the abundance of black swans—that apply to infrastructure investment. Risks have so far been as misunderstood and as mismanaged in infrastructure investment as in the financial markets, with equally devastating outcomes. Methods and data for better risk assessment and management were presented above. Third, incentives need to be put straight, so that bad performance is punished and good performance rewarded, and not the other way around, which is often the case today. Again, methods for how to do this were described above. AT: Perm Do BothDoing both links to all of our net benefits – The portion that does the plan still would result in massive cost overruns – It eliminates the threat of program termination.*****And, establishing cost controls is a PRE-REQUISITE – cant develop TI policies without first knowing what the policy how the policy will be implementedPuentes 2k8 (“A Bridge to Somewhere Rethinking American Transportation For The 21st Century,” g online @ http://www.brookings.edu/~/media/research/files/reports/2008/6/transportation%20puentes/06_transportation_puentes_report.pdf //um-ef) 4. FUNDING FOR THE FEDERAL PROGRAM— BOTH FUNDING LEVELS AND SOURCES— SHOULD ONLY BE CONSIDERED AFTER THE REFORM IDEAS ARE PUT IN PLACE Just as transportation is not an end in and of itself – neither is increasing funding the primary solution to the transportation problems. However, because of the short term conundrum of the federal government obligating more federal money for transportation than it has to spend and the disdain for the annual rescissions, many are calling for the next Congress and the new President to increase the federal gas tax. This puts the cart before the horse. Simply put: we should not continue to pour more money into a dysfunctional system before serious attempts at significant policy reform. In other words, the federal transportation program is not just broke; it is broken. The funding debate needs to shift from spending more and more taxpayer dollars on the same product to where, what, and how to spend that money better. So in addition to just focusing on increasing revenues for the existing program the nation deserves a real conversation about curbing the demand for transportation spending. It is impossible to start with a funding solution or what the optimal level of investment should be when there is no agreement about what the federal role should be, what problems we are trying to solve, or what questions we are trying to answer. Indeed, although the NSTPRSC did call clearly and specifically for an increase in the fuel tax, they also maintained that adding revenues to the program in its current form would “not be acceptable.” We concur. Given the track record of the program in recent years such systemic reform may seem difficult to achieve. However, it has been argued that during their times as transportation visionaries, President Dwight Eisenhower and Senator Daniel Patrick Moynihan did not so much have an inspiration for transportation as they had a revenue stream. Indeed, history has shown that each new wave of transportation policy carried with it a major restructuring in how the system is planned and financed. Looking at it another way: no major federal transportation reform has ever occurred without a major increase in revenues. 15 This should be another one of those times. We need a clear articulation of the goals and objectives of the federal program, and the desired outcomes. The program should then be structured to get to those outcomes. There then should be a frank and vigorous conversation about the revenues currently available and whether or not additional funding is necessary. At that time, all options toward re-invigorating transportation funding should be on the table to meet the transportation challenges of the future while also ensuring financial revenues will be available. We recommend that the federal government reinvigorate its transportation funding structures based on the three-pronged strategy to lead, empower, and maximize performance. 70 years of TI proves – failure to establish performance measures ENSURSES the plan will be a cost-overrun – Cost underestimation will not stop unless it comes with a consequenceFlyvbjerg et al 02 [Bent Flyvbjerg, Mette Skamris Holm, and Søren Buhl. Flyvbjerg is a professor of planning with the Department of Development and Plan- ning, Aalborg University, Denmark. He is founder and director of the university’s re- search program on transportation infra- structure planning and was twice a Visiting Fulbright Scholar to the U.S. His latest books are Rationality and Power (University of Chicago Press, 1998) and Making Social Science Matter (Cambridge University Press, 2001). He is currently working on a book about megaprojects and risk (Cambridge University Press). Holm is an assistant pro- fessor of planning with the Department of Development and Planning, Aalborg Uni- versity, and a research associate with the university’s research program on transpor- tation infrastructure planning. Her main in- terest is economic appraisal of projects. Buhl is an associate professor with the De- partment of Mathematics, Aalborg Univer- sity, and an associate statistician with the university’s research program on transpor- tation infrastructure planning. “Underestimating Costs in Public Works Projects: Error or Lie?” Journal of the American Planning Association, Vol. 68, No. 3, Summer 2002, http://www.industrializedcyclist.com/Flyvbjerg02.pdf, accessed 7/17/12]//DLi Figure 3 shows a plot of the differences between ac- tual and estimated costs against year of decision to build for the 111 projects in the sample for which these data are available. The diagram does not seem to indicate an effect from time on cost underestimation. Statistical analyses corroborate this impression. The null hypothe- sis that year of decision has no effect on the difference between actual and estimated costs cannot be rejected (p=0.22, F-test). A test using year of completion instead of year of decision (with data for 246 projects) gives a similar result (p=0.28, F-test). We therefore conclude that cost underestimation has not decreased over time. Underestimation today is in the same order of magnitude as it was 10, 30, and 70 years ago. If techniques and skills for estimating and forecasting costs of transportation infrastructure pro- jects have improved over time, this does not show in the data. No learning seems to take place in this important and highly costly sector of public and private decision making. This seems strange and invites speculation that the persistent existence over time, location, and project type of significant and widespread cost underestimation is a sign that an equilibrium has been reached: Strong incentives and weak disincentives for underestimation may have taught project promoters what there is to learn, namely, that cost underestimation pays off. If this is the case, underestimation must be expected and it must be expected to be intentional. We examine such speculation below. Before doing so, we compare cost un- derestimation in transportation projects with that in other projects. Establishing penalties for cost-overruns is CRITICAL – the possibility of eliminating the plan is necessary to establish accountability – REGARDLESS of who implements the planFlyvbjerg 2k9 (Bent, professor of planning at Aalborg University, Denmark. He is founder and director of the university’s research program on large-scale infrastructure planning, “Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it,” Oxford Review of Economic Policy, Volume 25, Number 3, 2009, pp.344–367, pg online @ http://www.sbs.ox.ac.uk/centres/bt/Documents/UnfittestOXREPHelm3.4PRINT.pdf //um-ef) (i) Transparency and public control In order to achieve accountability through transparency and public control, the following would be required as practices embedded in the relevant institutions (the full argument for the measures may be found in Flyvbjerg et al. (2003, chs 9–11)). National-level government should not offer discretionary grants to local agencies for the sole purpose of building a specific type of project (a.k.a. ‘categorical grants’). Such grants create perverse incentives. Instead, national government should simply offer ‘block grants’ to local governments, and let local political officials spend the funds however they choose to, but make sure that every dollar they spend on one type of project reduces their ability to fund another. Cost–benefit analysis and other types of ex ante appraisal should be shifted from promoters to more neutral ground, for instance with the Treasury, in order to reduce risks of agency problems. Forecasts and business cases should bemade subject to independent peer review.Where projects involve large amounts of government funds, such review may be carried out by national or state auditing offices, such as the General Accounting Office in the USA or the National Audit Office in the UK, who have the independence and expertise to produce such reviews. Forecasts should be benchmarked against comparable forecasts, for instance using reference class forecasting as described in the previous section. For publicly funded projects, forecasts, peer reviews, and benchmarkings should be made available for public scrutiny, including by the media, as they are produced, including all relevant documentation. Public hearings, citizen juries, and the like should be organized to allow stakeholders and civil society to voice criticism and support of forecasts. Knowledge generated in this way should be integrated in project management and decision-making. Scientific and professional conferences should be organized where forecasters would present and defend their forecasts in the face of colleagues’ scrutiny and criticism. Projects with inflated benefit–cost ratios should be reconsidered and stopped if recalculated costs and benefits do not warrant implementation. Projects with realistic estimates of benefits and costs should be rewarded. Professional and occasionally even criminal penalties should be enforced for managers and forecasters who consistently and foreseeably produce deceptive forecasts (Garett and Wachs, 1996). When I first began suggesting, in lectures for project managers, promoters, and forecasters, that deception and criminal penalties may be concepts relevant to our professions, I would get headshakes, sighs, and the occasional boo. Enron and Iraq changed that, almost overnight. Today people listen and the literature has become replete with books and articles that hammer out the links between lying, forecasting, and management. For instance, a recent book about risk, the planning fallacy, and strategic misrepresentation bluntly states: ‘Anyone who causes harm by forecasting should be treated as either a fool or a liar. Some forecasters cause more damage to society than criminals’ (Taleb, 2007, p. 163). Law-making has followed suit, most prominently with the 2002 Sarbanes–Oxley Act, which stipulates up to 20 years in prison for a knowingly false forecast intended to impede, obstruct, or influence the proper administration of affairs. There is little doubt that penalties like this influence behaviour. The point is that malpractice in project management should be taken as seriously as it is in other professions, e.g. medicine and law. Failing to do this amounts to not taking the profession of project management seriously. (ii) Competition and market control In order to achieve accountability via competition and market control, the following would be required, again as practices that are both embedded in and enforced by the relevant institutions. The decision to go ahead with a major infrastructure project should, where at all possible, be made contingent on the willingness of private financiers to participate without a sovereign guarantee for at least one-third of the total capital needs.7 This should be required whether projects pass the market test or not—that is, whether projects are subsidized or not or provided for social justice reasons or not. Private lenders, shareholders, and stock-market analysts would produce their own forecasts or conduct due diligence for existing ones. If they were wrong about the forecasts, they and their organizations would be hurt. The result would be added pressure to produce realistic forecasts and reduced risk to the taxpayer. Forecasters and their organizations must share financial responsibility for covering cost overruns and benefit shortfalls resulting from misrepresentation and bias in forecasting. The participation of risk capital would not mean that government reduces control of major infrastructure projects. On the contrary, it means that government can more effectively play the role it should be playing, namely as the ordinary citizen’s guarantor for ensuring concerns about safety, environment, risk, and a proper use of public funds. Whether infrastructure projects are public, private, or public–private, they should be vested in one and only one project organization with a strong governance framework and strong contract-writing skills. The project organization may be a company or not, public or private, or a mixture. What is important is that this organization has the capacity to (i) set up and negotiate contracts that will effectively safeguard its interests, including in equity risk allocation, and (ii) enforce accountability vis-`a-vis contractors, operators, etc. In turn, the directors of the organizationmust be held accountable for any cost overruns, benefit shortfalls, faulty designs, unmitigated risks, etc. that may occur during project planning, implementation, and operations. Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. 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