Disastrous Public Works Projects: A History of Political Deception in Germany

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Berlin's airport debacle is turning into what seems like a never-ending scandal, with critics worrying the capital city has seriously damaged its image. But it's not the only place in Germany that has seen projects plagued by delays and exploding costs.

Hamburg's iconic Elbphilharmonie will cost almost double what was originally planned. Zoom
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Hamburg's iconic Elbphilharmonie will cost almost double what was originally planned.

Germany, respected around the world for its famed efficiency, quality construction and world-class engineering, is taking a beating to its reputation this year, with major problems plaguing a number of major public projects.

Whether it's the dazzling new train station in Stuttgart, Berlin's stylish new airport or Hamburg's stunning new concert hall, major public infrastructure projects often look great on paper. The costs appear to be bearable and politicians seem euphoric when they present their grand plans, emphasizing how they will change the region. And of course they won't take very long to build, either, they say.

But then one deadline gives way to another. Burdened by protests, requests for costly extras or other demands, the train stations, rail lines, airports and even concert halls still haven't been built. Costs rise -- doubling or even quadrupling. The people are outraged and a city's entire reputation can suffer, as has proven to be the case in Berlin with the failure to complete the city's new international airport. Politicians are always happy to tout the success of completed projects, but if problems creep up in their construction, few are willing to take any responsibility.

In many instances, the false calculations are deliberate. Werner Rothengatter, a researcher at the Karlsruhe Institute of Technology, has studied major public works projects around the world. He says there's a similar pattern in democratic societies, where politicians have a tendency to deceive the public about the actual costs of these projects.

Rothengatter argues that cost overruns rarely come as a surprise -- regardless of whether they are from the Berlin airport or Hamburg's new Elbphilharmonie concert hall. During his research, he found that most politicians try to calculate the price to be as low as possible in order to obtain support for the projects -- deliberately veiling the potential risks.

"Those who provide honest estimates for projects from the very beginning have little chance of getting them off the ground," Rothengatter claims. Often those at the political helm take a calculated risk by assuming they won't be held personally responsible if the costs start to explode.

In a 2009 study, "Survival of the Unfittest: Why the Worst Infrastructure Gets Built," Danish researcher Bent Flyvbjerg of Oxford University argued that it often isn't the best projects that are completed, but those that "are made to look best on paper." Those, of course, are projects that "amass the highest cost overruns and benefit shortfalls."

Politicians Lack Expertise

An additional problem is that the supervisory boards overseeing these projects are often filled with politicians who have no expertise when it comes to major infrastructure projects, as evidenced in the case of the Berlin airport, where both Mayor Klaus Wowereit and Brandenburg Governor Matthias Platzeck (whose state is also a shareholder) are board members. But the administrators who are actually responsible for the day-to-day work on these projects are often hopelessly overextended.

Why, then, do amateurs take on these massive projects?

The reason is simple: Politicians are afraid of hiring general contractors to run the projects. Professionals are able to set a firm price, but it is often a much higher one than politicians would be able to sell to their constituents. In the case of the Berlin airport, it was put out to bid twice because the lowest offer during the first effort came in at 70 percent higher than the €620 million ($817 million) that Berlin, Brandenburg and the federal government were prepared to shell out. In the end, the government bodies opted to assume management responsibility for the project themselves. The cost of the terminal alone now is estimated to be at least €1.2 billion.

In that sense, nothing has changed over the years. In his study, Flyvbjerg concluded that deception when it comes to costs has been persistent in most of the countries studied over the past 70 years. From the very beginning costs are underestimated and benefits overestimated. Cost explosions occur most frequently on rail projects, with Flyvbjerg estimating that such projects end up costing, on average, 45 percent more than planned.

Germany is currently experiencing considerable problems with a number of major public works projects. SPIEGEL ONLINE has provided thumbnails of the biggest.


Germany's Foreign Intelligence Headquarters

An aerial photo of the construction site of the new BND headquarters in Berlin Zoom
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An aerial photo of the construction site of the new BND headquarters in Berlin

The country's BND foreign intelligence service has been planning to move from Munich to Berlin since 2003. The original cost of its new headquarters was estimated to be around €500 million. The complex has been under construction since 2006, but costs today have already risen to €912 million. But construction alone isn't the only cost to be considered in moving the intelligence agency to the capital city. Factoring in other expenses for the move, the government is calculating total costs to be €1.4 billion.

Leipzig's City Tunnel

Construction workers inside the Leipzig City Tunnel: Will they complete building this year? Zoom
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Construction workers inside the Leipzig City Tunnel: Will they complete building this year?

If you visit downtown Leipzig these days, you'll come across a massive construction zone near the main train station. It's all part of the city's new 1.5 kilometer (0.93 miles) City Tunnel, designed to move commuter trains more quickly through the city's Central Station, which is a terminus station. The project was supposed to be completed in 2009 at a cost of €572 million. Instead, it will cost €960 million and open at the end of 2013 at the earliest. Many critics had warned from the very beginning that the project would be too expensive.

The Berlin-Brandenburg Airport (BER)

After a series of construction errors, no date has been given yet for the opening of Berlin's new international airport. Zoom
DPA

After a series of construction errors, no date has been given yet for the opening of Berlin's new international airport.

Arguably the biggest snafu of all in Germany these days is the Berlin Brandenburg Airport (BER). After reunification, it became clear to local leaders that instead of three airports (two in the west and one in the east), the city just needed one large one. In 1996, the city-state of Berlin reached a deal with the state of Brandenburg and the federal government to build an airport that would be financed and operated exclusively by private investors. Following legal disputes and planning problems, Mayor Klaus Wowereit abandoned the original plan, and instead the city, state and federal government became shareholders and took over planning and construction of the airport. By the time construction was approved in 2006, costs were estimated to be about €2 billion. Once again, the airport operator opened construction up to a bidding process, but the concrete prices offered were too high. Instead, the partners sought to have the terminal built on their own, with a planned opening date of October 2011. It has since been delayed four times, with officials citing problems with the elaborate fire safety system. A new date hasn't been given for its opening, but it won't be before 2014. In the end, the airport will cost at least €4.3 billion. Meanwhile, companies like Air Berlin, Germany's second biggest airline, are suing for lost revenues.

Stuttgart 21

At least €2.3 billion in cost overruns are creating problems for the Stuttgart 21 train station project in the city of the same name. Zoom
DPA

At least €2.3 billion in cost overruns are creating problems for the Stuttgart 21 train station project in the city of the same name.

In the capital of the state of Baden-Württemberg, the Stuttgart 21 project was supposed to transform the city's terminus into a modern underground through station. The project's planner, German national railway Deutsche Bahn, originally estimated total costs to be €2.5 billion. In 2008, the state's then-governor said costs had risen to €3.1 billion, but the project had been "planned solidly." Just a few months later, federal auditors estimated the project would cost "clearly more than €5.3 billion." In 2009, the city, state and federal governments agreed to a ceiling of €4.5 billion. By December 2012, however, it became clear that costs could soar to €6.8 billion, assuming the station goes into operation, as planned, by 2021. Deutsche Bahn executives claim it will cost a maximum of €5.6 billion and that the company will cover the bill.

However, the company said there are also €1.2 billion in "external risks" caused by mass protests against the project and changes made to accommodate critics. It is still unclear who will pay that bill. So far, city and state officials are refusing to cover those costs.

Hamburg's Elbphilharmonie Concert Hall

Hamburg's Elbphilharmonie concert hall was supposed to open in 2010. Now it will stage its first concerts in 2017 at the earliest. Zoom
DPA

Hamburg's Elbphilharmonie concert hall was supposed to open in 2010. Now it will stage its first concerts in 2017 at the earliest.

New York has the Statue of Liberty, Paris has the Eiffel Tower, and Berlin has the Brandenburg Gate. In Hamburg, the city would like its new symphony hall, the Elbphilharmonie designed by Swiss architects Herzog and de Meuron, to be its most identifiable landmark. The structure, proudly located at the western end of the tony new HafenCity district along the Elbe River, also includes 45 luxury apartments, a parking lot and a five-star hotel. The city hired a consortium under the leadership of German construction giant Hochtief to do the job in 2007. A firm price of €241 million had been agreed to at the time, with the city of Hamburg liable for €142 million. The concert hall was slated to open in 2010, but the building is nowhere near complete today. The construction site sat still for nearly a year as the city, Hochtief and the architects fought over costs, safety concerns and the delays. At the end of 2012, Hochtief and the city agreed to a new price tag: €575 million. It is still unclear how much of that bill taxpayers will end up paying. At the soonest, the city's symphony will take to the stage in its glitzy new home in 2017.

Cologne's North-South Subway Line

The construction site of Cologne's new north-south subway line. Zoom
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The construction site of Cologne's new north-south subway line.

Problems related to the construction of a new subway line in Cologne are equally as notorious as those pertaining to Berlin's airport. Construction of the city's new line began in 2004, but the project has been afflicted with major and deadly problems. Part of the tunnel collapsed in 2009, taking the city's archive building and many of its historical documents and artifacts with it. Two people died in the incident and it caused about €1 billion in damages. So far, no party has been blamed for the accident.

In 2000, the estimated cost for the project was €600 million, but today it has soared to €1.04 billion. Part of the line has already opened, but no date has been given for when the entire route will be operational, and it could be 2019 or even 2022 before it is. City planners have potentially bigger worries this week. The part of the line that opened in December runs right next to Cologne's landmark cathedral, a UNESCO World Heritage site. Church officials claim trains running along the line are causing the massive structure to vibrate. "It cannot be ruled out that the (vibrations) could cause long-term damage to the structure," church Provost Norbert Feldhoff warned.

Munich's Second Commuter Rail Tunnel

Munich is planning a second tunnel through the city center to help relieve a bottleneck of S-Bahn commuter trains. Zoom
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Munich is planning a second tunnel through the city center to help relieve a bottleneck of S-Bahn commuter trains.

For years, officials in Munich have been debating the best way to alleviate the bottleneck occurring in the tunnel on the city's suburban railway line between the city's central and Ostbahnhof stations. In November, the city, the state of Bavaria and the federal government reached an agreement to build a second tunnel that would go into operation by 2020. At the time, the costs were estimated to be €2.047 billion. This time, officials added a €500 million buffer to address any cost overruns. But an internal paper from September 2012 suggested project costs had already risen to €2.433 billion, a sum that would consume a good chunk of the additional funding. Documents relating to the permit-issuing process assume the tunnel will first be completed in 2021 or 2022. The state government has been outraged by the increase, but planners say they are just providing "an extremely conservative estimate" in the event of delays in construction or receiving permits, and possible legal issues.

Berlin's Stadtschloss Palace

Current financing for Berlin's Stadtschloss palace doesn't even include funding for the historically accurate reconstruction of the structure's cupola. Zoom
dapd/ Humboldtforum/ Franco Stella/ Stiftung Berliner Schloss

Current financing for Berlin's Stadtschloss palace doesn't even include funding for the historically accurate reconstruction of the structure's cupola.

In Berlin, the city is planning to rebuild its historic Stadtschloss, the palace that was badly damaged during World War II and later razed in 1950 by East German authorities. The project has long been the subject of controversy because of its cost and the suggestion that Berlin is looking to the past, rather than its future. The structure, to be named the Humboldt Forum, is to house works from the city's collection of art and historical artifacts. Agreed to in 2007, the palace was scheduled to rise again by 2012. Instead, it has been plagued with delays and soaring costs. Costs were initially estimated at €552 million in 2007, but the German federal parliament has already approved €590 million. But experts warn that the palace will cost considerably more, in part because the historically accurate reconstruction of the palace's cupola has not been factored into the financing plan.

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