Monday, October 6, 2008

Free Enterprise Works: The New I-35 Bridge

This is the first post in the series "Free Enterprise Works," which celebrates success stories based on free markets and well-designed economic incentives. The first post is about the new I-35 bridge in Minneapolis.
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According to this article in Popular Mechanics, the construction of the new I-35 bridge in Minneapolis has set a new standard for public works in the country (HT Perry). The factors behind the project success are really simple: government reliance on free enterprise and smart economic incentives:

After the I-35W bridge collapsed last year, experts doubted that its replacement, the St. Anthony Falls Bridge, would open by the Christmas Eve 2008 deadline. Instead, the next-gen bridge opened several months early. ... The new bridge should set an example for urban planners everywhere.

... FIGG, Flatiron and Mason pulled off the improbable, and delivered a new bridge in what appears to be an unprecedented time frame. Along the way, the company drew wide praise from infrastructure experts and fellow designers and contractors, employing as much innovation in its construction techniques as in its project management. Construction began well before the final design was completed, with teams of contractors working 12-hour shifts in brutal subzero temperatures. Three of those teams would drill shafts at the same time, instead of one. When conditions on the ground necessitated a shift in the overall bridge design, FIGG made the adjustments on the fly. By shaving off more than three months from the Christmas Eve deadline, FIGG, Flatiron and Mason have earned themselves a hefty bonus.

Their contract with the Minnesota Department of Transportation stipulated an extra $7 million if the bridge opened on time. An earlier opening would mean another $2 million for every ten days before December 24th, with a maximum of $20 million (plus the on-time award of $7 million) if cars were rolling across the St. Anthony Falls Bridge on September 15th. The deal was a doubled-edged sword: If the bridge opened late, the team would lose $200,000 per day. At press time, the Minnesota Department of Transportation had yet to announce the final bonus, but it seems likely that the team will receive either $25 million, or, provided there's enough good will to forgive a few short days, the full $27 million. However that decision shakes out, the larger world of infrastructure is enjoying a rare piece of good news, and a structure that represents the best the industry has to offer. From the history-making pace of construction to the sensors embedded deep in its frame, here's what the St. Anthony Falls Bridge can teach us about building the next generation of American bridges. ...

With millions in bonus dollars on the line, the fact that Figg, Flatiron and Manson asked the Minneapolis community to contribute to the design of the new bridge was unexpected. Even more surprising, though, is that they actually listened. Within two weeks of getting initial approval for the project, the St. Anthony Falls team held a community meeting to discuss specific design elements. A design committee made up of residents from the community and elected and appointed officials voted on many of the bridge's design elements, including the open railings and the transition from the bridge itself to the attached roadways. But in keeping with the overall strategy of nimble, concurrent development, while these and other details were being hammered out, construction on the foundations of the structure had already begun.

The result is a new kind of infrastructure culture, where new ideas are folded into the larger work-in-progress, and no one is waiting for one element to be finished before drawing up plans for the next. And the final product is something that wasn't agreed to in a backroom, or paid for, sight unseen, by a community already rattled by recent tragedy. It was an effort that incorporated decisions from the people who will be driving across it on a daily basis.

Perry summarizes it all:

As economist Steven Landsburg reminds us, "Most of economics can be summarized in just four words: People respond to incentives. The rest is commentary."

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