28 February 2005

The Stunnel is feasible! - updated

But only with government money. Which means it isn't really feasible at all.

You read it here first and NOT at a cost of a $100, 000 of public funds.

The pre-feasibility study is finally in the public domain, courtesy of a provincial government release today.

The highlights:

- The link can be built. (Engineers can reinstall the backside in a cat given enough time and money.)
- A bored tunnel running an electric train system (a variation on the Keirans Stunnel concept) is the one that can be built easily and most cheaply.
- The Stunnel would cost an estimated $1.7 billion to build.
- The Stunnel would take 11 years to bore.
- The annual operating cost would be $7.4 million dollars.
- The Stunnel would require a government investment of $1.4 billion to build. (That's 82% of the total project cost, in case your calculator is on the fritz.)

Now here are a couple of observations:

1. The Premier was pretty quick to dismiss the idea of going to Ottawa looking for cash for this project of tremendous significance. That's because he knows his approach to the Atlantic Accord burned a lot of previously fixed links to Ottawa that need to be rebuilt.

2. The consultants report (Chapter 7) makes it pretty clear that there is no business case to be made for the Stunnel, hence the requirement for public sector spending instead of a private sector initiative.

The consultants admittedly optimistic projections are based on an assumption that existing sea-based links to the mainland will continue and will retain a competitive advantage in some instances.

Surface ferries will still have to be used both at Port aux Basques and in the link to Labrador. Both services require provincial and federal government subsidies in order to operate.

Here's a great quote from the conclusions chapter (p. 127) couched in the very best bureaucratese:

"The analyses, developed by considering traffic diversion from existing services, growth in service and facility demands, the impact of both construction and operating jobs, and the inclusion of potential revenue from incorporating electrical transmission cables in the tunnel, showed that a fixed link would not attract private sector financing under normal economic and business case criteria. Using relatively optimistic diversion and growth assumptions resulted in negative rates of return and less than unity cost benefits ratios over the period of the study. This result, however, may be considered not atypical in the realm of public transportation infrastructure." [Emphasis added]

Pay close attention to those highlighted words.

- "Negative rates of return" is code for money loser.
- "Less than unity cost benefits ratios" means, in plain English, that there is no reason on God's green Earth to sink money into this idea - the costs outweigh the benefits.

Consider that the consultants apparently did not include subsidies to existing surface ferries in their calculation of annual Stunnel operating costs when they reached their conclusion.

For those who missed it, go back and have a look at my previous post on this issue. My version may not be as pretty, costly or lengthy, but it winds up in the same spot.

Outside the box: The Stunnel

And, as before with the Atlantic Accord, remember that you read it here first!


Here's the CBC story on the Premier's comments. Apparently, he thinks the price is reasonable.

Uh huh.


Try reading Chapter 7, Premier.

Surely your old business senses would cut in here and warn you that this project might just be feasible (in an engineering sense like arses back in domestic felines are "feasible") but that it might not be practical or even sensible.

Something tells me that if we were talking about the Premier investing his own cash in this venture the words "negative rates of return" would be enough to convince the Premier this entire scheme is anything but reasonably priced.

Perhaps the Premier used that phrase after looking at the chart the consultants provided in Chapter 8 on other similar projects. The Confederation Bridge for example only cost $1.0 billion dollars.

Sheesh. Ours isn't that bad by comparison.

Then there are a string of road construction projects - surface roads (!!!) - and a 152 metre bridge in Manitoba. That one only cost $15 million. Interestingly the cost per kilometre is the same as for the Stunnel, as proposed.

Then they mention the Chunnel between France and Great Britain. 21 kilometres long. Between two economic powerhouses. Estimated at one point to cost 7.5 billion pounds sterling; final cost more than 16 billion pounds sterling. (For those sans abacus that's more than double the original estimate. )

Now compared to that, the bored Stunnel would be reasonable and something worth pursuing. After all, we can surely learn the lesson from the Brits and the French.

Are there other projects?

Oh yes. But not in the consultants report.

Take for example, the Big Dig - Massachusetts Turnpike Authority's rebuilding of Boston commuter traffic for a mere $15 billion and a decade's worth of work.

Btter yet, here's a site for Bent Flyvbjerg, the Danish social scientist who examined megaprojects in a recent book.

Among his conclusions (surprise, surprise):

- Cost overruns for megaprojects of 50% are common and 100% are not uncommon.
- Claimed benefits never appear.
- Environmental and other problems are seldom as minor as proponents claim.

All I can do is point everyone back to Chapter 7 of the consultants' report on the Stunnel.

The provincial and federal governments just spent more than $100, 000 to buy the same conclusion reached in a book that could be bought at Chapters for the reasonable price of CDN$20.96.