Budget Revelations About Olmsted A Shocker

The Waterways Journal
20 February 2012
WJ Editorial

The presidents 2013 budget leads the river industry to believe that the Olmsted Lock and Dam project may never be finished. It could stop progress on other projects as well.

Olmsted was authorized in 1988 at a cost of $775 million with a seven-year construction period. The new price tag is more than $2.9 billion, and the government has added 10 years to the construction schedule. As late as last year, the price tag for Olmsted had risen to $2.1 billion. Now. it is $2.9 billion.

This development leads industry leaders to believe that "there will be no meaningful investment in modernization of our aging inland waterways infrastructure for a decade, or more. if Olmsted continues down its current path."

Shakespeare was using a Bible reference when he wrote. "Neither a borrower nor a lender be."

Government has blown the borrowing admonition completely out of the water. Perhaps more applicable is the statement Jesus made to the apostles about counting the cost. He suggested that they evaluate the issue and make sure they could finish the course.

The biblical admonition was apparently ignored totally when it came to Olmsted. We know Olmsted was being constructed under experimental methods. But the Corps knew that, too. They have modern computers, models, and calculators to help them figure out various project elements. It took from 1904 to 1914 to build the 18-mile long Panama Canal. Most likely calculations were done by pencil and brainpower. The builders of the Empire State Building bought the site in 1929 for $16 million and opened the 102-story building in May 1931.

Readers can find elsewhere in this issue detailed information about what this budget revelation means to America's economy. But it is pertinent to the issue that the U.S. has billions of dollars worth of backlogged projects, many of which have been gathering moss for decades simply because of poor planning and financing techniques. Some have been deauthorized because the original reason for construction no longer exists. Every businessman worth his salt knows about "counting cost." Those who don't know have great potential for failure.

Needless to say, Waterways Council Inc. is unhappy over this budget revelation and is reacting to the delay and increase in the price tag. The overall leap from $775 million in 1988 to $2.9 Billion today is a big jump. WCI says that under the current plan, "there will be nothing for the authorized projects on the Upper Mississippi River, no investment for the Illinois, the Ohio, the Tennessee. the Cumberland. the Monongahela. or any other construction on any other part of the system."

What is it that the federal government does not understand about the importance of water transportation to the economic well-being of the nation?

According to WCI, "The national economy will lose $700 million per ear in benefits foregone by the delay in the Olmsted project alone, as estimated by the Corps' own economists. Our nation will be placing a risky 10-year bet iii relying on the 'Roaring 20s'-era facilities at Locks 52 and 53, which Olmsted was to have already replaced."

Bungling this project is a tremendous burden on industry. which pays 50 percent of the cost of construction plus a similar share of cost overruns.

Some time hack, industry recognized that the governments present business model "is broken and that we do not have an efficient way to construct lock and dam projects." WCl reminds us that the navigation industry, along with Corps of Engineers experts, developed the Inland Waterways Capital Development Plan to address these deficiencies and cap cost overruns. "If this plan were to be used, it would deliver 25 projects in the next two decades instead of the six that will be completed under the current process." developers of the plan said. Interestingly. WO points out, "Panama is proceeding toward completion of six Olmsted-sized major lock expansions in 2014. below budget and ahead of schedule."

As for Olmsted. WCI says Congress must decide whether the experimental methods being used at the construction site should continue or whether they should return to traditional methods and bring the cost back under control. "At minimum," writes WCI, "Congress must act to relieve the Inland Waterways Trust Fund from further obligation to the Olmsted project."