Wasted Money

I’m curious about something. About a decade ago the LA Community College District floated a series of massive bond issues for building construction. Gale Holland and Michael Finnegan of the LA Times spent 18 months looking into how that money has been spent, and the last of their 6-part series on the building projects is in today’s paper. They document boondoggles galore, including some extremely timely questions about the widespread use of politically connected “body shops” who paid the salaries of consultants at seemingly indefensible markups.

But here’s what I’m curious about. The district has so far spent $2.6 billion on its construction program. I went through all six parts of the Times series, and if I added things up correctly, they identified about $100 million in wasted money of various kinds. That’s about 3.8% of the total.

So is that good or bad? Serious question. If someone told you that a public agency was embarking on a multi-billion dollar building project, and in the end about 96% of the total would end up being used properly and 4% would end up wasted, would you consider that a decent outcome or not? In any big project like this, how much waste should you reasonably expect, once all is said and done?

UPDATE: I added a bit of this in comments, but just to clear up a couple of things…..

Yes, that $100 million is only what the Times uncovered. Maybe there was more. On the other hand, all I did was add up all the numbers in the series, and some of it might not really count as waste. Sometimes construction projects go over budget for perfectly defensible reasons. So that $100 million number could be either high or low.

Oversight of public programs like this is important, and I think the Times series was terrific. I’m glad they were willing to spend the resources on it. Still, whenever I see a piece like this, I automatically think in terms of percentages. Horror stories are worth telling, but I still want to know what the total damage is, and I want to know how that compares to other similar programs. After all, construction projects are famous for running into problems and going over budget, and you’d be foolish not to expect any of that in any big building program. But stories like this never seem to provide that kind of comparison, and it’s one that I think is important.


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