Handelsblatt auf Englisch
Germany's Unfinished Business

A new study shows that Germany wasted about €59 billion on avoidable mistakes over four decades while building public infrastructure. Early planning mistakes, incompetent management and a shocking lack of data and best practices are to blame.
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Germany is a country that tends to splash out big on publicly funded building projects – over the past four decades, it has spent an estimated €200 billion, or $226 billion, building new airports, installing wind turbines and solar energy farms and digitizing many functions of the federal government. But 30 percent of that tab, about €59 billion, was spent on cost overruns, most of which could have been avoided if planners, contractors and supervisors had done their jobs properly, according to a new study by Genia Kostka, professor of governance of energy and infrastructure at the Hertie School of Governance, a business school located in Berlin.

Ms. Kostka and her researchers looked into 170 infrastructure projects in Germany financed at least in part by taxpayers between 1960 and 2014. Almost a third of these projects are still underway.

On average, they found that completed projects had exceeded their original budgets by 73 percent, and “the cost of the projects which are still unfinished is likely to go up before completion,” she said.

The Elbe Philharmonic Hall, a dramatic musical venue being built on a peninsula jutting into the Elbe River in Hamburg, easily beats this baseline.

The concert hall under construction in the historic northern German port is almost 150 percent over budget. The euphoria over the prestigious showpiece quickly faded when the price rose from an originally projected €352 million to currently €865 million.

With the explosion in expense came delays: Originally to be completed in 2010, the Elbe Philharmonic Hall is now projected to open in 2017, taking three times longer than planned.

Another German prestige project not only cost much more money than planned but cost one of the country’s aspiring political leaders his job: Berlin’s former mayor, Klaus Wowereit, whose career was brought to a screeching halt by the notorious Berlin Brandenburg International Airport, or BER.

The unfinished airport, designed to be a symbol of German efficiency, innovation and modernity, has become an embarrassing, costly reminder of the opposite. Its costs have more than doubled, from €2.5 billion to a projected €5.4 billion ($2.7 billion to $5.9 billion).

A hulking, empty shell located southeast of the German capital, the airport, to be named after the former chancellor Willy Brandt, has been plagued by management ineptitude and corruption. Its owners – the city-state of Berlin, the surrounding state of Brandenburg and the German federal government – have refused publicly to commit to a final opening date.

Originally scheduled to begin operations in 2012, the airport is now tentatively set to open in 2017.

Shortly before the initial opening in 2012, the airport’s overseers, including ex-Mayor Wowereit, were forced to put the project on hold after learning that a complicated, expensive ventilation system for the main terminal building designed by a German architect did not function.

The computer-guided system was supposed to automatically close the terminal’s fire doors and suck smoke out of the building through a complex, expensive underground ventilation system, which had been installed improperly.

Safety inspectors ordered a stop to the opening and in the ensuing investigation, it emerged that many building contractors had used sub-standard methods when wiring the ventilation system, which now has to be removed and rebuilt at additional cost before the terminal can finally open.

The airport has provided a constant stream of embarrassing visual reminders of the failure of one of Germany’s largest public sector projects. An empty subway car is driven through the vacant facility regularly to move the air in the station to discourage mold. The lights were left on in the main unfinished terminal building for almost a year because no one could find the off switch.

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