If you will look at the right-hand column over here you will find the percentage year-by-year; first, the difference between the authorization estimate (based on survey reports) and the estimate in support of the first construction appropriation, an increase of 39.3 percent. Then from that point, to fiscal year 1950 the cost went up to 110.1 percent; and then from fiscal year 1950 to fiscal year 1951 it went up to 116.5 percent. As of this year, with the civil-functions bill now pending, the increase has been 124 percent over the authorization estimate, and the authorization estimate was weighted Mr. KERR. This covers all projects? Mr. DONNELLY. Yes, sir. The authorization estimate was weighted as of 1937. Now, if you will notice the table at the top on the right-hand side, alongside that 124 percent, you get the present cost of the projects, which is $5,912,451,000. That is quite an increase over the authorization estimate, which was $2,638,517,000. Now, the cost for these projects today, that this committee just voted on Mr. KERR. How long has this project been under way? Mr. DONNELLY. This is the whole 182, Judge. The survey reports showed $2,638,517,000. Then it has increased 124 percent to the cost this year for the whole 182 projects of $5,912,451,000. We have an analysis of the reasons for all this increase. It is shown on this sheet. You see, I think, that there are areas where improvement in planning can be made so that this committee will have the benefit of better information, upon which to vote. Mr. KERR. A large percent of that increase, though, is due to the increase of the cost of material and cost of labor; is that not right? Mr. DONNELLY. Exactly. It is right down here at the bottom. We have it broken down. Gentlemen, if you will look at the bottom on the righthand side you will see that the increase in cost for the projects due to pricelevel changes is 71.6 percent, which is a large increase. Then you have the next item, authorized project extensions, a 21.8 percent increase. Now, with respect to those two categories we need not have any further concern. The rise in prices follows generally the Engineering News Record Index, which is published monthly by the engineering profession. That gives a key as to the rise in construction costs. The authorized project extensions are those either specifically authorized for an individual project or those which are the result of general authorizations, such as the act of Congress requiring that power consideration be given. But the big things to consider are the next four percentages in the lower right-hand corner over here, which add up to $800 million and which represent money that could be saved, perhaps, if better planning were had. Mr. Chairman, you will see here that this is the increase for the whole 182 projects. It is a 124 percent increase, from $2.6 billion to $5.9 billion. The increase in dollars is $3,273,000,000. We have broken this down into price changes, 71.6 percent; and authorized project extensions, 21.8 percent. I do not think we should concern ourselves further with those. The first is the price change as a result of economics, and the second is due to acts of Congress. Then you have the categories of changed local needs or situations, structural and engineering modifications, unforeseen conditions, and inadequacy. Those four total $800 million of the increase, or 30.6 percent of the tremendous increase in the cost of these projects. (Discussion off the record.) Mr. DONNELLY. The increased cost of individual projects has a direct and important bearing on their economic justification as stated in the benefit-cost ratios. This is particularly true since the benefitcost ratio on many projects is just a shade above the minimum prescribed by statute. In 110 projects which the corps reported to this committee in the April 1951 hearings, the ratio on 87 projects was between 1.0 to 1 and 1.9 to 1. A table listing this data (which appeared on pp. 778-80 of the April hearings) is as follows: HEARINGS IN APRIL AND MAY 1951 BEFORE SUBCOMMITTEE ON ARMY CIVIL FUNCTIONS OF HOUSE APPROPRIATIONS COMMITTEE Illinois waterway (exclusive of Calumet-Sag Channel). Mississippi River between Missouri River and Minneapolis, Minn. Iowa: Missouri River from Kansas City, Mo., to Sioux City, Iowa.... 39, 825,000 173, 108, 300 10, 400, 000 New Jersey: $42, 208, 000 1. 13 40, 225, 000 1. 13 20,843, 000 1.07 4,300,000 1.21 10, 300,000 2.40 3,276,000 1.30 24, 131, 000 1.69 (2) 1.22 1.50 1.87 1 Benefit-cost ratio shown is for peacetime conditions in reach between St. Johns River and Cape Cana veral (Cocoa, Fla.). The project was authorized primarily to afford a protected inland waterway during wartime. The benefit-cost ratio shown would be multiplied many times in event that a protected route is again needed for water shipments on Atlantic seaboard. 2 Not evaluated. 1 For basin plan. Annual cost and benefits not computed for separate units at this time. 2 For 3-reservoir plan. 3 For basin plan for flood control. BENEFIT-TO-COST RATIO OF PLANNING PROJECTS RIVERS AND HARBORS Planning, fiscal year 1952 Project Alabama: Alabama-Coosa Rivers, Ala. and Ga.: Howell Mill Shoals Dam, Ala. Ohio River locks and dams: Greenup lock and dam... Cumberland River, Ky. and Tenn.: Lower Cumberland locks and dam..... Ohio: Ohio River locks and dam: New Cumberland lock and dam COST INCREASE DUE TO OMISSIONS IN ENGINEERING PLANNING Mr. DONNELLY. Now, members of the committee, so that you will have the detail for this increase that I spoke of for those four categories totaling $800 million, let us talk first about inadequacy. Inadequacy is the category of omission in the engineering planning. You will find of the 182 projects in the current program that on 48 of the projects the corps had omissions of engineering estimates in excess of 10 percent. The omissions start as high as 217 percent errors in engineering planning, and they run down through the 48 projects to 10.6. The total increase due to this omission in engineering planning is $175,914,140. This is shown by the following table: |