Florida Gov. Rick Scott (R) just rejected the $2.4B federal grant to build a high speed rail link from Tampa to Orlando. The grant was supposed to cover 90% of the project costs.

Why the rejection? He believed the costs would over-run and if the project was cancelled later, FL would have to repay all the upfront costs to the Federal Government. That’s what happened in NJ with the rail tunnel to Manhattan. The Governor also felt the rider and revenue projections were too optimistic, which would lead to operating losses.

Governors in Ohio and Wisconsin also recently turned down over $1B of federal grants for high speed rail projects. As I’ve written before, the inability of our industry to deliver projects on time and budget certainly hurts us. Firms that develop contracting methods and histories of successful projects have great opportunities to prosper.

The other interesting aspect of these rejections involves the failure of the top down funding mechanism. The Federal Government wants these sexy high speed rail projects, whether the locals really need them or not. Deciding what projects should be developed is a difficult process.

I’ve worked with many commercial developers and helped them through that decision making matrix. After all the analysis, it always seems to come down to the decision maker’s gut feelings. Almost all those projects were successful for the developer/owner. I don’t know how that gut decision making, that comes partly from having some skin in the game, could be passed onto government. Any ideas?