Beaver Stadium reconstruction thread
- Thread starter Tom McAndrew
- Start date
It looks impressive from the videos. Oklahoma refers to its stadium as the Palace on the Prairie, but Beaver Stadium is going to be a true football palace when everything is completed, and it certainly should help this program both on and off of the field.
Beaver stadium is always going to be somewhat of a dump. But, having said that, it will now be a dump with a well to do zip code.
It will be cool to see it come together in the next couple of months. PSU has trealky stopped hyping the project, no videos in months.
“If we stop talking about it, hopefully people will stop asking about the cost. Let the overruns fly.”
People keep talking about over runs like they are a condition that is entirely preventable. Inflation on materials is real, and any renovation has issues mixing old with new. Over runs should be expected with what happened to supply chain in last 15-18 months. I would love to hear % and where they occurred, maybe an explanation..,“If we stop talking about it, hopefully people will stop asking about the cost. Let the overruns fly.”
Key Findings of the Flyvbjerg Studies
Key Causes Identified
Other Famous Studies and Data
Examples of Famous Overruns
- The "Iron Law": Over 90% of megaprojects experience cost overruns, overruns of up to 50% are common, and over 50% are not uncommon.
- Magnitude of Overruns: The study found an average cost overrun of 28% for transportation infrastructure projects.
- Persistent Failure: Data over 70 years indicates that cost estimates have not improved and overruns have not decreased over time.
- "Fat Tail" Risk: Outlier projects can exceed budgets by over 1,800%, with roughly 91.5% of projects going over budget, over schedule, or both.
Cato Institute +4
Key Causes Identified
- Optimism Bias: Project planners often underestimate costs and overestimate benefits due to a psychological tendency to believe things will go better than they actually do.
arXiv +3 - Strategic Misrepresentation: The study argues that overruns are not merely errors, but often deliberate underestimation by planners to get projects approved (lying).
Project Management Institute +1 - Lack of Accountability: Because projects are often approved based on inaccurate forecasts, there are few incentives to produce accurate estimations.
Other Famous Studies and Data
- McKinsey & Company: A study conducted with the University of Oxford found that half of all large IT projects (over $15 million) blow their budgets, running an average of 45% over budget while delivering 56% less value.
McKinsey & Company +1 - The Standish Group (Chaos Report): Frequently cited for showing that only a small fraction of large software projects are completed on time and on budget.
Wikipedia +1 - Merrow (1988) / Independent Project Analysis (IPA): Found that large-scale industrial projects are frequently "out of control," with high rates of cost and schedule overruns.
Project Management Institute +4
Examples of Famous Overruns
- Channel Tunnel: 80% over budget.
- Boston’s "Big Dig": 220% over budget.
- Sydney Opera House: 1,400% over budget.
- NASA's James Webb Space Telescope: 450% over budget.
Cato Institute +1
Construction costs inflation over the last few years has averaged 3-5% per year (figures that certainly would have been incorporated into the process).
Further, at the initiation of the process, costs were to be "locked in" with purchase/bids for major items (steel, etc) contracted for at the prevailing rates (a normal SOP)
Further, the project had approximately $100 million (of the $700 Million total) added as a "fudge factor" for unanticipated events (a VERY high "fudge factor" for a project of this type)
Further, massive amounts of "philanthropy" were to come in - reducing the amount of borrowing that was to be required.
Put that all together, and one might have found it nearly impossible to expect costs would "overrun" - but time will tell (not that anyone will actually know the truth).
Bottom line is that any significant "overruns" should occur only if multiple significant things were SNAFU-ed. To the point that I would be very surprised if things go that route - though I have been surprised before, and as time goes on that sort of situation appears to me increasingly possible.
Further, at the initiation of the process, costs were to be "locked in" with purchase/bids for major items (steel, etc) contracted for at the prevailing rates (a normal SOP)
Further, the project had approximately $100 million (of the $700 Million total) added as a "fudge factor" for unanticipated events (a VERY high "fudge factor" for a project of this type)
Further, massive amounts of "philanthropy" were to come in - reducing the amount of borrowing that was to be required.
Put that all together, and one might have found it nearly impossible to expect costs would "overrun" - but time will tell (not that anyone will actually know the truth).
Bottom line is that any significant "overruns" should occur only if multiple significant things were SNAFU-ed. To the point that I would be very surprised if things go that route - though I have been surprised before, and as time goes on that sort of situation appears to me increasingly possible.
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I saw that Nebraska is going to do a $600 million renovation of their stadium, which surprises me because I thought that they had done a major renovation within the last twenty years.
In the run-up to approval of the project, the poobahs made it a point that they would seek Guaranteed Maximum Price ((GMP) construction contracts. That nothing was said about it afterward inclines me to believe they were unsuccessful. We'll see how it turns out in the end. What is the likelihood that there is ever a truly accurate accounting for the costs?
From PSU?
I would rate that a "Blutarsky" - 0.0
(But there will be ways to get a lot of that info, with a high degree or reliability - will just take some time and some digging)
From information available right now, it can reasonably be concluded that either:
The overruns have been very very high, and/or the projected "philanthropy" was been incredibly low.
My best guess (at this point) is that it is largely cost overruns - though I do think "actual cash money" philanthropy for the stadium is also drying up rapidly (which does surprise me a bit, if that is the case - I always felt the expectations for "stadium philanthropy", even given PSU's horrific track record in recent years, were rather modest)
PSU projects that more than half of the philanthropic pledges will be received in five years or more. Assume that applies to those designated for the stadium as well.
As we are on the subject of roulette, what is the likelihood that West Shore Home completely fulfills the contract for stadium naming rights?
WRT West Shore:
I forget the exact figure of what the annual payment was to be for the advertising (which is really what that is - an advertising contract, NOT philanthropy)?
I am thinking something like $3 Million/yr OTTOMH? Give or take.
Anyway - I wonder if what PSU has paid for all the signage (and remember, they went through 3 different iterations in the first several months - I suppose they have been shorthanded wrt employees that can use design apps.... and now they have signage, which probably ain't cheap, all over the place)? Has PSU even broken even yet on Advertising Gross Revenue vs Signage Costs? Seriously.
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IIRC, West Shore was to pay $50 million over ten years. An undisclosed amount, probably $2.52, was to have been front-loaded.
You may get an explanation, whether you get the truth or not…….
What NLC members were thinking as they walked through the stadium:
“What the hell is this going to cost me?”
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Certainly interesting the marketing featured old people.What NLI members were thinking as they walked through the stadium:
“What the hell is this going to cost me?”
Werzyn Family and West Shore Home Make Significant Field Naming Gift for Beaver Stadium - Penn State - Official Athletics Website
15 Years, $3.3 M per year over that time period (IIRC, the earlier years are a bit higher - then a bit lower)
Thank you. Finally some semblance of sense on the issue.
Are there actual significant over runs? I've heard rumors on here but nothing else.
My first thought was to wonder why I (an NLC member) wasn't invited on the tour. But then I realized it looked like a tour of mainly the new premium areas. The tourists were likely those who have already laid out the money to sit there. It makes sense they'd be invited to see what their field view will be and what the finished suites and club areas may look like.
Hopefully when the entire project is finished, all NLC members will have a chance to tour the place and see what their donations are paying for.
Thanks. Got the total right, but not the years. So, again, what are the odds on the deal fully paying out?
Yep. I had to refresh my memory as well - as to the specific numbers.
Will it all be paid out? Who knows. I would expect so - but there is always at least some element of risk that one wouldn't have if the purchaser of the advertising was some large corporation (Pepsi or some national bank or what not)
Way more than 3-5%. Maybe an average the last 50 years but that is irrelevant today.
“If we stop talking about it, hopefully people will stop asking about the cost. Let the overruns fly.”
Producer Price Index by Commodity: Special Indexes: Construction Materials (WPUSI012011) | FRED | St. Louis Fed
Materials Costs Index:
Jan 2024: 334.374
Jan 2025: 326.249
Jan 2026: 347.710
That is an annualized inflation rate of a tad UNDER 2% per year since project inception.
ENR has non-res construction costs at around 3.5% per year.
US Bureau of Labor & Stats has it as: Bureau of Labor Statistics Data
Jan 2024: 193.074
Jan 2026: 200.772 (Preliminary)
Also just a tad under 2% per annum over that time frame.
But, yeah, sure. Whatever.
Irrelevant anyway - as the competent project managers would have incorporated pricing adjustments expectations over that time and/or locked in rates in critical and impactful components.
Expect it will be a challenging few years for West Homes, and any other company in their line of business. Might be more comfortable if my cash flow were coming from someplace like Safelite.
Overruns should not be expected. Construction managers face challenging environments all the time. You factor in estimated inflation rates and contingency to help cover unforeseen issues. I worked on very large capital projects most of my career. We rarely overran and when we did, the overruns were small. Large overruns are a sign of incompetence.
Yeah, Beaver Stadium may be a dump, but it’s our dump!