RPA Reveals Underlying Reasons MTA Megaprojects Cost More than Twice as Much Than Peer Cities and Basic Steps to Save Billions

Regional Plan Association report examines why it costs MTA so much more to build new subways and commuter rail

RPA recommends a series of reforms aimed at Governor, MTA, Labor and local leaders to reduce costs on megaprojects by at least 25%, rebuild public trust and enable MTA to add much-needed transit capacity

NEW YORK, NY – Regional Plan Association today released a comprehensive new report ​“Building Rail Transit Projects for Less”. The report analyzed three rail projects built recently in New York City, comparing them to similar projects in peer cities. It finds that the cost of building new subways and commuter rail is more than twice as high here than in cities like, London, Paris and Los Angeles.

RPA’s research finds the reasons for high costs and delays go beyond overstaffing, outdated work rules or padded contracts. From decisions by political leaders at the outset of projects to the final stages of construction, entrenched practices and procedures lead to a cascading series of cost overruns, delays (which lead to more cost overruns) and a complete failure of cost containment. This new report gives an in-depth look at project costs as well as planning and delivery issues behind Second Avenue Subway, East Side Access, and the #7 Line Extension.

“The MTA’s capital project delivery process is broken. Projects take far too long, and cost way too much. If we are asking the public to pay more to modernize our public transportation network, then the MTA must give confidence that it can spend that money effectively and efficiently,” said Scott Rechler, Chair of Regional Plan Association’s Board of Directors. ​“The broken system that is in place today is unfair to the men and women that keep the agency running, it’s unfair to the MTA’s contractors, it’s unfair to the hard-hats performing the work, but most of all, it is unfair to the public.”

“Even as we repair and modernize our existing transit system, we know that our region needs more. We need to continue to build more transit to serve underserved communities, our growing economy and to meet modern expectations,” said Tom Wright, President Regional Plan Association. ​“But we can’t keep building like we have in the past. This report shows the way for the MTA, the Governor and other stakeholders to make meaningful changes in how big projects get done. This is crucial to rebuilding public trust and laying the foundation to both both fix the subways and expand our transit network.”

“A big challenge to rebuilding transit in New York is convincing the public they’re getting the best bang for the transit buck,” said Jon Orcutt, communications director at TransitCenter. ​“Transit needs more resources, but it will be hard to secure them unless everyone from Governor Cuomo to MTA project managers show they are changing business as usual to get work done faster and for lower cost.”

“In the areas where our city is rapidly growing, our transit network cannot keep pace because capital construction costs are much too high. This is a sustainability crisis waiting to happen if New Yorkers increasingly turn to car ownership and for-hire-vehicles,” said Marcia Bystryn, President of the New York League of Conservation Voters. ​“While raising additional revenue for the MTA is critical, we must also do better with the funding we do have. RPA’s reforms, many of which have already proven successful in other major cities around the world, could provide significant savings and we strongly urge the MTA to adopt them.”

Therefore, RPA is calling on the MTA, state and city political leaders and labor to adopt a series of reforms outlined in the report. RPA estimates that the adoption of these reforms as a whole could reduce project costs by at least 25-33%, saving billions of dollars and rebuilding public trust.

Some of these reforms can be made relatively quickly, and in fact the MTA has already made progress on public engagement with it’s approach to the L-Train shutdown. The State Legislature should add the MTA to the list of state agencies and authorities certified to use design-build and the MTA should make this their standard approach for new projects. And for each new megaproject the Governor should create a temporary, independent organization with a singular purpose: to deliver the project on-time and on-budget.

Others reforms may be more difficult to achieve but would have a meaningful impact on project budgets. These include shortening environmental review, reforming MTA’s procurement processes and modernizing work rules in coordination with labor.

The full recommendations include:

1. Create realistic budgets and project timelines. Political pressure often leads the MTA to lowball initial project cost and timeline estimates. This leads to costly project interruptions and extensions and a loss of public trust.

2. Engage the public early and often. Right now, the public is engaged in a narrow way. People are often asked to react to plans already far along in development. This leads to unnecessary fights and litigation that slow projects down, adding time and money. The MTA’s outreach in advance of the L train shutdown may be a model to incorporate in future projects.

3. Put one team of professionals in charge of each new project from start to end. A temporary special purpose entity should own responsibility to deliver the project on time and budget. This has worked well in London and other peer cities, in contrast with the MTA’s internal office of Capital Construction, which has little authority over other MTA agencies.

4. Rationalize environmental review. The national average for reviews is currently 84 months, compared to international peer cities with strong environmental track records that complete similar processes in 18-24 months. The State and MTA can streamline the process for large projects without compromising the intent of protecting the environment.

5. Move to a ten-year pipeline for large capital projects. The current five-year outlook is insufficient to plan and fund large-scale capital projects. The MTA should prepare a ten-year capital plan for larger investments and develop a dedicated funding/financing plan for each project, separate from its annual budget. To be effective, and before transitioning from the five-year capital program, this reform would require sufficient dedicated revenue for both annual operating and long-term capital budgets.

6. Employ the use of new project insurance and liability models. London and Australia have shown these approaches remove the adversarial culture between project teams, creating a no-fault-no-blame culture, reducing costs and delay.

7. Permit design-build for all new rail lines and extensions. The MTA should replace its traditional design-bid-build procurement for megaprojects with the increasingly accepted practice of design-build, in which a single contract is made to design and build the project. This model is credited with saving significant costs in the construction of the Tappan Zee Bridge.

8. Maximize the land-use development potential of transportation investments. Future megaprojects should incorporate land use and zoning changes to capture the value created through redevelopment, as was done successfully in the case of the #7 extension and rezoning of Manhattan’s west side. To be successful this needs to be a collaborative and cooperative process with both state and local leaders recognizing the assets the other is bringing to the table and sharing resources accordingly.

9. Rethink labor practices and work rules. Other world cities including London and Madrid have demonstrated how employment and wages can be maintained while delivering projects faster and at lower costs. Two examples of reforms include realigning overtime pay to start once the 40-hour workweek is completed and reducing the number of staff required to operate tunnel boring machines (TBM’s). These could result in significant direct cost savings and suggest that other work rule reforms could lead to additional savings.

10. Create a public institute to supply a well-trained pool of labor for future megaprojects. While respected training programs do exist, a data-oriented organization modeled on the UK’s Infrastructure Skills Programme would help benchmark labor supply for megaproject pipelines and expand capacity to meet demand.

11. Distinguish capital and operating workforces. Capital construction projects should be free to use third-party trade labor for all jobs in and around active facilities in coordination with other MTA operating agencies. Today MTACC must use the operating agencies’ unionized labor force for mandatory work involving safety, such as track flaggers. This leads to unnecessary delays.

What’s at stake? RPA’s research suggests that if these reforms were implemented the MTA would save at least 25-33% on new projects, freeing up billions for other MTA priorities, like signal modernization, railcar modernization, or continued expansion of transit to areas of the city and region that are underserved.

The full report is available here: http://library.rpa.org/pdf/RPA-Building-Rail-Transit-Projects-Better-for-Less.pdf

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About Regional Plan Association

Regional Plan Association is an independent, not-for-profit civic organization that develops and promotes ideas to improve the economic health, environmental resiliency and quality of life of the New York metropolitan area. We conduct research on transportation, land use, housing, good governance and the environment. We advise cities, communities and public agencies. And we advocate for change that will contribute to the prosperity of all residents of the region. Since the 1920s, RPA has produced four landmark plans for the region, the most recent was released in November 2017. For more information, please visit www.rpa.org or fourthplan.org.