Building Rail Transit Projects Better for Less

New Yorkers have long understood that their city endures higher construction costs — both private and public — than other jurisdictions, here and abroad. With a $43 billion construction boom combined with costs increasing 3.5% last year, New York took the title of the world’s most expensive city in which to build, pushing Zurich from its former top spot, concluded a report by Turner & Townsend. Although the study focused on buildings rather than infrastructure, its findings were consistent with the region’s reputation for having high construction costs — for both public and private development — which were the result of high construction bids from outmoded labor practices, expensive materials, complicated site logistics, excessive government regulations, complex codes, institutional and owner inefficiencies, and bonding requirements. Habitually tolerated as an accepted natural consequence of New York’s size and dominance, the premium is increasingly understood as a serious impediment to New York’s economic competitiveness. While New York struggles to keep up with basic maintenance, other global cities have pressed their economic advantages to attract new businesses and residents, and build important, economically driven infrastructure.

Nowhere is this more clearly seen than in transportation — the subways, tunnels, bridges, harbor, airports, and roads that helped transform an island city into an economic powerhouse. Of these, the city’s extraordinary subway system has been uniquely important not only as an efficient mover of people and goods, but as a channel of upward mobility, linking far-flung neighborhoods to centrally located jobs and businesses. Yet even as today’s subway faces historic demand for service, its physical dilapidation — constant delays, noise, dirt, and deplorable communications — drives users to other forms of transportation, including private cars. Deteriorating maintenance accurately reflects a system in decline — indeed, a system that peaked in 1937. New York has only recently begun to increase its system capacity for the — first time since the 1930s. Progress has been far too slow, even as London, Paris, Madrid, and other cities have surged ahead, building whole new lines and enhancing their economies and neighborhoods.

New York needs to reverse this decline and set itself back on the path of building wealth-creating infrastructure.

The twin challenges the region faces in expanding public transportation are high costs and the slow pace of project delivery. They are interrelated — costs rise, for example, as project schedules are continually stretched. Public confidence in the government’s ability to deliver capital improvements erodes as budgets balloon and deadlines are repeatedly missed. Yet public understanding of the problems associated with building large capital projects is limited because the process is complex and opaque. At the same time, the agencies responsible for delivering projects are struggling. Whether the root cause is political interference, time-consuming environmental reviews, labor issues, or internal management procedures that add years and waste hundreds of millions of dollars, it is abundantly clear that reforms are needed.

Regional Plan Association (RPA) has forecast that the region could add an additional two million jobs and four million people by 2040, with most of this growth concentrated in urban areas — growth that cannot be accommodated without improving all aspects of public transportation, including rail systems. This will not happen unless costs are brought down and project delivery is rationalized.

This report is an essential part of RPA’s fourth regional plan — a strategic blueprint that assumes an expanded public transportation system is crucial to supporting a growing economy, expanded opportunity, and the efficient use of energy, land, and other resources. Using the Metropolitan Transportation Authority as a proxy for the region, RPA has evaluated the three megaprojects — the #7 Line Extension, Second Avenue Subway (SAS), and East Side Access (ESA) — and has undertaken, through interviews with experts here and abroad, an extensive literature review, and a compilation of best practices in other world cities, thereby articulating the major causes of high costs and serious delays, and formulating a series of strategies to address both. The Milstein Forums on New York’s Future provided critical information for this report.