http://www.capitalnewyork.com/article/city-hall/2015/03/8564884/where-transit-build-costs-are-unbelievable
By Dana Rubinstein, March 31, 2015
Michael Horodniceanu leads a tour of the ongoing Second Avenue construction.
It’s not often that a New York agency is accused of overestimating
the cost of a major, multi-billion-dollar transportation project.
That’s
what happened in March, when an advocate suggested the Port Authority
of New York and New Jersey had conspired to inflate the projected cost
of a new midtown bus terminal in order to kill it.
More
frequently, the agencies are criticized, with justification, for
low-balling the costs and timelines of major projects, which almost
invariably come in late and overbudget. In New York, this problem is
chronic—and almost comically severe.
One example that is topical, and will remain so for
years to come, is the Metropolitan Transportation Authority’s estimate,
back in 2000, that a new Long Island Rail Road station beneath Grand
Central Terminal would cost $4.3 billion, rather than the more than $10
billion it is expected to cost by the time it’s complete, sometime in
the 2020s.
When, seven years late, the M.T.A. finally got around
to completing the Fulton Center transit hub in lower Manhattan, it cost
almost 100 percent more than anticipated, kind of like the Port
Authority’s transit hub at the World Trade Center.
And just this
year, Governor Andrew Cuomo—who had made a great issue of the cost
overruns at the World Trade Center site—announced a plan to build a new,
$450 million train to LaGuardia Airport. Skeptics of the price tag were
quickly vindicated when, less than two weeks later, the Cuomo-appointed
head of the M.T.A. put the cost at up to $1 billion.
The M.T.A.
chairman, Tom Prendergast, hastily walked back his politically
inconvenient estimate. But if anything, his estimate was an
overoptimistic one, too: A Bloomberg-commissioned study, based on a
longer (or perhaps more accurate) measurement of the same route put the
cost of a similar proposal at $1.5 to $1.9 billion.
Cuomo
spokeswoman Beth DeFalco said, “Gov. Cuomo has made the holistic
redesign of both airports a priority and is committed to finding the
most cost-effective way of constructing an Air Train.”
Nicole
Gelinas, a transportation-finance expert at the Manhattan Institute,
said, “We really have no idea how much this is going to cost.”
The
same could be said of nearly any major project in this part of the
country. All that is certain is that New York’s transportation
agencies—and the political leaders who control them—have a problem with
estimates, and that New York’s projects appear to be more expensive than
comparable ones elsewhere in the modern world.
All of which
makes it that much harder for the M.T.A. to raise money for the
infrastructure that planners believe the region needs.
“We’ve got
to be able to say with a straight face that ‘Hey, we want to build more
subway lines,’” said Richard Barone, director of transportation
programs for the Regional Plan Association. “And people say, ‘Yeah, OK,
for more than $1 billion a mile—good luck with that.’”
This is not a new problem,
even if it has seemed particularly acute in the past decade or two as
the M.T.A. has resumed building what are known, in the infrastructure
world, as megaprojects. And it is not unique to New York, though the
tradition is particularly strong here.
That tradition was cemented, if not invented, by master builder (and chronic underestimator) Robert Moses.
“Year
after year, the Board [of Estimate] would allocate new funds—and then
would learn that still more were needed,” wrote Robert Caro in The Power
Broker. “Marine Park in Brooklyn could be completed for $6,000,000, he
assured the Board. When $6,000,000 had been spent on the park, Moses
informed the Board that an additional $6,000,000 would be necessary. And
when that was spent, the park would still be far from completed. He
deceived the Board constantly.”
That legacy appears to be alive and well.
“When
are they going to open the first phase of the Second Avenue Subway?”
said City College civil engineering professor Robert Paaswell. “The
date’s put off. East Side Access, the date’s put off. The opening of the
11th Avenue subway on the 7 line? That’s put off.”
A widely
cited Danish study from 2002 found that, worldwide, “[u]nderestimation
of costs at the time of decision to build is the rule rather than the
exception for transportation infrastructure projects.”
That’s at
least in part because “the targets for budget and time are politically
motivated,” said Juliette Michaelson, vice president for strategy at the
Regional Plan Association. “They’re not really based on what things
cost for real.”
Transit historian Peter Derrick, who is working
on a book on the M.T.A.’s contemporary rebuilding efforts, said, “It’s
the normal thing for transit people to low-ball the cost of things to
get them approved in the first place.”
One major motivation for
this habit, the world over, is simple enough. That 2002 Danish study, by
Bent Flyvbjerg, Mette Skamris Holm and Soren Buhl, put it this way:
“[D]eliberate cost underestimation is lying, and we arrive at one of the
most basic explanations of lying, and of cost underestimation, that
exists: Lying pays off, or at least economic agents believe it does.”
When it comes to megaprojects in New York, lowballing is only half the problem.
At
$1.4 billion, Fulton Center “avoided becoming the most expensive subway
station on earth only because the World Trade Center PATH station next
door took that crown,” wrote Stephen Smith on the urbanism-focused
website Next City. “The 7 train extension won’t become the world’s most
expensive subway on a per-mile basis only because that honor belongs to
the Second Avenue subway.”
It is a sign of how ordinary cost overruns have become in New York that such boondoggles receive relatively little attention.
The
only New York politician in recent memory who’s attempted to grapple
with the issue is New York City comptroller Scott Stringer, who noted in
a speech back in 2011, when he was running for mayor, “The first phase
of the Second Avenue subway is costing $2.7 billion per mile of new
tunnel.
The extension of the 7 line from Times Square to the Javits
Center is costing $2.1 billion per mile.”
He contrasted that with
the construction of the Jubilee line extension of the London
Underground, which he said cost $700 million per mile.
“We cannot
build a 21st-century city and compete globally if we continue to spend
five, even seven times as much on construction projects as compared to
our competitors,” he said.
How New York City’s megaprojects
compare in cost to those in similarly developed countries around the
world is a question that is, somehow, very rarely studied.
Stringer’s
spokesman said the comptroller relied for his numbers, in part, on a
mathematician named Alon Levy, who’s now completing his post-doc at the
Royal Institute of Technology, and who notes, in his blog Pedestrian
Observations, that, mass transit is a “side interest” for him and
“entirely unrelated to my work.”
The experts at the Regional Plan
Association, who are looking into the problem of megaproject cost
overruns as part of their latest survey of regional infrastructure,
directed Capital to a blog post by Levy, too.
The post, from
2011, reported that the Toei Oedo Line in Japan cost $560 million per
mile. The Berlin U55 cost $400 million per mile. The Paris Metro Line 14
cost $368 million per mile.
New York’s construction costs blew all of that away, the study found.
The
Second Avenue Subway is coming in at $2.7 billion per mile. The 7 train
extension to the far West Side? $2.1 billion per mile.
David
Schleicher, an associate professor at George Mason University School of
Law, has analyzed Levy’s numbers and says that his analysis basically
confirms Levy’s.
Barone, of Regional Plan Association, said, “The question is always why, why, why is it so expensive?” said Barone.
The
answer always seems to come back to a limited universe of issues, in
varying combination: labor costs, work rules, managerial incompetence,
the spaghetti of infrastructure tangled beneath Manhattan’s streets, a
political firmament without incentive to tackle hard issues.
Maybe, suggested Gelinas, the M.T.A. is just trying to do too much all at once.
“If the choice is doing a lot of things not very well or nothing at all, then what do you pick?” she asked.
There have, in fact, been some in-house efforts to examine the issue, though none that anyone seems to find particularly useful.
In
2008, the M.T.A. released the report from a “blue ribbon” panel on the
topic of unwieldy megaprojects. Then it appointed a traffic engineer
named Michael Horodniceanu to run those projects and “implement the
ideas the panel generated.”
Seven years later, all of the M.T.A’s megaprojects are still late, and nearly all are hundreds of millions over budget.
Cuomo
appointed a “reinvention commission” to tackle the problem, too. It
came up with recommendations, like creating a “center of excellence” to
reform procurement procedures.
Asked which of these
recommendations the M.T.A. has implemented, agency spokesman Adam
Lisberg said, "We have used design-build processes for billions of
dollars’ worth of procurements, we solicit input from the contractor
community during the design of complex projects before locking them
down, we do formal risk assessments of all large procurements, and we
develop mitigation strategies to manage that risk."
“It is time
to recognize that the delivery model for big projects is broken and
fiddling on the margins will not build the kind of projects the region
needs,” said Chris Ward, the former Port Authority executive director
and former East Side Access contractor, who Cuomo publicly chastised for
cost overruns before replacing him at the head of the authority.
New York City in the early 21st century looks very different from New York City in the early 20th century, when much of its transportation system was built.
More
people live in the outer boroughs, and more people work there, too, but
the options available for traveling between boroughs other than
Manhattan are limited.
New York’s main bus terminal is a tear-down.
In the next 20 years, one or perhaps both of the two tubes connecting Midtown to New Jersey may have to be closed for repairs.
At
the same time, the region invests billions of dollars in projects that
planners believe were prioritized for political reasons. That Long
Island Rail Road terminal beneath Grand Central will serve some 160,000
people a day, while the bus terminal serves more than 230,000. The
temporary PATH station at the World Trade Center now serves 44,000
passengers a day, while Penn Station serves 600,000.
When those
politicized projects go wildly overbudget it gives that much more
license to politicians to be miserly about transportation funding.
Last
year, after the M.T.A. approved a $32 billion capital plan with a $15
billion hole, Cuomo—who effectively controls the authority—called it
“bloated,” even though the vast majority of it would go toward expenses
like new subway cars, new buses, new rail and new signals to replace
deteriorating old versions of each.
The governor is uneven at
best as a champion of the transit system he oversees, and he had every
political motivation in the world to reprise his tough-on-spending
routine. Yet no one affiliated with the system was in a particularly
good position to complain.
“Success requires bringing these
projects in on time and within budget,” said that 2008 Blue Ribbon Panel
report. “The public focuses on the transportation community and draws
conclusions, deserved or undeserved, about MTA’s competence based on
their perception of project success. Public trust and confidence in the
transportation sector as a whole often lies in the balance.”
