The Super High Cost of Building Subways in NYC

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Arun Venugopal: It's The Brian Lehrer Show on WNYC. Welcome back, everybody. I'm Arun Venugopal from the WNYC, and Gothamist newsroom. Now, if you're a fan of the city's subway system and have wondered, like me, why it's hardly grown in the last century or so, here is a sobering statistic-- Transit infrastructure projects here in New York cost not 5 times, nor 10 times, but 20 times more per kilometer than they do in Seoul, South Korea.

That's according to a recent report from a team of experts at NYU's Marron Institute of Urban Management, who found that subway construction costs in New York are far greater than pretty much any other city in the world, but the authors have also broken down the costs and tried to unpack all the reasons it's so hard to build an extra subway station, let alone an entire new subway line.

The hope is it won't just demystify the enormous multi-billion dollar costs of recent projects, like the Second Avenue Subway line, but maybe even help policymakers trim the Fed, and there is a lot of Fed. We're joined by Eric Goldwyn, a program director at the Marron Institute of Urban Management, and he's also a clinical assistant professor in the transportation and land use program there. Eric, thanks for joining us today.

Eric Goldwyn: Thank you. Good morning, Arun.

Arun Venugopal: Listeners, perhaps you have questions about ballooning costs for our expert, Eric Goldwyn, or maybe you also have some insights about the problem. If you've worked on one of these massive projects, or maybe you've been abroad and seen firsthand how it's done in other countries, let us know. The number is (212)-433-WNYC, or tweet us, @BrianLehrer. Eric, when it comes to subways, New York is special, but perhaps in ways a lot of us don't want to admit, isn't it?

Eric Goldwyn: That's exactly right. First, I just want to thank you for plugging people to get in touch with me about this stuff, because that would be very helpful. To your initial observation, yes, New York is special. We spend more money per mile or kilometer to build subways than any other city in the world.

Arun Venugopal: We're talking about cities that are in equally developed or wealthy nations, as well as less so, correct?

Eric Goldwyn: That's right. In our analysis, we look at things like GDP. Rich countries like Sweden, Switzerland, they build for much less than we do.

Arun Venugopal: How did you go about studying this problem? It sounds pretty complicated.

Eric Goldwyn: One of my colleagues, Alon Levy had been looking into this issue for more than a decade now, and we had been working on some projects together. Alon had sort of just-- You know, collecting data as they found it. We decided to just put together a research program where we would collect data on as many projects as we could. We have a database of about 900+ projects. Just under 60 countries are represented.

It's tens of thousands of kilometers worth of projects. We use this database not to prove statistically one thing or the other, because we know that headline costs, that's just the final price tag. It contains a lot of different things in different places. What we wanted to do was just identify where are places that are doing this cheaply, where are places that are doing it extensively, and what's the global average.

When we did that, we saw that New York, not surprisingly, it was at the very high end, and the United States, actually, because we group it by countries, was at the very high end. Then some of the countries that we dug more deeply into, to understand how they do things more cheaply, were Turkey, Italy, and Sweden, which I mentioned just a little while ago.

Arun Venugopal: For a good example of the runaway cost, that we're talking about, let me just quote from the opening sentence of an article in Gothamist just last week, which said, "The cost of the Second Avenue Subway extension to East Harlem has ballooned to $7.7 billion, an $800 million increase from previous estimates." I think you were quoting that same article, what did you make of the news?

Eric Goldwyn: Unfortunately, it's not good news. I think the first thing I would say is, these runaway costs just inhibit our ability to build. We're talking about a 1.76-mile extension. That's not very much. We're talking about-- I think when I did the math, it's almost $3.5 billion per mile. As anyone can imagine, you don't need to know very much, assembling that amount of money is not an easy thing to do. Phase Two of the Second Avenue Subway has been on the books, the environmental documents have been done for several years now.

The main thing that is slowing us down is assembling this money and putting it together so we can get shovels in the ground and actually build. When costs are so high, it just makes it that much more difficult, and becomes a huge political fight. On the other side of it, the federal agency that is in charge of giving out some of the money, the FTA, I would assume they're requiring the MTA at contingency, so money for in case things go wrong, on some of the riskier elements of the project. There's going to be a new tunnel that gets built.

There's a new station that's going to be tied in with the existing station at 125th Street. I would guess that these are two of the riskier elements of the project, and the FTA probably just wants them to add more contingency. That just means that the MTA now needs to come up with more and more money. That is really hard. That probably helps explain a lot of the delay that we've experienced, and that extra $800 million.

Arun Venugopal: I think a lot of us have this image, perhaps, in our head, of-- We've seen these black and white photos from sometime in the early 20th century. It's taken from the middle of some avenue, just stretching into the distance. All these workers on either side of this huge, essentially, ditch or hole in the avenue, where the subway was being constructed. You can feel that sense of this epic construction project, and also the sense of possibility that allowed for people to build this incredible system across the five boroughs.

When did building subway stations in New York get to be so expensive, and why?

Eric Goldwyn: It really starts with-- I shouldn't say that. Going back to the 1930s and '40s, with the IND system, we inaugurated a style of subway station construction that included these full-length mezzanines. Starting then, you start to see New York's costs diverge from-- There weren't as many projects in the world at that time, but from the Parises and the Londons of that day. Now, to be clear, we haven't built a full line since 1940 or so, or 1930. A long time ago, is the point. 1940, I think is right.

Phase One of the Second Avenue Subway is really exciting and was really exciting because it marked new expansion and the beginning of a new line, now. It's broken down into four phases, and currently functions as an extension of the Broadway Line, or the Q-train. We revamped the way that we built stations in that period. Now, there were new stations added to the system prior to Phase One of Second Avenue Subway. The 63rd Street station on the F-train, I think, opened in 1989.

There is an extension in Queens that also saw some new stations. The stations of Second Avenue, if any of the listeners have been to them, are very different. They share very few similarities with some of those stations that opened in the '80s.

Arun Venugopal: How much of this has to do with the backlash to mass transit that you saw in the postwar era? This is a conventional narrative that during the Eisenhower years, there's a lot of investment in highways, and a push away from mass transit projects, and that ever since then, the federal government has really not been as supportive of big projects here, in cities like New York. Is that accurate, or do you think it distracts from the real reasons?

Eric Goldwyn: I think it's a little bit of both. I think New York has been a transit town for a long time and is obviously unique, relative to the rest of the country. The federal government does spend a lot of money on transit. I think the FTA allocates $16 billion a year to transit, currently. Now, we do spend a lot of money on highways, don't get me wrong, and I think the reason why transit does not succeed in many cities is because building both highway infrastructure and transit projects simultaneously is not a good strategy for getting people to use transit.

Also, we build a lot of our transit infrastructure on those highways, which is very inaccessible, if anyone tried to take a light rail, or a train in Chicago, LA, or in Seattle. Some of those stations are just fundamentally inaccessible, I would argue. I think the bigger issue is that we haven't been building in New York, certainly, in a really long time. We lost the expertise and capacity at our internal agency. Back in the early 1900s, there was a public service commission that undertook a lot of this work.

People talk about the private subway companies that existed. That's true, but there was this public service commission that managed, designed, and did a lot of the construction management of the projects. Then, with the formation of the MTA-- It was created, in part, to figure out Long Island Railroad and Metro-North issues. The subway was glommed onto that, but yes, we have not built. The expertise at the agency currently just didn't exist, as they were ramping up to build Phase One.

They had to hire a bunch of consultants and they didn't always do the best job directing those consultants on what to do. The consultants are very frank about that. They will tell you, "We were hired. They didn't know what the station should look like. They didn't know what this should look like. We created a bunch of different things, and eventually, we landed on the concepts that you see today, but it took a lot of trial and error to get there."

Arun Venugopal: We have a number of callers. One of them is calling in from Forest Hill, Queens. Sheldon, calling in from Queens. If you have a question or an insight for our guest here.

Sheldon: I have some insights. I'm a former contractor. I'm retired now. I've done work on the subways. I thought about it, I'm also a rail buff. I have some other insight into it. I would identify three main reasons. The propensity of every contractor, at every level, to push for change orders. I'm sure you just will know what I'm talking about. I'll just talk in shorthand. Second is the nimbyism that is endemic across the whole system.

Third, in contrast to what went on in Los Angeles-- Los Angeles took a revolutionary idea and embraced it, and that created a manual that instructs the practice, that MTA-- I forgot the name of it, I think it's the LA Metro District, I've forgotten the name, that every plan contractor working for the LA transit authority has to literally go to school and understand the workings of what they require. Those things certainly delay and extend cost. That's all I got to say.

Arun Venugopal: Thank you, Sheldon. I guess just some clarity change orders. You mentioned that, just a lot of us may not know what you're referring to.

Eric Goldwyn: You want me to clarify, or is Sheldon still on?

Arun Venugopal: Yes, sure. Why don't you? It looks like Sheldon's gone, but thank you for that call, Sheldon. Go ahead.

Eric Goldwyn: Sheldon's hit it on the nose on a number of those issues. A change order is when-- When you procure a subway, or at least for Phase One, it was a design-bid-build contract. The MTA procures design blueprints of what the project should look like on paper, and then it hires contractors to build to those specifications and blueprints. If the contractor is building and is like, "Well, maybe the wall should go over there," and the engineer says, "You know what? The design is wrong. You're right.

We own that mistake and we are going to pay you for whatever additional costs you incur to put the wall in a different spot," so to speak. That absolutely is part of the issues with these projects. Sheldon also mentioned the nimbyism. That's the not-in-my-backyard crew. I think that, broadly speaking, there's a lot of stuff that falls into that bucket. Arun, you mentioned those great black and white photos of the trenches, of open streets from the 19-whatevers, 10s, let's call it.

For Phase Two, one of the principal design guidelines was to minimize surface-level disruption. Instead of big trenches, you have smaller mines, or shafts, and then the stations were constructed using a mining technique. You blow up stuff underground rather than using the traditional cut and cover that you're referring to. That technique is very labor-intensive, very expensive, of course. By trying to avoid disturbing people, it slows things down, and it costs a lot more money.

Now, that might be an appropriate thing to decide, but I think it's a trade-off that we should be clear about and transparent about, and say, "We could build this project,-" I'm going to make up these numbers, "-in 10 years, trying to avoid these disruptions, or we can build it much more quickly, in 5 years, and have maybe a bit more disruption, but it's going to be much cheaper and much faster, and the pain won't last as long."

I think New Yorkers and people all over the world, they understand those kinds of trade-offs. I think there's an example after Hurricane Sandy, where the L-Train tube, the Canarsie tube was flooded, and the MTA had put forward two options. They didn't end up going with either of them, but one option was work nights and weekends for three years, or to just shut it down for-- I think it was 16 months.

I think the polling showed overwhelmingly that New Yorkers were like, "Yes, let's just do it, get it over with, and move on with our lives." They opted for that 16-month option. I think the same-- Aggressiveness is not the right word, but the same clarity about the trade-offs should be proposed for Phase Two of the Second Avenue Subway. Could we build the tunnel much more quickly if we agreed to shutting down parts of Second Avenue?

Could we build the stations more quickly if we agreed to shutting down, also, parts of Second Avenue? I think if people understood what the time savings and cost savings were, I think we can make a more informed decision about that stuff.

Arun Venugopal: Let's take a call from Patrick, in West Orange, New Jersey. Hi, Patrick.

Patrick: Hi there. Thank you for taking my call. Interesting topic. Can you hear me?

Arun Venugopal: We can, yes. Do you have an insight or a question for our guest?

Patrick: I have a question, really, your guest seems to be-- I don't know, dancing around the subject. I want to hear, I'm asking for some real specifics in terms of comparison. Why is it 20 times more expensive in New York than in other major developed cities around the world? I'm not getting a clear picture as to why. I want to hear some specifics from your study, if you can, please, about what are the factors that are different here, that makes it so much more.

You just referred to the cut and cover thing. Are they doing cut and cover in all these other cities, and that makes it a lot cheaper than the other [unintelligible 00:17:57]

Eric Goldwyn: For the station construction, yes.

Arun Venugopal: Got it. Thank you, Patrick, for that call. [unintelligible 00:18:03] brought outlines, Eric.

Eric Goldwyn: I'm happy to provide. The six things that we focus on are politics and decision-making, and that means having elected officials who are champions of these projects and then do whatever they can to get obstacles out of the way. That means coordination with city utilities, state agencies, or neighboring municipalities. When you don't have that political leadership, it leaves transit agencies to fend for themselves, and they often have to--

Bribe is too strong of a word, but they have to pay for lots of improvements to get the permits they need to move on with their lives. We find abroad that when a city is leading the project, as it is in Italy and Istanbul, that coordination happens much more easily, and much more seamlessly. Another big part of it is civil service and internal capacity at agencies. As I mentioned, in New York, we haven't built a lot of this stuff recently.

There wasn't a team of experts on hand to lead the planning process, to lead the early design process, and to lead the early engineering process. That meant we were relying on very expensive consultants to do that. That is a driver of cost. Another big issue is labor costs. New York absolutely does have high labor costs, and our consultants are also expensive. I'm talking about blue-collar and white-collar here. Our productivity is very low. When you interact low productivity with high wages, you get an expensive proposition.

Just to give an example. One of my favorite statistics from our study is-- When they were building the launch box for Phase One of the Second Avenue Subway-- That's the big branch you have to build to get the tunnel-boring machine into the ground so that it could dig the tunnel. It took three years to build here in New York. In Istanbul, in Italy-- We looked at four cities in Italy, and some Indian cities I've heard from, and Spain, it takes them six months to a year.

Now, when you're saying that it takes three times longer in New York and our wages are two to three times higher, the final cost is going to be six to nine times more. That helps explain some of that difference right there. Then another big piece of it is cost-effective design. The stations for Phase One of the Second Avenue Subway, if anyone has visited them, they're enormous, gigantic cathedrals. They're gorgeous. Now, there's a whole area of these stations called back-of-house space, which is not public.

You've never been there as a passenger. That is reserved for the staff that maintains and operates the subway. Now, the amount of space dedicated to these back-of-house facilities in New York is gigantic. The platform for Second Avenue Subway is about 615 feet. If you look at the station digs for 86th Street, it's 1,000 feet, for 72nd Street, it's 1,300 feet, and for 96th Street, it's about 1,600 feet. You're talking about 60% to 250% more space than the passenger area.

When we looked in other parts of the world, that percentage was usually in the 3% to 20% range. That would've put a Second Avenue station at about 750 feet, at the longest. As we were talking about, this mining technique is very expensive. When you're building all this extra space underground, it adds up. It took eight, nine years to build each of the stations. Whereas in other parts of the world, it could take you two to three years to build the station. Those are the real issues that drive the cost difference. I hope I explained that somewhat clearly.

Arun Venugopal: Hope so. Thanks for that Call, Patrick. Let's take another call. This is Harvey, calling from Yonkers. Hi, Harvey.

Harvey: Hello. Actually, he did start to answer the same questions, because I was getting upset that I wasn't really hearing any facts. A couple years ago, I took a regular train from Cherbourg to Paris. Right in that same station, I was able to get a subway train that went out to Charles de Gaulle Airport. Now, Charles de Gaulle airport is relatively recent, so the subway was clearly built relatively recently, and somehow, they just got it done.

Now, I understand that cross-track, I think it's called, in London, was very expensive, but they got it done. Is the real problem here just political constipation? That they can't actually make decisions, they can't force people? The cost of labor in London and in Paris isn't that different than the cost of labor in New York.

Eric Goldwyn: That's true.

Arun Venugopal: Thanks, Harvey.

Eric Goldwyn: There's some truth to that. Absolutely. They're not poorly compensated. I agree. Part of the issue is the expertise. The Parisians have been building consistently since the metro opened, in the early 1900s. You're talking about the RER, which goes out to Charles de Gaulle, which is a more recent vintage. Crossrail is a very expensive project. It's not as expensive as what we have here in New York, but it's not, I would say, a positive example, in terms of costs in Europe.

The British have some of the most expensive costs in the world as well. What I outlined previously, about those four or five different points, sort of speak to the cost issues that we have here in New York, and in the US, in general.

Arun Venugopal: That caller, Eric, mentioned Charles de Gaulle, CDG, in Paris. Right here, locally, just look at the AirTrain Project, the proposed AirTrain project to La Guardia, it was officially canceled just yesterday, by governor Kathy Hochul, after the latest estimates put the cost at $2.4 billion, which is to say five times the initial estimate. These overruns are so dramatic, I guess one would think there would be repercussions, or some sort of serious introspection. Right?

Eric Goldwyn: First of all, I'd say that the big takeaway from yesterday's thing is obviously what you mentioned, but the expert panel said the best solution is extending the subway to La Guardia, but that's not reasonable, because it will cost $7 billion, and take seven years. Again, this goes to my initial point, about-- These high costs inhibit us from doing the things that are best for our city, and best for helping New Yorkers get from point A to point B. I think that's why we really need to focus on cost.

I would say if we were paying 10%, 20% more, fine, we could do better, but that's not the end of the world. We're talking about multiples. That's why we study it, and that's why we've spent so much time on it. In terms of your question about repercussions, I think the initial cost estimate for that AirTrain was more political theater than reality. I think if you talked to some of the consultants, they would say, "We had to hit a specific number to satisfy what the governor wanted." I don't think anyone believed that it would cost $500 million.

Arun Venugopal: You mentioned in the report, and you were just talking a minute ago, about London, that you say the problem of cost overruns, in the report, it says "Rife in the English-speaking world," which I'm really intrigued by. What does English speaking have to do with these cost overruns?

Eric Goldwyn: Right. It's not cost overruns. It's high costs. The thesis is that-- Using the British as an example, they have diffused a lot of knowledge about how to build, design, and manage these projects. Their costs are not good. All of these countries that look to England as a model, such as Australia, New Zealand, Hong Kong, Singapore, New York, Canada, are sort of copying, I would say, mediocre practice.

Not worst practice, necessarily, but are not copying the best practices that come from, Spain, Italy, or Korea, as you mentioned. We're learning from the wrong places. That is the point there. English is one of the things that all these places have in common, that they have official documents in those languages, that the experts speak those languages, the consultants that are hired work in all of those countries. That's the logic there.

Also, just to be clear to the listeners, there's a 400-page study, that you're welcome to read, at transitcosts.com. Just by the way.

Arun Venugopal: Just to make a point about London, you said the cost premium of building in London versus Italy or Sweden is a factor of about three times greater than those countries. That's nothing compared to New York, which is a factor of 10 times, which is still quite extraordinary. I guess, in the last couple minutes we have for this segment, are there certain fixes to this problem of high cost, that you think are most achievable?

Eric Goldwyn: Yes. The lowest hanging fruit is right-sizing the stations and dealing with the back-of-house space issue. All credit to the MTA on this. For Phase Two, they have proposed doing some of that stuff. I would guess that they've seen hundreds of millions of dollars of cost savings just there. Other issues, though, related to utilities and agency coordination, that is a political issue that needs to be solved.

There's a bill in front of the state legislature, on policing the utilities a bit more, on being more timely in their decisions about MTA designs, and responding to the MTA more quickly. Things like that would also help to speed things up and save some money. The big issue is having an agency that really owns their project, can articulate its vision, and guide its contractors effectively. I think for Phase Two, to be frank, the MTA has proceeded in a very interesting way, where they're procuring a bigger design upfront.

They're using a different procurement strategy, which I don't necessarily think is the best, but I think they're doing it in a really smart way. The fact that we still see the costs going up is very alarming. We need to know more about what exactly is driving those costs. I think part of it is this issue of contingency that the federal government is probably requiring on some of these elements. Oftentimes, it could be 20, 30, 40%, for certain elements, and best practice shows that, really, it should be no more than, like, 10%.

When you're talking about, say, a $500 million, $700 million station, or something like that, when you talk about a 20% premium on that, you're talking about over $100 million. We get into very big numbers, very quickly. I'd like to see more about that contingency issue. I also think there's concerns about labor shortages, there's concerns about material, supply chain issues as well, that is probably also driving some of that contingency fear.

Arun Venugopal: We're going to wrap it up, but I do want to voice the question that a couple of our callers have put forward, which has to do with geology. Is New York City geologically so unique that it explains some of these challenges of building here?

Eric Goldwyn: There are geological challenges. Absolutely. For Phase One of the Second Avenue Subway, that's not the case. It was built in hard rock, Manhattan schist, which is a very good rock to drill in. When you're building closer to the water table and you have issues of when you need to do dewatering, that makes things much more expensive. We looked at a project in the Netherlands, and that was a big issue that they had, dealing with water. That's not the issue with the Second Avenue Subway.

Arun Venugopal: We're going to leave it there for today. My guest has been Eric Goldwyn, an Assistant Professor and Program Director at NYU Marron. Eric, thanks so much for joining us today.

Eric Goldwyn: Thank you. Have a good day, Arun.

Arun Venugopal: You too.

 

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