National News

MTA Construction Costs ‘Threaten to Strangle’ Growth, Report Warns

Posted February 5, 2018 8:40 p.m. EST

NEW YORK — The Metropolitan Transportation Authority could dramatically reduce its construction costs by rethinking how it manages projects, prioritizing efficiency over bureaucracy and ending rules that require far more workers than are needed, according to a new report based on two years of research.

The report, scheduled to be published Tuesday by the Regional Plan Association, an urban research and advocacy group, says that dozens of missteps, abuses and inefficiencies have helped to make New York City the most expensive place in the world for public transit projects.

Among other factors, the report’s authors found that recent megaprojects like the first phase of the Second Avenue Subway on Manhattan’s Upper East Side have suffered from overly burdensome environmental reviews, repeated political interference, out-of-date work rules, “excessive customization” and a lack of coordination, communication and accountability.

“The extraordinarily high costs are due to many factors at every stage, from decisions by political leaders at the inception of a project to the final stages of a lengthy process of planning, design, and construction,” wrote the co-authors, Richard Barone, Julia Vitullo-Martin and Alyssa Pichardo. “Long tolerated as an accepted natural consequence of New York’s size and dominance, these costs threaten to strangle New York’s future economic growth.”

In addition to the Second Avenue Subway, the report examines the extension of the No. 7 Line to the Far West Side of Manhattan and East Side Access, a project, still underway, to link the Long Island Rail Road to Grand Central Terminal through a 3 1/2-mile-long tunnel. The report compares the projects with similarly ambitious transit projects in London, Paris and Los Angeles.

The report largely echoes the findings of an investigation published by The New York Times in December. That investigation found that 1 mile of train track in New York cost at least five times as much as anywhere else in the world, an inefficient use of money that had sapped funding that could have been used to fix the aging subway system. It blamed public officials who stood by as a small group of politically connected labor unions, construction companies and consulting firms amassed large profits.

The Regional Plan Association report goes a step further by recommending 11 measures to rein in costs.

The transportation authority should create a separate management agency to run each megaproject, according to the report, which cites a similar model that is used in London. Officials also should streamline the environmental review process, expand the use of design-build contracting rather than have separate contracts for each, and allow the use of private workers for more tasks, the authors recommend. Work rules should be changed to reduce unnecessary staffing and overtime, they say.

The report also notes a variety of ways that other transit systems achieve efficiencies, including private-public partnerships, innovative insurance policies, and performance bonuses for workers and contractors.

Together, the changes could cut construction costs by a third, according to the group.

In response to a request for comment, an MTA spokesman, Jon Weinstein, said in an email: “Tackling outsized capital costs is a key goal of the MTA’s new leadership team. Chairman Lhota created a board task force to specifically and aggressively attack this problem. Among other things, as part of this initiative MTA leadership is working to streamline the procurement process, stop customization of components, reduce change orders, chop huge costs and delays associated with utility relocations, and more effectively manage projects across the board. We look forward to reviewing the report.”

The authority’s chairman is Joseph J. Lhota.

The report is likely to spur discussion at a time when state lawmakers are debating how to address the failing subway system. Only about 65 percent of trains now reach their destination on time, the lowest level in decades and the lowest of any major rapid transit system in the world.

Gov. Andrew M. Cuomo, a second-term Democrat who controls the MTA, which operates the subway and the region’s buses and commuter railroads, has proposed a congestion pricing system for vehicles entering Manhattan’s most crowded neighborhoods to increase funding for public transit. But some critics have resisted, saying the authority should prove it can wisely spend money before getting more.

Councilwoman Helen Rosenthal, D-Manhattan, called the report’s proposals “a great start.” In particular, Rosenthal, who last fall led a group of council members who sent a letter to the authority demanding an independent commission to study the costs, praised the idea of the special management agencies for each project.

“The MTA’s sky-high costs aren’t some immutable fact of nature; they’re the result of flawed processes and outdated practices,” she said. “What’s been desperately needed has been a willingness to shake up those practices, to bring in new competition and innovation, and to make the MTA accountable to the public.”