Why Costs Matter

Stockholm is currently expanding its transit system, with about 19 kilometers of subway extension, and another 6 kilometers of a commuter rail tunnel taking regional traffic off the at-capacity mainline. The subway extension, excluding rolling stock acquisition, costs about $2.1 billion, and the commuter rail extension $1.8 billion.

The US is currently building five subways: Second Avenue Subway Phase 1 (2.8 km, $4.6 billion), East Side Access (2.2 km, $10 billion), the first phase of the Wilshire subway (6.3 km, $2.8 billion), the Regional Connector (3.1 km, $1.4 billion), U-Link (5 km, $1.8 billion). Two more projects are partially underground: the Crenshaw/LAX Line, a total of 13.7 km of which 4.7 are underground, at a total cost of $2.1 billion, and the Warm Springs BART extension, a total of 8.6 km of which 1.6 are underground, at a total cost of $900 million. (Update 2/1: the Central Subway is $1.6 billion for 2.8 km. Thanks to Joel for pointing out that I forgot about it.)

The first observation is that Sweden has just 700 meters 3.5 km of subway under construction less than the US under construction, despite a vast gap in not only population but also current transit usage. Stockholm may have twice the per capita rail ridership of New York, but it’s still a small city, the size of Indianapolis, Baltimore, Portland, or Charlotte; 450 million annual rail trips is impressive for a city of its size, but the US combined has more than 3 billion. This relates to differences in costs: the amount of money Sweden is putting into heavy rail infrastructure is $3.9 billion, vs. $23.6 billion $25.2 billion among the seven eight US projects, which approaches the ratio of national subway and commuter rail ridership levels.

The second observation is that the US spending is not really proportional to current rail ridership. Two thirds of the spending is in New York, as is two thirds of US rail ridership, but nearly everything else is in Los Angeles, which takes in a majority of current subway construction route-length. Los Angeles is a progressive city and wants better public transit, but the same is true in many of the six major US transit cities – New York, Washington, San Francisco, Chicago, Boston, and Philadelphia. And yet, of those six, only New York and San Francisco are building urban subways (BART’s one mile of tunnel is in a suburb, under a park).

The difference is that Los Angeles builds subways at $400-450 million per km in the city core (less in future phases of the Wilshire subway), whereas in most of the US, lines are either more expensive or more peripheral. Boston, the Bay Area, and Washington are expanding their rapid transit networks, but largely above-ground or in a trench, and only outside the core. Boston’s Green Line Extension is in a trench, but has had major budget overruns and is currently on the high side for a full subway ($3 billion for 6.9 km), and the MBTA is even putting canceling the project on the table due to the cost. Washington’s Silver Line Phase 2 is 18.5 km and $2.7 billion, in a highway median through the Northern Virginia suburbs. BART’s Warm Springs extension is about $100 million per km, which is not outrageously high, but the next extension of the line south, to Berryessa, is $2.3 billion for 16 km, all above ground.

Let us now stay on the North American West Coast, but go north, to Vancouver. Vancouver’s construction costs are reasonable: the cost projections for the Broadway subway (C$2.7 billion ex-vehicles, PDF-p. 95) are acceptable relative to route-length (12.4 km, PDF-p. 62) and very good relative to projected ridership (320,000 per weekday, PDF-p. 168). Judging by the costs of the Evergreen and Canada Lines, and the ridership evolution of the Canada Line, these projections seem realistic. And yet, in a May 2015 referendum about funding half the line as well as many other transit projects, 62% of the region’s voters, including a bare majority in Vancouver proper, voted no.

The referendum’s result was not a shock. In the few months before the vote, the polls predicted a large, growing no vote. Already in February, the Tyee was already comparing Vancouver negatively with Stockholm, and noting that TransLink’s regional governance structure was unusual, saying the referendum was designed to fail. This is not 100% accurate: in 2014, polls were giving the yes side a majority. The deterioration began around the end of 2014 or beginning of 2015: from 52-39 in December to 46-42 in January, to 27-61 in March. The top reason cited by no voters was that they didn’t trust TransLink to spend the money well.

This cannot be divorced from Vancouver’s Compass Card debacle: plans to replace paper tickets and SkyTrain’s proof-of-payment system with a regionwide smartcard, called Compass, and faregates on SkyTrain, were delayed and run over budget. The faregates aren’t even saving money, since TransLink has to pay an operating fee to vendor Cubic that’s higher than the estimated savings from reduced fare evasion. The height of the scandal was in 2014, but it exploded in early 2015, when TransLink replaced its manager amidst growing criticism. The referendum would probably have been a success a year earlier; it was scheduled in what turned out to be a bad period for TransLink.

The importance of the Vancouver example is that construction costs are not everything. Transit agencies need to get a lot of things right, and in some cases, the effects are quite random. (Los Angeles, too, had a difficult rollout of a Cubic-run faregate system.) The three key principles here are, then:

1. Absolute costs matter. They may not directly affect people’s perceptions of whether construction is too expensive. But when legislators have to find money for a new public transit project, they have some intuitive idea of its benefits, give or take a factor of perhaps 2. Gateway is being funded, even though with the latest cost overrun (to $23.9 billion) the benefit-cost ratio in my estimation is about 1/3, but this involved extensive lobbying by Amtrak, lying both to Congress and to itself that it is a necessary component of high-speed rail. Ordinary subways do not have the luxury of benefiting from agency imperialism the way the Gateway project did; if they’re too expensive, they’re at risk of cancellation.

2. Averaged across cities and a number of years of construction, cities and countries with lower construction costs will build more public transit. We see this in the US vs. Sweden. Of course, there are periods of more construction, such as now, and periods of less, such as around 2000, but this affects both countries right now.

3. Variations from the average are often about other issues of competence – in Vancouver’s case, the failure of the faregates and the delayed Compass rollout. Political causes are less important: Vancouver’s business community opposed the transit referendum and organized against it, but it’s telling that it did so and succeeded, whereas business communities in cities with more popular transit authorities support additional construction.

In a post from 2011, Yonah Freemark argued that California HSR’s projected cost’s upper end was just 0.18% of the projected GDP of California over a 20-year construction period. The implication: the cost of high-speed rail (and public transit in general) is small relative to the ability of the economy to pay. This must be paired with the sobering observation that the benefits of public transit are similarly small, or at most of the same order of magnitude.

New York’s survived decades without Second Avenue Subway. It’s a good project to have, provided the costs are commensurate with the benefits, but without cost containment, phase 2 is probably too expensive, and phases 3 and 4 almost certainly. What’s more, the people funding such projects – the politicians, the voters, even the community organizations – consider them nice-to-haves. The US has no formal mechanism of estimating benefit-cost ratios, and a lot of local political dysfunction, and this can distort the funding, to the point that Gateway is being funded even though at this cost it shouldn’t. But, first, even a factor of 3 distortion is unusual, and second, on average, these distortions cancel out. Democrats and Republicans shouldn’t plan on controlling either Congress or the White House more than about half the time, in the long run, and transit activists shouldn’t plan on political dysfunction persistently working in their favor.

The only route forward is to improve the benefit-cost ratio. On the benefit side, this means aggressive upzoning around subway stations, probably the biggest lacuna in Los Angeles’s transit construction program. But in New York, and even in the next five transit cities in the US, this is not the main problem: population density on many corridors is sufficient by the standards of such European transit cities as Stockholm, Berlin, London, and Munich, none of which is extraordinarily dense like Paris.

No: the main problem in most big US cities is costs, and almost only costs. Operating costs, to some extent, but mainly capital construction costs. Congress and the affected states apparently have enough political will to build a 5-km tunnel for $20 billion going on $24 billion; if this system could be built for $15 billion, they’d jump at the opportunity to take credit. The US already has the will to spend reasonable amounts of money on public transit. The difference is that its $24 billion $25 billion of spending on subways buys 26 km 28.5 km of subway and 16 km of a mix of light rail and el, where it could be buying 120 km 125 km of subway. Work out where you’d build the extra 94 km 96.5 km and ask yourself if ignoring costs is such a good idea for transit activists.


  1. michael.r.james

    I guess what you meant to say was that “until a substantial PT network is established” the benefits remain small. You wouldn’t say that the benefits are small for any of those European cities, or the sole example in the US: New York City, where the benefits are so huge as to be beyond realistic calculation. LA is clearly moving in the same direction, even if expensively and painfully slowly. And in the Bay Area all the roads are fully used and there is no real (affordable) space to build new ones. For California what would a full cost-benefit analysis reveal if you included the billions or tens of billions in airport expansion to serve a domestic route that should be serviced, and better serviced, by rail? Or the real costs of road congestion in all its major cities which have reached the point of (dare I deploy Maggie Thatcher’s favoured maxim) There Is No Alternative (TINA). (Notwithstanding the autonomous car enthusiasts.)

    As you say the real cost of high-cost infrastructure in the USA (and the Anglosphere in general) is that it builds less, in a transport environment that desperately needs a lot more. But at least it is mostly domestic spending and so lubricates the local economies. Though again, in the European system more of the money returns to the local economy via taxes and wages (and 20% VATs), than in the US where a lot more of it flows up to an elite who cache it in their walled gardens in the Caymans etc or seek unproductive financial “investments”.

    • Alon Levy

      No, I mean small, everywhere in the developed world. The costs of subway extensions in New York, Paris, etc. are measured in billions of dollars/euros. So are the benefits. They’re both big numbers compared to people’s individual incomes and small numbers compared to regional GDPs. In a country with functional financial markets and a government that’s run by better people than the Assad clan, you’re not really going to see infrastructure projects with benefit-cost ratios of, say, 10. They were all built decades ago, when the benefit-cost ratio was smaller because of lower incomes. The result is that the marginal infrastructure project today is going to be controversial, with a lot of people groaning about costs or outright arguing that it’s not worth it: in the US the marginal project is SAS Phase 2 or future phases of the Wilshire subway or California HSR; in Spain, these subways and HSR lines have all been built already, so the marginal project is a subway in a small city or a money-losing HSR line to a coastal resort.

      As for lubricating the local economy… you can say that about any waste. If you’re using three people to do a job that one person can do for the same wage, you’ve created two more jobs directly, and about one more job indirectly via the multiplier effect. The problem is that, just as ultimately absolute costs matter, so does absolute use of resources. Ultimately, regional or national wealth is measured by how much can be produced for a given amount of labor, capital, and natural resources. In poor agrarian countries, capital forms a sharp limit, so you can’t easily enlarge the labor force and expect more output, so instead you keep people on farms doing makework so that they won’t be unemployed. In rich urbanized countries, there’s very little such hidden unemployment, and not much actual unemployment (in the more functional states, governments fall at 8% unemployment, and 25% is a once-in-a-lifetime disaster); having three people do the job of one person does not have a long-term stimulus effect, and mainly just makes the area poorer via reduced labor productivity.

      • Lewis Lehe (@LewisLehe)

        Great post. Small absolute benefits is an important point.
        Note to go off on too much a tangent, but it is especially worth remembering regarding carbon savings. These are a tiny rounding error compared to say—CAFE, gas tax, fall in the costs of solar and wind, etc. All the carbon savings from US transit for a year (37 million tons, according to the APTA) are about 2 days of indonesia’s forest fires. Obama’s new CAFE standards are expected to involve two orders of magnitude larger savings, but there are not entire blog networks devoted to efficiency regulations.

        I wonder if it would be better for efficiency and politics both to just ignore carbon emissions in transit and target fewer, more falsifiable goals (ridership, accessibility, maintenance). But we are headed in the opposite direction. Transit is supposed to be part of building a healthy city, solving inequality, economic development, attracting millenials, attracting the creative class, attracting tourists, achieving energy independence, reducing congestion, beautification, improving air quality, creating a walkable neighborhood, revitalizing detroit and creating middle-class jobs. This goes not only for the operation itself, but for decisions about suppliers and contractors.

        There is something to be said for mindfulness over multi-tasking even at the policy level. When I sit down to research, I don’t think, “How can I write this paper in a way that saves carbon?” Ultimately, maybe my research will end up saving carbon, but it probably has the best chance of doing that, or anything good, if I just try to write it well.

      • asdfsdf

        ” you’re not really going to see infrastructure projects with benefit-cost ratios of, say, 10. They were all built decades ago, when the benefit-cost ratio was smaller because of lower incomes.”

        I’m not entirely sure what you’re saying here. Did benefits grow proportionately as incomes grew proportionately everywhere, so something that generated, say, 100m of benefits now generates 300m, because a GDP/capita of 20K is now 60K? Or are you saying that transit projects slowly accumulate benefits, because a lot of proximity benefits (reduced time wasted in commute, better networking, etc.) tend to stack on top of each other?

        • Alon Levy

          One benefit of better transportation is faster travel; in ridership models for intercity rail, the benefits of reduced travel time are converted to a unit of money by using hourly wages, so e.g. saving an hour of travel time in a community where the average wage is $25/hour is deemed to be worth $25 per traveler. This naturally is proportional to income. Very generally, in intercity lines, the ability of passengers to pay fares is proportional to their income – China is having some problems making a profit on CRH, since fares are lower than in developed countries but construction costs and most operating expenses are not.

          The other benefits vary, but also grow with income, to some extent. Evidently, travel volumes in poor countries are smaller than in rich countries; on Twitter, Threestationsquare tells me that in East Africa, traffic between major cities is a couple of busloads per day, a lot less than in developed countries. There’s also a long-term trend toward ridership growth on European high-speed lines.

  2. michael.r.james

    Arrggh, got my formatting wrong, meant to begin with the following (if you want to add it to my first post):

    the benefits of public transit are similarly small

  3. Adirondacker12800

    East Side Access (2.2 km, $10 billion)

    It has a lot of four track tunnel that then spreads out into 8 platforms. There’s all that tunnel out in Queens too. Which had to be done under one of the busiest stretches of railroad in the world. Not that it should have cost 10 billion but it’s not 2.2. km either.

    • Alon Levy

      The Manhattan part is 2 km, the Queens part is a small number of hundreds of meters.

      And yes, some of it is a station cavern. Somehow, Sweden is managing to build Citybanan, including two new deep-underground stations with platforms, without blowing the budget to ESA levels.

      • Adirondacker12800

        Wikipedia says 3 km in Queens. And gives the impression that it’s four bores. IIRC the eastern side is three the western side is two.

        • Alon Levy

          3 km of line, not 3 km of tunnel. The tunnel is a short underpass to get under Harold Interlocking and the railyard. The hard part of the tunnel, getting across the East River, was built decades ago and is not included in either the cost or the route-length.

          • Alon Levy

            So, I’ve been looking for maps, and so far, 2 miles of route-length seem implausible. As far as I understand from NYCsubway.org, the eastern end of the LIRR half of 63rd Street Tunnel is at the western end of Northern; go 2 miles east of Northern and you’re past the Woodside LIRR station. Most likely, then, the reference to 10,000 linear feet is to track length in a four-track tunnel (why four tracks, when it feeds into a two-track 63rd Street tunnel?), so the actual route-length is 2,500′, or 750 meters. The Manhattan part of the tunnel is a hair under 2 km, so you add them and it’s not 2.2 km, sorry, but 2.6.

          • Adirondacker12800

            Four bores are gonna cost more than two bores. Probably not twice as much but they will cost more. There’s the Q-tip which will be buried eventually and the part under Northern Blvd. That had to be frozen. And has an elevated teetering over it. The parts in the Bronx weren’t particularly expensive but they add to the cost.

          • Alon Levy

            Yes, but they’re not actually providing four tracks’ worth of capacity. They’re merging four tracks (from the LIRR Main Line and Port Washington Branch) down to two, underground.

          • Adirondacker12800

            There’s four tracks of Main Line and two tracks of Port Washington Branch in Woodside. The LIRR is too busy to have it all as a flat junction.

          • Joey

            Bored tunnel tends to be relatively cheap anyway. I suspect that most of the cost is in the station caverns.

          • Nathanael

            Actually, important correction on where the costs are. The tunnelling through the mud in Queens is more expensive than the hard-rock tunnelling in Manhattan, *and* is taking longer. This is actually typical.

  4. Brendan Dawe

    I must quibble with a few of your Vancouver details. And I don’t see why a referendum in 2014 would have worked. For one, Compass would have still been a year late rather than two years, subject to criticisms in the media, and the open gates that were immediately installed years prior had been raising suspicions for all that time. The last-few-years decline in service reliability had already been apparent in 2013, a result of too-delayed preventative maintenance and preventative maintenance having unfortunate problem of damaging things (like the welders replacing third-rails who set on fire a bird’s nest that fell from a tree that burned through control cables.) So coming into this in 2015 and 2014, we have declining service reliability

    When it came to the campaign, in my professional opinion the yes campaign was poorly strategized by people who had no experience with referendums. While the Yes Campaign enjoyed broad support from Business (yes, business groups were solidly in favor of a YES vote,with one of the campaign co-chairs being the head of the Board of Trade, not opposed to it as you claimed. The only significant business opposition I can imagine was Canadian Pacific’s suspiciously contemporaneous dicking-around with the West Coast Express, whose 98% OTP fell markedly before the referendum, and returned to normal a few months after the votes were counted ), environmental groups, labour groups, most local governments; all told a solid consensus of the regional elite. They felt that they could wait until the ballots were out to start campaigning, and were very late out the gate in trying to get their message across after people had already solidified their opinions. It also didn’t help that they felt that it was a-ok to go and spend public money to fund the yes campaign, which struck people as unfair.

    This left several months for the Canadian Taxpayer’s Federation (a Norquistian bunch) who ran the No campaign to get their message out through adept use of unpaid media exposure (irritatingly enough, their local leader Jordan Bateman continues to be a go-to resource for uninformed moaning for journalists). As you mention, polling was already slipping when Translink fired their CEO, which rather than being over fare cards was done as a hail-Mary move to try to instill confidence. It only confirmed to everyone what Bateman had been telling them.

    For all this to have happened in 2014 would have left much of the same cards in place – the campaigners who didn’t know how to campaign, reliability and fare card issues stewing away, the hostile press coverage, and the adept opposition, the general lack of experience which Vancouver voters have of similar places leading to a lack of understanding of how well run Translink actually is. These would all still be there.

    Given the Premier’s behavior during this whole ordeal, I still insist that there was not a desire on the part of the Provincial government for this to succeed.

  5. orulz

    Is it your opinion that every project in the US is unreasonably expensive?

    To me, it seems to me that Los Angeles stands alone as being able to build worthy projects for a cost that are not about an order of magnitude out of whack, but what do you think? IMO the regional connector project is reasonable, at least by US standards: three new underground stations in 3.1km for $1.4 billion. New York City could hardly even build an infill station on an existing line for that much.

    LA may be an example of the best practices that are possible in the current US regulatory, business, and political environment, especially given that California is just as heavily unionized as states in the northeast. If so, other agencies need to go to Los Angeles and figure out what they’re doing differently and change their practices to match.

    Put another way, let’s ignore (for now) how much Barcelona pays to build a subway; if NYC could build 3.1km of subway with three stations for $1.4 billion, there’s a whole slew of projects that would come out with reasonable cost benefit calculations, including but not limited to the entire second avenue subway.

    • Alon Levy

      I don’t think everything in the US is unreasonable expensive. I do, however, think that,

      1. Even in LA, costs are pretty high by European standards. They’re just high by a factor of 1.5-2 rather than 10. A factor of 2 isn’t nothing, but it’s also pretty routine here – not every city is Madrid. Seattle seems to be in the same category as LA: U-Link should have cost half as much as it did, which isn’t great, but is a lot better than what we see in New York.

      2. In cities that are not New York or Los Angeles, the extra cost factor is probably 3-4. I’m basing this on some long-range plans Washington has to give the Blue and Yellow Lines dedicated tracks through the District: the cost of the plan that I saw was projected at $800 million per km, if I remember correctly. New York is somewhat unique, and the explanations I’ve seen include a uniquely bad public procurement law in the state, and sandhog union intransigence. Of course, other states have strong unions too, but for decades they built no tunnels, so the sandhogs union died out, and new subway projects involve new workers with modern practices; in New York, Water Tunnel 3 preserved the union, which resists the adoption of modern labor-saving practices, and had to be dragged into accepting TBMs over dynamiting.

      3. Most US rail construction by route-length, and probably also by cost outside New York, is not underground. There, the costs are all over. The worst projects seem to be the ones next to mainline rail: the Green Line Extension, and PATH to the airport. The JFK and Newark AirTrains were about $200 million/km, only a factor of 2 too expensive, but now PATH to the airport is projected at $500 million/km. But Milwaukie Max and the WMATA Silver Line Phase 2 are also ungodly expensive for at-grade rail. In contrast, most US light rail projects aren’t horribly expensive – they just get low ridership, usually because they’re built far out into the suburbs (hi, Dallas). To the extent the PATH budget reflects mainline rail problems, the non-horrible cost of the AirTrains suggests New York’s subway construction cost problem is specific to tunneling issues, i.e. the sandhogs’ union.

      4. In small cities, it’s more important to keep costs down. Stockholm has low construction costs, for the most part. If its construction costs were twice as high, say $200-250 million per km for most projects and $400 million for complex tunnels under the CBD, as in Paris, would it be able to afford such a huge subway system for how small it is? Maybe, but maybe not.

      5. In a lot of cases, the problem is not the cost, but the project itself. Take the Central Subway: it’s too expensive by a factor of just 2, maybe even less considering it has to go under the multilevel Market Street subway. Its problem is that it should not have been built – it’s so short the time savings over buses are swallowed by long station access time. The same is true of the Foothills Extension, California HSR’s alignment choices, Houston’s choice to build the Universities Line last rather than first, and, if I remember correctly, Minneapolis’s ongoing light rail expansion.

      • Adirondacker12800

        Water Tunnel 3 is on time and on budget.
        Quarter of a million dollars per year per sandhog, wages and benefits, doesn’t make the project cost 10 billion dollars. Half a million a year doesn’t either. There aren’t that many of them.
        Look at the nice white collar workers toiling away at making sure every jot and tiddle is in the correct font and it’s printed on the right kind of paper. Which someone will sue over anyway.
        It took nine years to get to the point where they were able to send someone out with a spray can of marking paint to start digging holes. That cost money. Lots and lots of money. So did the lawsuits that Second Avenue would have – horrors – pedestrians. And that the Cathedral would be disturbed. And…

        • anonymouse

          It’s not a matter of how much each worker gets paid as how many of them there are, and the rate at which work gets done. NYC construction unions often require overstaffing by a factor of 3 and require various time-wasting practices that can cut productivity in half. Any of these things in isolation might not be fatal, but the effects are multiplicative, and an overall factor of 12 in labor costs is pretty big.

          • Adirondacker12800

            yes the endless environmental review and lawsuits do suck up great big rivers of white collar vigorish.

  6. Steven Berry

    The key question is what are Barcelona and (to a lesser degree) LA doing right that other US cities should copy? It one thing to say “worry about about costs” and yet a better thing to say “change the following stuff.”

    • Nathanael

      What are they doing right? For one thing, they are not allowing rogue contractors to defraud the government.

      That’s the main problem in both NY and Boston: contractors are basically openly defrauding the government by using whatever “loopholes” they can come up with to bill large amounts for work which could (and should) be done much more cheaply and with better quality. In Boston on the GLX, this was recognized and the contractors were sacked. In NY? They just keep using the same contractors.

  7. The Economist

    Congress and the local politicians in NY still have not built the Gateway, so do not count it as a done deal. The money is not allocated and will not be for many years to come. In my opinion the chance of the next recession canceling or scaling down the whole thing is better than 80%.

    Even though you are making some very good and interesting points, I need to point out that you are missing the biggest factor driving the divergence in costs: the density. The density difference between LA and NYC is huge. In fact when we compare Second Avenue to any of the LA projects, the proper comparison is the density of the Upper East Side to the density of the relevant project area in LA. Having buildings on both side of the street that exceed 10 stories makes a big difference when selecting what and how to build it. Additionally while NYC’s streets are not narrow, on average they are probably narrower than the streets available in LA and that makes a difference. While I suspect that LA’s costs at NYC Upper East Side densities would still be lower the difference will not anywhere the same order of magnitude. If NYC was building a subway in Queens or Staten Island which have areas deserving service by European standards, the costs would be a third to at most a half of the costs in Manhattan. I am not saying that you do not have a point about the costs in NYC, you do. I am pointing out that the numbers need to be adjusted in order to compare apples to apples.

    The real difference between European and US projects is that the thresholds determining the cost-benefit tradeoffs in the US are so much higher than in Europe. The threshold is about an order of magnitude higher in the US primarily because of direct and indirect effects of the significantly lower cost of car ownership. To get the same 1,000 subway (or rail) customers per hour in the US requires neighbourhood densities which are an order of magnitude higher than in Europe. This is because gas is cheap (about half of the cost in Europe) and highways were built back (or space was reserved for them and their widening) in the 60s and 70s to the point that we need to double or triple the US population before we congest them enough. So not surprisingly people prefer to drive. In fact my personal experience with people who I know in Europe is that they would also drive if cost of car ownership/use and congestion were comparable to those in the US. Building in denser neighbourhoods means higher costs, so on average I would expect the costs in the US to be higher. You do have the point that they are way too high here, but we cannot expect them to be the same.

    Another factor is that the US is extremely large geographically compared to most Western European countries. This causes problems in formulating a uniform policy. Clearly what works in NYC (e.g. “transit”) does not work in Iowa (e.g. “pick-up truck”). It has clearly proven impossible for the Federal government to formulate a proper locally adjusted framework for transportation. To the Senator/Congressman/Voter of Iowa trains and subways are things they have never experienced, so they are against them and pro-cars because they drive them every day. It happens that historically over the last 50 years the people whose lives are closer to cars have had the upper hand, so things have continued their way. Indeed even in smaller areas, such as NY State, the state is so influenced by the lo w density upstate areas that they still get as much spent on roads there as is spent on transit in the NYC area, so the status-quo continues. It might tip one day as the rural areas and the small towns lose population, but we are not there yet. In fact the process is slower than you would think because of the inflow of retirees who are leaving the dense areas in search for cheaper living — that is why suburban and rural Florida commands so much power because the number of people living there is surprisingly large and they all drive.

    • Alon Levy

      The problem with the density argument is that, while the Upper East Side is very dense, it’s not an unusually difficult geography to build in. Second Avenue is a wide, straight throughfare, in well-understood geology, in an area that was only developed in the second half of the 19th century, without crossing under older subway lines except to link with the 63rd Street station. Moreover, Phase 2, which is a bit harder because of the crossing under 125th/Lex, is in a neighborhood that’s not unusually dense by Parisian standards, and still will probably cost more per km than Phase 1.

      Compare that with some of the clusterfucks on this side of the Pond: Paris Metro Line 14 went through old catacombs, and had to cross under the entire older Metro and RER networks; Rome Metro Line C ran into archeological sites from antiquity; Citybanan has to go deep under the highway and subway tunnels of Central Stockholm and has a major water crossing. Los Angeles doesn’t have anything that bad, but the Regional Connector goes through Downtown LA and crosses the Red Line twice – the residential density there isn’t high, but the overall intensity of development is more than on the Upper East Side.

      • Nathanael

        Los Angeles — the Wilshire Boulevard line is digging through the La Brea Tar Pits. It’s pretty nasty geology to tunnel through.

        • Nathanael

          (Not to mention the paleontology required for any tunneling through the tar pits!)

          Second Avenue Subway tunneling in NY is easy by comparison.

          • johndmuller

            I found the La Brea Tar Pits to be extremely disappointing. If you put more than 5 or 10 Brontosauri in there it would be starting to get crowded – it’s just a moderate sized city block in the middle of an upscale (sub)urban strip. The kind of thing the neighborhood improvement association might otherwise call a blight if it weren’t so famous.

            I suppose that the ground around it must be somewhat similar, but there is stuff built on it, so it can’t be too bad either. As far as whether the paleontology aspects could slow construction from a ‘be careful of the fossils while you’re digging’ point of view, the same sort of thing happens in NYC with archaeological relics turning up in subway digs slowing down the works. Just add that to the list with the unmapped utilities and foundations to be underpinned.

          • Nathanael

            The tar pits actually extend for dozens of blocks in every direction. Occasionally basements fill with methane and explode; they have to take special precautions while tunnelling. This is why there was a federal ban on tunnelling for several years, until they could prove that they knew what they were doing. The problem is basically that the ground is flammable; apart from that it’s straightforward…

            There are also oil wells throughout the neighborhood, because you know another name for tar is oil…

      • Ryan

        If that’s the case, then scaling Phase 2 back to 125/2 Av and abandoning this idea of a spur route down 125 ought to deliver immediate savings on the Phase 2 price tag, as well as delivering us a superior eventual transit route, no?

    • Nathanael

      “Indeed even in smaller areas, such as NY State, the state is so influenced by the lo w density upstate areas…”

      We really aren’t that low density. (Unless you mean the North Country, which really is low density but has very little influence.) Buffalo, Rochester, and Syracuse have certainly sprawled and hollowed out, but they’re still actual cities, and they all developed before the automobile. Cities with this population density in Europe have bus service, train service, and even tram service.

      You know, all the upstate NY cities used to have streetcar systems, interurbans, and multiple intercity railroad lines too.

        • The Economist

          Cars are not that cheap by themselves, they cost about the same here as in Europe. The cost of gas is the major driver of the difference.

  8. Nathanael

    OK, so a few points:
    (1) In Boston, they are largely blaming the high fake costs of the Green Line contracting method which encouraged contractor scamming and bill-padding and general fraud, and the contractors who proceeded to scam and bill-pad and defraud the government. With any luck the cancellation of the contracts will teach the Boston area contractors a lesson and they’ll get better behavior from contractors next time. It should come in a lot cheaper. Period.
    (2) New York has done absolutely nothing to prevent this sort of contractor fraud, which is endemic in New York.
    (3) Gateway got funded because of Hurricane Sandy. Amtrak will be closing one of those tunnels for repairs. New Jersey Transit will be unable to run its rush hour service under those circumstances. This was unpalatable to the politicians.
    (4) LA, where costs are reasonable, shows the interesting property that there’s a large set-up cost for a project: it seems to be cheaper per-km to do one long line than to do a dozen short lines.

    • Eric

      4) True, and unfortunately LA is doing its most important rail project (Wilshire) in 3 stages, not counting the already-built stages.

      • Nathanael

        I think perhaps the situation with the Big Dig was so insanely bad that it woke people up.

        There were a lot of other things wrong with the Big Dig in addition to the contractor scamming, though.

        — For one thing they repeatedly disregarded professional engineering studies (which they’d paid for!) which were giving big warnings. (Same thing happened with Seattle’s Big Dig, Bertha).
        — For another, every time someone with any power opposed the project, they “bought them off”, often with money, sometimes with unrelated promises. The *legal obligations* they incurred with regards to air quality are something which the state government has been trying to weasel out of for decades and people are *really really mad about it*. (The habit of “buying off” the opposition is also practiced by the NY MTA. Los Angeles doesn’t do this, not to this degree anyway.)

        In more sane projects, the promoters actually try to convince other people that the project was a good idea (rather than bribing people not to oppose it), and if they can’t, they fight the opposition. In more sane projects, the promoters actually pay attention to the professional advice and try to improve the project design based on it.

        • Alon Levy

          Well, Boston is still doing this – look at the GLX cost overruns, or at South Coast Rail. California is building HSR for less per km than the MBTA is planning to build South Coast Rail, an unelectrified single-track commuter line on legacy track.

    • Steven Berry

      Nathanael, “contractor fraud” tolerated by the city may have some truth, but it is at best incomplete. Bloomberg tolerated known fraud, in the billions, for what reason?? Can you imagine the political payoff to the politician or prosecutor who stopped it! I came across a theory that NYC courts side uniformly with city contractors, that would be a more complete story that would explain why contractor waste persists. A French economist told me that French courts would, in contrast, give significant deference to the state in a contractor dispute.

      • Nathanael

        Steven, you’re probably right about the courts in NYC, but also, the construction companies seem to have some sort of political “pull” — I haven’t figured out why or how.

        • Nathanael

          Bluntly the contractors don’t seem to get away with anywhere near this sort of crap once you get 50 miles west of the Hudson River in New York, and even in Albany they seem to behave better than downstate. So there really is some geographical difference in how much political pull they have.

          • Alon Levy

            The problem with this line is that most of the US is not Los Angeles (and frankly, even Los Angeles isn’t Madrid). Milwaukie MAX and the Washington Silver Line both cost a multiple of what at-grade rail lines should cost.

          • Steven Berry

            Alon Levy: everyone reading is convinced that costs matter. We are reading you because we are convinced and we are convinced because we are reading you.

            Now, how do we change the costs? I understand you want the conversation to move, but it will move faster if we know what is the solution. How do we bring costs down? It is very similar to the conversation about health care. By now, everyone knows that US health care costs are high relative to other developed nations’ costs. In health care, we know a few (controversial) partial solutions, like having the government bargain over drug prices. But other health-cost drivers are not so well understood. In health care, like in transit, what possibly drives the large *within* US variation in costs? “Variation in physician practices?”

            Do we know of any transportation cost solutions, the analog of “bargain over drug prices”? Do we have any candidates for the within US variation in costs? Is there any feasible research program or data-collection effort that would help?

          • Nathanael

            Pffft. Most of the US does nearly as well as the UK — this points to lawsuits under the common-law system being the primary cause of *nationwide* elevated costs. We aren’t going to change that directly. And frankly it seems to be tolerable, because roadworks — the competition — also come in at similar prices. A large portion of the problem is fixed deployment costs (where it costs the same amount to build 1 km or 100 km), combined with the US tendency to build very tiny extensions, and that will only be dealt with by getting more funding.

            I’d rather address the enormous problems in New York City. NYC is something like half the transit ridership in the country, and it is impossible to get anything built at even twice a reasonable price there. This is more urgent than the general problem.

          • Alon Levy

            1. Do non-London British cities build rail tunnels?

            2. I’m going to look at whether there’s a fixed term in tunneling costs in a post soon. I suspect that if there is, it is small: recall that my initial set of projects to compare SAS and the 7 extension with includes Berlin’s U55, a 1.8 km tunnel. Short extensions of preexisting lines also appear in Stockholm’s current set of subway extensions (alongside a longer and more complex line).

          • johndmuller

            I believe that cost matter, but I’m not sure that I’m convinced that they do. Most things are not as simple as they seem on the surface and Economics is apparently so full of counter-intuitive stuff that all the other people in the room think that the economists are crazy.

            One thing to consider is what NYC would do with the money instead of building more of the 2nd Ave Subway. We’ve got plenty of examples right in front of us – Abstract dinosaurs atop subway terminals – lots of little ferries shuttling across the East River – Miniature railroads to airports – Linear parks in RR ROW’s – Raises and extra benefits to RR employees – and those are just some of transit related options. We could hire thousands of policemen, lawyers, consultants, media experts (not to mention economists) and set traps to catch errant politicians; what about building more public housing (instead of maintaining what we already have), hiring hundreds of crane inspectors or arguing about building/demolishing horse carriage facilities in and around Central Park.

            If we are saving our money for political vanity projects or other useless or unnecessary things, why not just waste it (or burn it as Alon would say) on overpriced transit improvements that at least have some use?

          • Nathanael

            And the elevators didn’t even work right, delaying the extension for six months. And they removed a very useful second station from the design because…. I’ve no idea, really. Once they were already digging holes it wasn’t going to make the project any harder. They seemed to be fixated on doing as half-assed a job as possible for as much money as possible.

  9. kclo3

    Philadelphia exemplifies number 3, but its overwhelming problem is all the naysayers come from top-level administration even before an LPA is selected, before any external stakeholder has a chance to comment at all. I doubt there is another American city whose politicians have incongruously cowered behind the untested excuse of “insurmountably high projected costs” as those in Philadelphia have. The difference here being that it doesn’t matter if it’s $250 million or $2.5 billion, intrinsically urban or exclusively exurban, it all dies a quiet death in development hell as the planners make up crippled alternatives from the outset and don’t say a word about the important things at hand (Regional Rail frequency). So what is happening now is a major trend in accepting subsequent BRT-creep alternatives as if they were a smartly-designed low-cost alternative from the beginning. The South Jersey freeway BRT, a bunch of P-n-R’s, shoulder lane expansion and extremely minimal TSP, is $120 million for 1.8k projected new transit riders. For Roosevelt Blvd BRT, the clearest goal they’ve set so far is an outright refusal to consider one dedicated lane out of 6, again cowering behind the conjectural funding scapegoat and completely overlooking cost/benefit. The latest incompetent City Branch study was a series of three $100 million build-alternatives that ultimately advocated for a reduction in neighboring route frequency in a quixotic effort to maintain preexisting operating funding levels through the new-build. Not a single constituency has substantially complained or rallied against this mindset.
    I am reminded of this very early post in particular:

    In an environment of high costs, it still make sense to draw plans as if the costs are normal, and when the costs are not normal, build more slowly and start with the most cost-effective lines. If agencies and activists behave as if there’s no money for good transit, they will only get bad transit.

    • Nathanael

      At least, since the passage of the funding bill last year, Philadelphia is starting to approach things more sensibly with the *renovations* of the existing system. They’re doing a pretty good job with it. Perhaps that will eventually spill over into extensions.

  10. EJ

    Upzoning around stations? In LA? But where are we going to put our grandiose headhouses and entrance plazas? Seriously, check out these designs in case you’re wondering where all that construction money goes: http://thesource.metro.net/2012/08/23/regional-connector-community-updates-continue-today-new-drawings-of-stations/

    But LA needs faregates on its system! (it doesn’t need them because POP was a failure, but to assuage the typical American fear that Someone Might Be Getting Away With Something) So that’s why we need the headhouse, right? Nope! Those go on the mezzanine level. Yep, a giant three level station, complete with large windswept plaza, for a stop that, while potentially fairly busy, isn’t a major junction or transfer point.

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  15. kristofer bartelle

    As a long time estimator for these project. The cost over runs are the direct affect of agency incompetence and inability to deliver these projects. That is directed down from the politicians who hire unqualified directors with very little regard or ability to implement a project. By the time anyone figures out that their inabilities they are usually gone on to their next position leaving the agency spinning and starting the cycle all over again. Politicians look for the wrong skill sets when hiring directors of public transit agencies, and they frequently fire good directors who disagree with them. In regards to “Bad Contractors” . There is a myth Transit Agencies like to spread that the cost over runs are directly due to “Bad Contractors”. Yet these contractors very rarely loose legal suits against the agencies. It is the agencies that are frequently held in noncompliance. That is because the agencies cannot write iron clad contracts and behave like they have no contractual obligations to provide plans and a construction site free of errors. To be fair to the agency that is an impossible task, yet agencies pretend that they can provide plans and authorizations to perform these projects. That is until the contractor points out a utility in the way or land hasn’t been acquired. Agencies don’t want to hear about reality during design, its only when a contractor comes in, are they forced to deal with the realities of the projects and the many externalities the agencies had taken for granted become costly delays. All of this leads to escalating costs, most “Good Contractors” wouldn’t work for a public agency because they know the risk of dealing with them is too great. It is only deep pocketed “Bad Contractors” who have the ability to hire a legal team to point document and recoup costs for every error, delay and omission the owner left out. The myth is self serving, its a way for the agency to tell themselves its not really their fault, it was the “Bad Contractor”, or consulting engineer of record. It keeps them from changing the way they deliver projects and being real about costs and laws that keep these projects inept.

    • Alon Levy

      Some contractors really are bad. When Tutor-Perini has change orders that raise the costs for pretty much everything they bid on in California, and other contractors mostly don’t, the incompetence is with the agency that keeps giving it contracts.

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