The most persistent criticism I have heard of my writings on construction costs, coming from YIMBY Princeton, is the importance of gradual expertise and experience. Against my claim that Americans build subways for higher costs than the rest of the world due to poor management practices, regulations, and procurement, and scope creep, YIMBY Princeton says that high costs are a result and not a cause of the rarity of American subway investment. I believe that high US costs are endogenous and therefore the US is reluctant to fund rail transit; he believes that disinterest in transit is endogenous and if the US were willing to build more rail lines, then construction costs would naturally go down through economies of scale and steady accumulation of project management expertise. I promised last year that I would go over his argument more carefully, and am going to do so in this post.
The obvious difficulty with this debate is that we agree there is negative correlation between construction costs and the extent of construction, and disagree on causation. Wikipedia lists 55 countries with metro systems, with a handful more with under-construction metros, but this is not enough of a dataset for large-n studies. There are too many control variables – for example, it’s easier to build the first subway line than the tenth, which reduces the proper comparisons for New York to a handful of large cities. Instead, the only real way to figure out what causes what is to rely on a handful of natural experiments.
I can come up with a number of natural experiments. One is ambiguous about causation: the role of poor project management in the high construction costs in Boston and Paris. The others all suggest that high costs are endogenous to the US, rather than unwillingness to build subway tunnels. These include the history of construction costs in New York, London, and Paris in the 1930s; the construction costs in London today; and the history of construction costs in Seoul from the 1970s to the present.
I know of two overpriced rail extensions blamed explicitly on poor project management: the Green Line Extension in Boston, and Grand Paris Express. As I explained in CityLab a few months ago, the GLX was budgeted at $3 billion for just 7.5 km of light rail trench in preexisting open cuts, but the MBTA cut this to $1.1 billion in actual construction plus $1.2 billion in rolling stock and sunk costs through hiring a more experienced project manager. In Paris, one of the reasons the Cour des Comptes cited in its report about the cost overrun is lack of experience in managing such a large project; as a result, the 200 km system, with 160 km underground, is now up to €35 billion.
The problem is that even with better cost control, Boston’s construction remains pricey. At $150 million per km, GLX is expensive for a line in a preexisting right-of-way, and not far behind GPX’s $220 million per km for an 80% underground network. While both Boston and Paris can expect future construction to be cheaper if they apply the lessons of GLX and GPX cost overruns, their absolute costs remain different, with Boston spending more per unit than Paris. At best this is neutral between my explanation and that of YIMBY Princeton.
Construction costs, dieselpunk edition
New York’s subway construction costs have risen since the start. In 1900-4, the First Subway cost $32 million for 22 km of subway and 1 km of viaduct (namely, the 125th Street viaduct on today’s 1 train), and another $3 million for 9 km. In today’s money, this is $39 million per km underground and $9 million per km elevated. JRTR has some statistics for the Dual Contracts, built in the 1910s and early 20s, and the IND, built in the 1930s. The Dual Contracts cost $366 million, equivalent to around $8 billion today; the total route-length added was about 180 km, of which 70 km was underground, consistent with a cost of about $80 million per underground km. Then the IND cost $815 million, equivalent to about $14 billion today, for 97 route-km, practically all underground, or about $140 million per km.
The projected cost of Second Avenue Subway kept rising. In 1929 the projection was $86 million, or about $1.2 billion in today’s money, or $90 million per km; this was before the IND cost overruns materialized (at a time of general deflation). In 1939 it was up to $249 million, or $4.2 billion today, about $320 million per km; by 1949, it had crept up to $500 million, or $5 billion today and $390 million per km. Put another way, WW2-era America, a country that had just built massive public works in the Depression as well as the war, including the IND and Chicago’s two subway lines through the Loop, was already projecting a higher per km cost than is routine in nearly the entire world today. Moreover, the plan was to build Second Avenue Subway cut-and-cover, a technique that is cheaper today than the deep boring typical of comparable infill subways in the first world.
I have less data than I’d like for other cities’ construction costs in the interwar era, but where they exist, they are a fraction of New York’s. The London Underground extension to Cockfosters in the Depression cost £4m for 12 km, 60% underground, per Wikipedia. In today’s money it’s $45 million per underground km. In Paris, there was little growth in real costs between 1913 and 1930: according to a presentation by Pascal Désabres, construction costs in today’s money in both 1913 and 1930 were about €23 million per km, or about $29 million per km.
London’s mounting costs
In the 1930s, London built an Underground extension for $45 million per km. After the war, it could no longer do so. According to numbers in the Financial Times, the Victoria line cost £4.5 million per km in the 1960s, all underground, which is about $110 million per km in today’s money, while the Jubilee line, built in the 1970s, cost about $250 million per km.
The Victoria and Jubilee lines were more complex projects than the Cockfosters extension, going under older Underground lines. The Jubilee line also included the construction of a transfer station with the Northern and Bakerloo lines at Charing Cross, whereas previously they only connected at the next two stations, Embankment and Waterloo. However, the construction technique, the tunnel-boring machine, is one that is supposed to have a much smaller city-center premium over outlying construction, since there is no surface disruption.
But whereas the Victoria and Jubilee lines had excuses for their high costs, more recent Underground extensions do not. In the 1990s, the Jubilee line extension cost around $500 million per km in today’s money, going under a few older Underground lines and crossing the Thames four times (in an environment with not much underwater premium) but mostly extending the system to the east, to previously underserved areas like Canary Wharf. The under-construction Battersea extension, crossing under one older line and serving a relatively undeveloped area at Battersea Power Station, is about $550 million per km. The next Underground extension under discussion today, that of the Bakerloo line to Lewisham, is budgeted at £3.1 billion over 7 km, or about $620 million per km, crossing under no Underground lines and largely following a wide road.
Under YIMBY Princeton’s theory, London’s construction costs should be decreasing as it obtains more experience tunneling in a constrained urban area with millennium-era sensitivity to environmental impact like noise. But on the contrary, costs keep growing.
Seoul’s low costs
If London is the expensive city that should under YIMBY Princeton’s theory get cheaper but isn’t, Seoul is the cheap city that should have been expensive in the 1980s but wasn’t. JRTR has data from the 1970s to the 1990s: after an increase at the beginning, Seoul’s construction costs stabilized in the 1980s and 90s at about $80 million per km in constant dollars in today’s money. These costs seem to persist today, judging by the Sin-Bundang Line, which cost 1,169 billion won for 18 km, converting to about $90 million per km in PPP dollars.
Seoul is consistent with the theory that costs are endogenous to a city or country. There is high correlation between the construction costs of different lines within the same city: having set non-US records with the Jubilee line extension, London keeps building very expensive Underground extension of the Northern and Bakerloo lines; Paris is spending around $250 million per underground km on a number of Metro extensions; Seoul keeps building subways at just under $100 million per km.