Costs are Rising
This is a partial data dump from an in-progress database I’m compiling for subway construction costs around the world. The key point is that costs are rising: in cities with enough historical data points we can see a secular increase in construction costs. The difference between expensive cities like New York and London is that their costs have been high for a while, whereas cheap ones like Madrid and Seoul are seeing construction cost growth from a very low basis.
As a note of caution, while growth in costs seems universal, the rate of growth is not the same everywhere. Some cities, most notably Singapore and Toronto, have seen a cost explosion in the last 15-20 years; others, most notably Seoul, have seen only a moderate increase in costs.
I also urge readers to look at some 20th century historical costs here, as in this post I am going to focus on the very end of the 20th century and the 21st century.
Paris: the original Metro Line 14 cost €1.174 billion for 9.2 km (link), built between the 1990s and 2007; deflated to 2012 euros, the baseline year used for ongoing extensions, this is around €160 million per km. More recent projects in Paris cost around the same, including the Line 1 extension and Grand Paris Express – but those are mostly suburban extensions, whereas M14 had to go underneath central Paris.
Toronto: Jonathan English, who has been working with me on Canadian construction costs issues, notes that the Sheppard subway, opened in 2002, cost C$1 billion for 5.5 km, but ongoing projects are far more expensive. The one-stop 6.2 km Scarborough subway is projected to cost around C$3.5 billion not including extra items for interfacing with the existing rapid transit line along the same alignment, which is to be dismantled. Not only is the nominal cost 3 times higher – and the real cost is still around twice as high – but also the Scarborough subway has just one station to be constructed, which makes it a simpler project.
Montreal: Jonathan equally looks at the cost explosion in Montreal. The Laval extension was built in the 2000s and opened in 2007, costing C$742 million for 5.2 km and 3 stations, or C$143 million per km, crossing under the Rivière des Prairies. In contrast, an extension of the Blue Line planned for next decade is to cost C$3.9 billion for 5.8 km and 5 stations, or C$672 million per km – and even adjusting for inflation only reduces the cost differential to a factor of about 3.
(In case Canadian readers wonder why I’m not covering Vancouver, even though the escalations on the Broadway subway have pushed its per-km cost well beyond that of the Canada Line, the reason is that the Canada Line was built cut-and-cover whereas the Broadway subway will be bored.)
Singapore: Singapore’s cost overrun history in the 21st century has been unusually severe. Built mainly in the 2000s, the original Circle Line cost S$10 billion for 33.3 km, or S$300m/km, an overrun of 50% over the original budget. Subsequently, the Downtown MRT Line, built from 2008 to 2017, cost S$21 billion for 42 km, and the Thomson Line S$24 billion for 43 km. The Thomson Line has a complex interchange at Orchard, but also long segments in easy suburban areas – Upper Thomson Road, after which it is named, is very wide and borders modernist housing projects on one side and a forest on the other. Moreover, the last stage of the Circle Line, completing the circle, is to cost S$4.85 billion for 4 km and 3 stations – depending on PPP rates, it may be the first line outside New York to cross the US$1 billion/km line.
Seoul: South Korean costs are fairly stable. JRTR has data for the Seoul Metro going back to its start in the 1970s. After adjusting for inflation, costs were initially about $70 million per km, and rose gently to $80-90 million. The cost increases are continuing, albeit at a slow pace. As best as I can tell, the 2020s’ expansion program is budgeted at about $110 million per km in PPP terms.
Madrid: in the 1995-2003 period the city built tunnels for very low costs. The 1995-8 program cost $55 million per km, all underground, and the 1999-2003 program cost €3.147 billion for 74.7 km, 77% underground, around $52 million per km based on the era’s PPP conversion rate. In the conditions of 2010 this would be roughly $65-70 million per km – but the Line 2 extension, built 2008-11, cost €315 million for 4.6 km and 4 stations, and the Line 9 extension, built 2009-15, cost €191 million for 3 km and 2 stations, about $80-90 million per km.
Update: since people have asked for high-speed rail data, it confirms the same story. Ferropedia has costs in Spain, which have risen from €4.88 million per kilometer in 2001 terms for Madrid-Seville, which opened in 1992, to about €15-20 million per kilometer in 2006-7 terms for subsequent lines from the 2000s and 2010s. France displays the same history of escalation: built in the early 1980s, the LGV Sud-Est cost €5.5 million per km, much less than the late 1980s and early 1990s’ LGVs Nord and Atlantique (which cost €10 million), let alone this decade’s LGV Est (which cost €16 million for Phase 1 and €19 million for Phase 2); all of these lines are through comparable terrain, with very little to no tunneling.
Pedestrian Observations 
Spain built HSR for ~$11 million per mile and now it is $25, the Ctrain was built for ~$40m per mile, is it increasing labor costs or less attention to cost-effectiveness?
Do you adjust for fixed project costs? Madrid’s recent projects that you list would seem to be much shorter than the projects of the previous decade; that would inflate the cost per km for them, even if long projects can still be built for the same low price per km.
Many of the projects of the previous decade were pretty short, too. I’m using two short projects now just because I couldn’t find overall lengths for everything the way I did for 1995-8 and 1999-2003.
How much of this is utility relocation, which gets more expensive with the profusion of underground telecom cables? It would be interesting to compare cities that place all utilities in a single tunnel with cities that don’t.
I have no idea.
Los Angeles Red Line three phases, 1980s-2000s
inflation adjusted to 2012 per mile costs:
phase 1 (downtown) 1986 $685M/mile
phase 2 (branched to Hollywood Highland and Wilshire Western) 1991 $437M/mile
phase 3 (3 mile mountain underpass) 1994 $323M/mile
In other words, for a certain period, subway construction in america got cheaper with experience (and per mile costs were driven down enormously by tunneling a long under-mountain section where there are no utilities nor jet grouting nor station palaces).
Naturally, Metro today, in estimating the cost of a new 5.5 mile tunnel under the same mountains (Sepulveda pass tunnel), they are assuming a per mile under mountain cost of $550M/mile, in the very document where they outline the above
source: page 8 below link
Click to access 6.0%20Preliminary%20Cost%20Report.pdf
And all of the money of the rising costs is going to consultants look at the memo on page 34 and 35 of the above: the baked in assumption is that the total cost of the most recent in-kind project will be multiplied by 50%, and that number will be the “project management” rent extracted from the new project. In other words, each project, must, of necessity, cost 150% the cost of the previous project. with all of the cost increase going to project management.
even though project management was included in the cost of the previous project!
So extrapolate that out through four or five iterations and how much total percentage of the cost becomes project management.
so in the above mentioned aerial rail project, the cost is $80M/mile (project management included in that amount, let’s assume it was $20M of the total cost)
first iteration (as outlined in the page 34-35 memo above mentioned) the cost is now $120M/mile (project management is $40M of the total per mile cost)
(total project management cost is now $60M/mile)
Second iteration the cost is now $180M/mile
(total project management cost is now $120M/mile)
third iteration, the cost is now $270M/mile
(total project management cost is now $210M/mile)
fourth iteration, the cost is now $405M/mile
(total project management cost is now $345M/mile)
fifth iteration, the cost for aerial rail is now $607,500,000 / mile of track.
(total project management cost is now $547,500,000 / mile of track)
TOTAL percentage of costs that Project management represents after five iterations is 90.12%
The above memo on page 34-35 has been inserted into virtually every LA metro cost planning document of the last seven years. They literally plan on spending 50% more on EVERY project with ALL of the increase going to project management.
Can it be explained solely by the Baumol’s cost disease – while construction is not a service sector, it has similarly awful labour productivity growth? Do you have the data on the number of the man-hours?
I don’t think private-sector construction has seen the same cost explosion?
Wow. Construction costs for new residential buildings in Spain (Eurostat’s wonderfully named sts_copi) rose 40% since 1997 *in nominal terms*. This is really weird because it suggests the annual growth (since 1980) of only about 1.7% – much less than I would expect. I am somewhat interested in how they measured pre-euro prices though
Do you have any data on rail construction costs for American private freight railroads? I know they’re more into sweating existing assets than constructing new lines, but surely there must at least be small projects (grade separation, passing loops, etc.) with costings. This would be a good comparator to see if rail construction inflation is mainly a public sector issue or not.
Virgin Trains/ Brightline?
Wow. Construction costs for new residential buildings in Spain (Eurostat’s wonderfully named sts_copi) rose 40% since 1997 *in nominal terms*. This is really weird because it suggests the annual growth (since 1980) of only about 1.7% – much less than I would expect. I am somewhat interested in how they measured pre-euro prices though.
Didn’t realize Scarborough RT is finally coming down. I hope they preserve a part of Kennedy station as a monument to the unique horrors of 1980s Anglo futurist transit station design.
Montreal blue line extension would now cost C$600 million more, at C$4.5 billion for 5.8 km.
https://montrealgazette.com/news/local-news/cost-of-metros-blue-line-extension-rises-to-4-5-billion-reports
https://ici.radio-canada.ca/nouvelle/1169677/prolongement-ligne-bleue-metro-cout
https://journalmetro.com/actualites/montreal/2321744/ligne-bleue-600-m-dimprevus-et-derreurs-dexpropriations/
Thanks!
It’s an old truism that today’s investment is cheaper than tomorrow’s…
How big might the “low hanging fruit first” effect be?
I don’t know how big it is, but I suspect it’s not that big. The first lines to be built tend to be the most cost-effective, not necessarily the cheapest.
No Hong Kong?
It would be interesting to compare with Singapore. With the island state do you think the inflation has anything to do with nepotism-corruption, or are public sector infrastructure projects run cleanly there? My impression has been that it is clean and efficient in HK but of course I have no particular insight into either city-state.
I presume that last segment of the Circle Line is expensive because it is submarine, and probably mushy geology of mud and sand.
The underwater premium is not a factor of 5.
(I don’t have much if any Hong Kong cost data.)
Then that should make that section (of Singapore Circle Line) a good case study. The responsible factors should stand out, yes? Especially compared to, say, earlier Circle Line projects.
I haven’t looked at it carefully enough but it struck me that that last section of Singapore’s Circle Line might be very similar to the Island & Tung Chung MTR Line as it passes thru Kowloon West Reclamation and crosses the harbour, ie. a watery reclamation of sand & mud? It is remarkable they can build one of the world’s tallest buildings (ICC) on such “land”. It was on tv news last night, in the background to the latest HK protests which were centred around the HSR Kowloon West station, which is a little slice of Chinese extraterritoriality and the new entry point of most mainlanders to HK.
I find it hard to believe a country as technocratically governed as Singapore would allow costs to rise so much without good reason.
I suspect they underbuilt the first lines, that immigrant labour is more expensive as the region has got a lot richer and that the more advanced technology used in newer lines is more expensive up front, but presumably with lower running costs.
South Korea has gotten richer, too. Costs there are still very low. Almost as if Singapore is a kakistocracy masquerading as a meritocracy.
Alon Levy, 2019/07/14 – 16:07
Right, but wouldn’t it be nice to show it unequivocally? I see that some big Chinese construction companies are involved.
It at least remains feasible that there is something special about this section of the circle line, and is the reason why it was left until now. Perhaps the cost is ‘hiding’ a lot of other associated public works?
I dislike the excessive focus on the last phase of the Circle Line – it’s far more expensive than anything else, yes, but even the Thomson Line is near-tied for most expensive subway outside New York, especially given how easy the alignment is. So maybe there’s something shady going on specifically with the Circle Line, but then there’s still a real problem with the entirety of this decade’s MRT construction in Singapore.
Not really, the Circle line still sticks to the old port area which was mostly around during colonial times?
Literally half the price tag is because they’re doubling the size of the existing depot area, all of which is underground. The idea is that they’ll able to make the money back through land savings.
@alon I’m curious as to how you think the Thomson Line is “easy”, and coming from someone who’s seen the extreme risk aversion of the local authorities at work, how you’d do it better.
Upper Thomson Road is wide and flanked by a forest on one side. I wouldn’t even bother boring underneath it, I’d go cut-and-cover.
Well, it’s because there’s a forest on one side that there are only two stations on Upper Thomson Road itself (not even consecutive) – other stations deviate from the road. And that’s only the northern half.
I’m not going to make excuses for them anyway – things like highly dense station spacing in the CBD, an insistence on cut and cover even though the stations are 30+ metres deep at that point, poor usage of spaces within the stations (you thought SAS’ full mezzanines were bad?) make it hard for me to do so.