As we’re finalizing edits on our New York and synthesis reports, I’m rereading about Second Avenue Subway. In context, I’m stricken by how easy it is to waste money – to turn what should be a $600 million project into a $6 billion one or what should be a $3 billion project into a $30 billion one. Fortunately, it is also not too hard to keep costs under control if everyone involved with the project is in on the program and interested in value engineering. Unfortunately, once promises are made that require a higher budget figure, getting back in line looks difficult, because one then needs to say “no” to a lot of people.
This combination – it’s easy to stay on track, it’s easy to fall aside, it’s hard to get back on track once one falls aside – also helps explain some standard results in the literature about costs. There’s much deeper academic literature about cost overruns than absolute costs; the best-known reference is the body of work of Bent Flyvbjerg about cost overruns (which in his view are not overruns but underestimations – i.e. the real cost was high all along and the planners just lied to get the approval), but the work of Bert van Wee and Chantal Cantarelli on early commitment as a cause of overruns is critical to this as well. In van Wee and Cantarelli, once an extravagant promise is made, such a 300 km/h top speed on Dutch high-speed rail, it’s hard to walk it back even if it turns out to be of limited value compared with its cost. But equally, there are examples of promises made that have no value at all, or sometimes even negative value to the system, and are retained because of their values to specific non-state actors, such as community advocacy, which are incorrectly treated as stakeholders rather than obstacles to be removed.
In our New York report, we include a flashy example of $20 million in waste on the project: the waste rock storage chamber. The issue is that tunnel-boring machines (TBMs) in principle work 24/7; in practice they constantly break down (40% uptime is considered good) and require additional maintenance, but this can’t be predicted in advance or turned into a regular cycle of overnight shutdowns, and therefore, work must be done around the clock either way. This means that the waste rock has to be hauled out around the clock. The agency made a decision to be a good neighbor and not truck out the muck overnight – but because the TBM had to keep operating overnight, the contractor was required to build an overnight storage chamber and haul it all away with a platoon of trucks in the morning rush hour. The extra cost of the chamber and of rush hour trucking was $20 million.
Another $11 million is surplus extraction at a single park, the Marx Brothers Playground. As is common for subway projects around the world, the New York MTA used neighborhood parks to stage station entrances where appropriate. Normally, this is free. However, the New York City Department of Parks and Recreation viewed this as a great opportunity to get other people’s money; the MTA had to pay NYC Parks $11 million to use one section of the playground, which the latter agency viewed as a great success in getting money. Neither agency viewed the process as contentious; it just cost money.
But both of these examples are eclipsed by the choice of construction method for the stations. Again in order to be a good neighbor, the MTA decided to mine two of the project’s three stations, instead of opening up Second Avenue to build cut-and-cover digs. Mined stations cost extra, according to people we’ve spoken to at a number of agencies; in New York, the best benchmark is that these two stations cost the same as cut-and-cover 96th Street, a nearly 50% longer dig.
Moreover, the stations were built oversize, for reasons that largely come from planner laziness. The operating side of the subway, New York City Transit, demanded extravagant back-of-the-house function spaces, with each team having its own rooms, rather than the shared rooms typical of older stations or of subway digs in more frugal countries. The spaces were then placed to the front and back of the platform, enlarging the digs; the more conventional place for such spaces is above the platform, where there is room between the deep construction level and the street. Finally, the larger of the two station, 72nd Street, also has crossovers on both sides, enlarging the dig even further; these crossovers were included based on older operating plans, but subsequent updates made them no longer useful, and yet they were not descoped. Each station cost around $700 million, which could have been shrunk by a factor of three, keeping everything else constant.
Why are they like this?
They do not care. If someone says, “Give me an extra,” they do not say, “no.” It’s so easy not to care when it’s a project whose value is so obvious to the public; even with all this cost, the cost per rider for Second Avenue Subway is pretty reasonable. But soon enough, norms emerge in which the appearance of neighborhood impact must always be avoided (but the mined digs still cause comparable disruption at the major streets), the stations must be very large (but passengers still don’t get any roomy spaces), etc. Projects that have less value lose cost-effectiveness, and yet there is no way within the agency to improve them.