Here are the slides; they are not in Beamer format but in Google Slides. They’re largely a summary of the New York report with analysis informed by the overview with more direct comparisons with other cities, and for example the recommendation section won’t tell you anything you didn’t know if you’ve read the overview or heard me talk about this issue before.

But I want to highlight one addition: the cost history of New York, on slides 5-8. Costs were elevated even in the 1930s; the references are JRTR for New York, Pascal Désabres for Paris, and Tube History for London. Midcentury New York costs are sourced to New York Magazine, with a Wikipedia article providing some references that match those numbers. The excessive costs of works in the 1930s ensured that the budget would not be sufficient to build desirable lines like Second Avenue Subway, an extension of the Nostrand Avenue Line to Sheepshead Bay, and a line under Utica; those costs kept growing into the 1950s and 60s, and the total amount of money at hand for Second Avenue Subway in the 1950s, about a fifth of the intended budget, would have built the entire line at the then-current costs of Milan or Stockholm. At even semi-reasonable costs, the budget identified for Second Avenue Subway in the late 1990s would have built the entire line, where instead it was cut into four phases with the money only sufficient to build the first.

The overall presentation was a bit stressful for me, especially at the beginning; the talk started at 3 in the afternoon and we finished the slide deck around 2:45. It was better afterward. One caution is that while the talk was recorded, it was a cellphone recording from the back, so Elif and I were not easy to hear. Another is that there were people I was hoping to talk to after the presentation that I didn’t get to; the attendance was on the order of 80 people, and we needed the full two hours we had the room booked for the presentation and Q&A afterward.

A number of people asked us if anything was changing. Eric seems more optimistic that people are listening. I’m less so; we’re talking to some people at government agencies but I can’t tell how important they are (I do not speak Washingtonian and cannot tell from the name and title of someone I talk to where they are on the spectrum of “someone who follows me on social media” to “Pete Buttigieg’s closest confidant”). At the MTA, things are not changing for the better; union head John Samuelsen is under the impression that French employers don’t have to pay pensions, MTA Construction and Development head Jamie Torres-Springer thinks the Second Avenue Subway stations have higher ridership than the stations of Citybanan, MTA head Janno Lieber is in full denial mode, and so on. The excuses might be getting more sophisticated, but, fundamentally, an American manager whose gut reaction to any kind of global benchmarking is to assert with perfect confidence that European employers don’t have to pay benefits needs to be fired and retrained, not given advice on how to come up with more plausibly-sounding excuses. Lieber and Torres-Springer are worth negative billions of dollars to the city and the state while they remain employed.

While some things are improving, the procurement problems are getting worse due to the growing privatization of the state, and, fundamentally, none of those people is willing to admit their mistake. There are some ongoing experiments in New York with itemized costs, but only as part of a PPP privatization, and only as pilots, where the place where itemizing costs and technical scoring are the most helpful is in the biggest and most complex contracts. Government-by-pilot doesn’t work any more than any of the other gimmicks that dimwitted political appointees use to avoid taking responsibility for decisions.

We’re launching the Transit Costs Project conclusion and New York case this Friday at 3 pm. Unlike the October panel, this will not be moderated – Eric, Elif, and I will just talk about our report and take questions from the audience. While the talk will almost certainly be recorded, if you’re in the area you should still come in-person in order to be able to ask questions and interact.

As in our October event, the location is room 1201 of 370 Jay Street in Brooklyn, right on top of the subway stop that carries its name with A/C, F, and R service, and not far from other Downtown Brooklyn stops like Borough Hall on the 2/3/4/5, DeKalb Avenue on the B/Q, and Hoyt-Schermerhorn on the G. The building has access control so please tell us your name and email on this RSVP form so that security will know you can get in. If you crash the event you may still be allowed in but I won’t know until the day of, so do RSVP if you think you may attend; technically the room is capped at 180 people, around half seated, but I don’t expect to fill to even seated capacity, so don’t worry about taking someone else’s place.

Both the New York-specific report and the overall synthesis of all five cases plus more information from other cities are out, after three years of work.

At the highest level, it’s possible to break down the New York cost premium based on the following recipe:

To explain the animation a bit more:

• New York builds stations that are 3 times too expensive – either 3 times too big (96th Street) or twice as big but with a mining premium (72nd and 86th Streets). The 2.06 factor is what one gets when one takes into account that stations are 77% of Second Avenue Subway hard costs. This is independent of the issue of overall train size, which is longer in New York than in most (though not all) comparison cities.
• New York’s breakdown between civil structures and systems is about 53.5:46.5, where comparable cases are almost 3:1. This is caused by lack of standardization of systems and finishes, which ensures that even a large project has no economies of scale. This is a factor of about 2.3 increase in system costs, which corresponds to an overall cost increase of a factor of about 1.35. Together with the point above, this implies that the tunneling premium in New York is low, compared with system and station cost premiums, which I did notice in comparison with one Parisian project five years ago.
• Labor is 50% of the hard costs in the Northeastern United States; in our comparison cases, it ranges between 19% and 31%, and in Stockholm, which as the highest-wage comparison city is our closest analog for the United States, Citybanan’s contract costs were 23% labor. The difference between 50% labor and 25% labor is a factor of 3 difference in labor, coming from a combination of blue- and white-collar overstaffing and some agency turf battles that are represented as more workers, and a factor of 1.5 difference in overall costs.
• Procurement problems roughly double the costs; the factor of 1.85 is 2/1.08, dividing out by the usual 8% profit factor in Italy. Those problems can be broken out in different ways, but include red tape imposed by American agencies, red tape imposed by some specific regulations, a risk compensation factor whenever risk is privatized (just not itemizing costs by itself adds 10-20%, and there are other aspects of risk privatization).
• Third-party design costs add more. There are two ways to analyze it, both of which give about the same figure of a factor of 1.2 increase in costs: first, third-party design and management costs add 21% to Second Avenue Subway’s hard costs where various European comparanda add 7-8%, but the 21% should be incremented to 31% by adding the factor of 1.5 labor premium; and second, the inclusion of all soft costs combined is around 25% extra in Italy and 50% extra in New York, with the caveat that what counts as soft costs and what’s bundled into the hard costs sometimes differ.

I urge people to quote the cost premium as, at a minimum, a factor of 9-10, and not 9.34; please do not mistake the precision coming from needing to multiply numbers for accuracy.

I also urge people to read the conclusion and recommendations within the synthesis, because what we’ve learned the best practices are is not the same as what many reformers in the Anglosphere suggest. In particular, we urge more in-house hiring and deprivatization of risk, the exact opposite of the recipe that has been popularly followed in English-speaking countries in the last generation with such poor results.

Finally, if people have questions, please ask away! I read all comments here, and check email, and will vlog tomorrow on Twitch at 19:00 Berlin time and write any followups that are not already explained in the reports.

Here it is. This is the result of many months and years of work, and a lot of editing, and it should not be viewed as my work but rather as joint work of mine with Eric Goldwyn, Elif Ensari, and Marco Chitti. People should read the report, which talks about how to build in-house capacity and institutional support that does not involve American-style micromanagement and politiciziation.

We’re going to present on this in person at NYU in a day and a half, on Wednesday 10/26, at 11 am (moderated by Aaron Gordon) and again at 8 pm for people who can’t make it during work hours; this is at Marron’s office at 370 Jay Street on the 12th floor, room 1201. (I’m also separately on this panel about through-running, online, 10/25 at 6 pm New York time.)

We’ve managed to decompose much of the cost premium of New York over low-to-medium-cost comparison cases, in the following manner:

Labor

Labor costs are a total of 20-30% in our comparison cases (Turkey, Italy, Sweden). Sweden is the most relevant, as the highest-wage example; Citybanan’s costs were 23% labor. In the Northeastern United States, labor is 40-60% of the cost. Picking 25% vs. 50% as the respective averages, this means that labor costs in the Northeast are three times what they should be, and the difference contributes to a factor of 1.5 cost difference. This includes both blue- and white-collar labor – this isn’t just overstaffing of unionized workers (although that exists too) but also different agencies such as utilities demanding that their own supervisors be in the tunnel during construction. In Boston, the overhead ratio was 40-65% higher on the Green Line Extension than the norm for Bostonian construction.

Soft costs and design

In New York, and as far as we can tell across the Anglosphere, design and management add a hefty additional share. Of note, what counts as soft costs differs by country. For example, insurance is a soft cost in Italy, but in New York it’s bundled into the regular contracts. British cost breakdowns list contingency separately, but American ones do not. Taking just the project management and design contracts – what counts as soft costs for New York contracting – they add 21% on top of the other contracts. The norm in France and Italy is 5-10%. However, 21% is on top of an inflated base: while extra physical construction means a roughly proportionate increase in oversight costs, the extra labor costs do not, and so, relative to a right-size labor cost (that is, overall project cost falling by a factor of 1.5), this is 31%. This contributes a factor of about 1.2.

Procurement

Procurement problems, including lack of competition, poor management of the contractors (called “the [name of agency] factor” where this can be any American transit agency), change order litigation, risk compensation, and contingency, overall double New York’s overall construction costs. Some of this is recent enough to only have been instituted when Andrew Cuomo was governor, like debarment, a heavyhanded attempt to blacklist contractors who run over the estimated cost that leads to higher initial bids for risk compensation. But the privatization of risk goes back earlier and the closedness to working like in the rest of the world goes back much earlier. Moreover, the tendency to privatize risk and alternate between micromanaging contractors and not knowing how to supervise them at all appears pan-US.

As a note of caution, it’s perhaps best to think of procurement and soft costs together as contributing a factor of about 2.5: under different definitions from New York’s, for example those of Britain, some procurement problems like contingency and excessive contractor profit (due to risk compensation – this isn’t a freeroll for the contractors) are folded into the soft cost account.

Overbuilding

Subway stations should be built cut-and-cover, in a box barely longer than the longest train that is expected to run through them. Italian and French examples are maybe 5-10% longer than the train, and Odenplan on Citybanan is 17% (250 m box, 214 m trains). American stations are often oversize: Second Avenue Subway’s two mined stations are on average about 100% longer, and cut-and-cover 96th Street is almost 200% longer. Moreover, designs must be standardized across each project, whereas in the US they are not, to the point that there were two distinct escalator vendors for the three stations of Second Avenue Subway.

This is not seen as nicer passenger spaces – those stations still look pretty crummy compared with the standardized stations of the Nordic countries or Italy or Turkey. It goes without saying that non-standardized escalator placement does not make stations more pleasant. Moreover, the extra space is just used for back offices with full segregation between different functions and work teams that no legacy station has anywhere, or unnecessary crossovers; Odenplan looks much nicer without much superfluous digging. Political insistence on signature stations in the United States leads to waste without any improvement in user experience resulting from it.

This factor also absorbs conflict with utilities, which is seen in decisions to dig too deep and build mined stations, avoiding cut-and-cover even when the costs are more favorable. (Utility relocation costs should be reduced too, but those are second-order in New York.)

In New York, stations are 77% of the hard costs; systems and tunnels are 23%. Cutting station costs by a factor of 3 (or slightly more, counting utility conflict) means cutting overall costs by a factor of a little more than 2. In fact the overall cut should be bigger because there’s some overdesign in the systems as well. The paused, restarted, and budget-overrunning Paris Metro Line 1 extension budget is split as 30% stations, 55% tunnels and systems, but that’s for trains half the size of New York’s, and Länsimetro Phase 1, with trains three quarters the size of New York’s split about evenly between the two. With systems and tunneling made cheaper as well through scale and standardization, the overall cost difference is a factor of 2.5-3.

What does this mean?

It means you should read the report, linked at the very start of this post. But mostly it means the causes of high American (especially New York) costs are institutional, and fixable, without a revolutionary upending of the legal or social system. We can’t tell you how New York can build for the costs of Nuremberg or Turkey, both around $100 million per km, but $200 million per km, slightly higher than Italy and slightly lower than Sweden, is achievable. Moreover, because institutional problems with procurement and soft costs occur throughout (and also conflict with utilities, a bigger issue for smaller projects than subway expansion), the same reforms that should bring down tunneling costs should also bring down the costs of non-tunneling improvements like elevator accessibility and platform edge doors.