Category: Construction Costs

Construction Costs and Perceptions

While looking for South Korean cost data for a major update of my construction costs posts, I stumbled upon a newspaper article excoriating Seoul’s extravagant construction, comparing it unfavorably with the US. Per Joong-Ang, the US neglect of infrastructure is a form of frugality that South Korea should imitate; the National Mall’s poorly maintained, weedy lawns are treated as something to admire. Moreover, Seoul subway construction is more extravagant than in the Washington Metro:

I got on a train at the Smithsonian Metro station. All the stations there have the same architectural styles. They are the 1976 creation of American architect Harry Weese. High ceilings and open spaces are their trademarks. They are known for their practicality. But they are very modest compared to the subway stations of Seoul. The platforms are dimly lighted. It’s hard to read a book there. The walls are concrete, with none of Korea’s flashing signboards. The architecture is very quiet.

After I returned to Seoul, I got on the subway at Guryong Station in Gangnam District, southern Seoul. Marble proliferates at the entrance. A public table is covered with glass. Every day, about 3,600 people use the station, which cost 55 billion won ($51.2 million) to build.

Of course, in reality, Korean construction costs are a fraction of American ones. Guryong Station is an infill subway station in a dense urban neighborhood, opening about a year after the rest of the Bundang Line; it cost about $75 million in 2010 PPP dollars. The US sometimes builds at-grade infill commuter stations for more than that, and those do not have marble entrances or glass tables (update: New York Avenue in Washington is another example of more expensive US infill, this time an elevated station). Building just the shell of an infill subway station on the 7 extension simultaneously with the rest of the extension was estimated at $500 million. Similarly, the Sin-Bundang Line, a driverless rapid transit line, cost 1,169 billion won, about $1.4 billion, for about 18 km; the line is described as “largely underground,” fully underground, and its city terminus is under a dense secondary CBD. In contrast, in Washington, the suburban Silver Line, with very little tunneling, is $6.8 billion (in 2009-2018 dollars) for 37 km. $183 million per km versus about $80.

There are two takeaway lessons from this. The first is that to gauge whether something is cheap or extravagant we need to know the normal range of costs and compare, rather than looking at the quality of construction. Seoul may build very extravagant-looking stations, but it builds them cheaply for some reason.

The second, more important lesson is that people perceive costs the way they perceive local corruption. The US is indeed the world’s most expensive country to build transit in, which Americans can easily believe since they do not trust their government very much. At the opposite corner, Switzerland is quite cheap: a rejected mountain tunneling project in Neuchatel was CHF 850 million for 17 km, and a recently completed urban tunnel in Lucern was CHF 250 million for 1.32 km; accounting for the Swiss franc’s 87% overvaluation relative to PPP, these are $28 and $121 million per km respectively. And as far as I hear from Swiss commenters, the Swiss are proud of the success of their public transportation system. Indeed, Swiss levels of trust in government and institutions are very high.

In contrast, in cheap countries where people do not trust the government, people do not readily accept that construction costs are low. When I talk to Spaniards who are not railfans, they talk about corrupt and extravagant infrastructure projects, and do not believe that both high-speed rail and subway construction costs in Spain are so low. (It doesn’t help that Barcelona’s L9/10, despite still being about average-cost, went over budget by a factor of over 3.) This is no different from the Joong-Ang attitude toward Korean costs: the government self-evidently doesn’t work, and so a $75 million infill subway station is self-evidently a boondoggle.

The situation in the opposite corner – high trust/low perceptions of corruption, high costs – exists as well, in Singapore. The sixth MRT line, soon to begin construction, is S$18 billion for 30 km; the PPP exchange rate between Singapore and US dollars is about 1:1. The line is automated and fully underground, but about half of it is under very wide arterial roads and portions of it are in undeveloped rather than built-up land; it shouldn’t cost this much. The fifth line, currently under construction, is cheaper, S$12 billion for 40-42 km, but still much more expensive than the non-Anglophone average.

And yet, although Singapore’s not far behind Japan in its construction costs, I doubt Singaporeans are as willing to consider their construction practices expensive as Americans, Britons, and Japanese are. I know for a fact that international commentators who hold Singapore in high regard for its efficient government would not be willing to think of it as an expensive-construction country.

All this makes good transit activism somewhat frustrating, in that people will not usually recognize efficient government in absolute numbers. Percentages, certainly – people understand cost overruns and (much less common) cost underruns, and as we’ve seen in Canada people can compare different technologies. But absolute numbers are not as well-understood, and neither are international comparisons of the same technology, where cost differences revolve around questions of project management, contracting practices, labor rules, and details of geology and surrounding infrastructure; people have only recently begun to think in terms of per-km costs in New York, and in the rest of the US I have not seen such thinking. When a transit agency proposes a project, people automatically think it’s expensive, and some will also say it’s necessary, regardless of whether it actually is either. I don’t think reactions to Second Avenue Subway at $5 billion would be materially different from what they were when Phase 1 alone grew to $5 billion.

The upside is that in budget negotiations, the amounts given to transportation are based on absolute shares of the budget rather than on the needs of specific megaprojects, which means that lower costs would translate to more projects built for the same budget. People might not notice that costs have gone down, and might still complain that every subway line is a boondoggle, but more lines would be built and more people would ride those lines. Just the perception of government competence would not change.

Relative Costs of Transit Construction

The relative costs of different technologies of transit are not fixed. Although there are some rules of thumb for the ratio of tunneling cost to above-ground transit cost, the actual ratio depends on the city and project, and this would favor the mode that’s relatively cheaper. Likewise, the ratio of operating to capital costs is not always fixed, and of course long-term real interest rates vary between countries, and this could again favor some modes: more expensive construction and cheaper operations favor buses, the opposite situations favor rail.

In general, els cost 2-2.5 times as much as at-grade light rail, subways 4-6 times as much, according to Table 6 in this Flyvbjerg paper; Table 5, sourced to a different previous paper, estimates per-km costs, and has ratios of 1.8 and 4.5 respectively.

However, specifically in Vancouver, the premiums of elevated and underground construction appear much lower. The cost estimates for rail transit to UBC are $2.9 billion for an almost entirely underground extension of SkyTrain and $1.1 billion for at-grade light rail along Broadway, both about 12 km. Elevated construction is in the middle, though closer to the light rail end: the estimates for the two all-elevated SkyTrain extension alternatives into Surrey are $900 million for 6 km for rapid transit alternative 3 and $1.95 billion for 15.5 km for alternative 1. The under-construction Evergreen Line, which is 11 km long of which about 2 are in tunnel, is $1.4 billion.

In the rest of Canada, this seems to be true as well, though the evidence is more equivocal since the projects that are considered above-ground are often elevated rather than at-grade. The Canadian above-ground projects that Rob Ford’s Eglinton subway is compared with are not wholly above ground. Calgary’s West LRT, which with the latest cost overrun is $1.4 billion (a multiple of the preexisting three-line system) for 8 km, includes a 1.5 km tunnel, a short trench, and some elevated segments. Edmonton’s North LRT is $750 million for 3.3 km, of which about 1 km is in tunnel and the rest at-grade. But while it’s hard to find the exact ratio because of those mixed projects, the costs are not consistent with the ratios found in Flyvbjerg’s sources.

Outside Canada, those ratios seem to hold up better. American above-ground transit projects, such as the Portland Milwaukie extension and the Washington Silver Line, are as expensive as Calgary and Edmonton’s light rail, but American subways are much more expensive than Toronto’s Eglinton subway ($325 million/km, 77% underground and the rest elevated): Manhattan tunneling is more difficult, so its $1.3-1.7 billion/km cost may not be representative, but conversely, BART to San Jose’s $4 billion for about 8 km of tunnel is for tunneling partially under a wide railroad right-of-way, with no crossings of older subway infrastructure as is the case for Eglinton at Yonge.

Conversely, French tunneling costs are comparable to or lower than Canadian ones, but at-grade light rail is far less expensive than in North America. The RER E extension was at least as of 2009 budgeted at €1.58-2.18 billion for 8 km of tunnel (see PDF-page 79 here; this excludes €620 million in improvements to the existing commuter lines the tunnel will be linked with) – somewhere between the per-km costs of Vancouver and Toronto subways, but in a much denser environment with more infrastructure to cross. But the cost range for Parisian trams is much lower, about €30-50 million per km, in line with the subway:tram cost ratio of 4-6; the cost range in other French cities tends to be a little lower.

What this means is that in Canada in general, and in Vancouver in particular, questions about what mode to build should have higher-end answers than elsewhere. It doesn’t mean that the Eglinton subway is justified, but it does bias suburban rail lines in Vancouver toward elevated SkyTrain extensions rather than light rail, and inner extensions toward SkyTrain subways. For the same cost of building a subway under Broadway, Translink couldn’t build too much additional light rail; it could build two lines, say on Broadway and 41st, or maybe three if both non-Broadway routes are short, but certainly nothing like the entire network that SkyTrain opponents believe is the alternative, citing European tramway construction costs.

Are Forecasts Improving?

In response to my takedown of Reason, specifically my puzzlement at the estimates of inaccuracy in traffic forecasts, alert reader Morten Skou Nicolaisen sent me several papers on the subject. While there is past research about traffic shortfalls, for example this paper by Flyvbjerg (hosted on a site opposing the Honolulu rapid transit project), Flyvbjerg’s references are papers from twenty years ago, describing mostly subway projects in developing countries, but also rapid transit and light rail projects in the US built in the 1970s and 80s. Unlike Flyvbjerg, who posits that planners are lying, the authors of the papers he references have other theories: currency exchange rate swings, the challenges of underground construction, inaccurate forecasts of future economic growth, outdated traffic models based on postwar road traffic models. See section 6 of Walmsley and Pickett, and sections 3.3 and 4.2 of Fouracre, Allport, and Thomson (see also the range of costs for underground construction in developing countries in section 3.3).

The question is then whether things have improved since 1990. Since the first study to point out to cost overruns and ridership shortfalls in the US was by Pickrell, the question is whether post-Pickrell lines have the same problems, or whether there are better outcomes now, called a Pickrell effect.

The answer, as far as ridership is concerned, is very clearly that ridership shortfalls are no longer a major problem. See recent analysis by Hardy, Doh, Yuan, Zhou, and Button; see specifically figure 1. Cost overruns also seem to be in decline and are no longer big, although a multiple regression analysis finds no Pickrell effect for cost, just for ridership.

In particular, there is no comparison between projects from 30 years ago, most of which are underground, and present-day developed-world high-speed and urban rail lines.

Low- and Medium-Hanging Fruit

The entire process I try to apply to cost-effective rail construction is to figure out the best places to spend money per unit of time saved. Obviously, this is mainly for intercity traffic – for local traffic it’s more interesting to look at cost per rider – but it’s intercity traffic that benefits most from this kind of optimization anyway.

With the Northeast Corridor, there are definitively low-hanging fruit, such as new (non-FRA-compliant) rolling stock, raising superelevation, improving platform access within present infrastructure, and adding constant tension catenary south of New York. Those are so useful, in terms of cost per benefit to travelers, that they should all be pursued immediately. The more interesting question is what to do afterward. I’ve proposed a few things before, in various posts, but it’s more useful to talk about the general process of determining where to build, i.e. which fruit are medium-hanging and which are high-hanging. I think traditionally this boils down to two parameters:

1. Cost per minute saved, including by improving reliability. This is of course adjusted for demand: New York-Philadelphia minutes are the most important, then Philadelphia-Washington, then New York-Boston, and finally other corridors.

2. Reduction in operating cost. If the rest of the network is based on hourly trains, and you need to squeeze five additional minutes to reduce your travel time including turnaround to an integer number of hours, it’s worth spending the money on it to avoid needing extra trains, or a schedule that doesn’t match up with the rest of the network. (And the same is true if the network repeats every 52 minutes – there’s nothing magical about 60 here.)

However, three additional, less obvious parameters are important:

3. Usefulness to local transit, in terms of speed, reliability, etc. This essentially reduces the cost imputed to intercity trains per minute saved.

4. How low-hanging the fruit becomes if combined with another. The issue is that eliminating two adjacent slow zones in an otherwise fast run saves more than double the time of eliminating just one of the two; another way to think about it is that eliminating the second slow zone saves more time than eliminating the first. This can result in counterintuitive phasing in a constrained funding environment.

5. How high-hanging the fruit becomes if it is delayed. If there is significant disruption to service coming from construction, then it’s better to do it earlier than would be warranted based on pure cost-per-minute-saved calculation.

#3 features prominently in Amtrak’s preexisting planning – in fact, too prominently, with its emphasis on Gateway. It’s a matter of agency imperialism more than anything, but it can lead to good results elsewhere. It’s really points #4-5 that aren’t optimized – either the costs are out of whack, or they are ignored. Washington Union Station‘s remodeling is an example of overemphasizing #5 without considering the cost or the ability to use existing infrastructure more cheaply; Transbay Terminal‘s poor column placement is an example of ignoring #5 entirely.

The reason I push concrete-heavy improvements between New Rochelle and Stamford, but not between Stamford and New Haven, comes essentially from those three points. The Cos Cob Bridge replacement is good because of points #1, #3, and #5; an I-95 bypass of Port Chester and Greenwich then interacts with it positively because of point #4, and also provides a suitable passing segment between high-speed and express commuter trains. In contrast, the projects east of Stamford don’t interact so positively: they involve constructing various bypasses, at high cost per minute saved, in separate locations so that the same increasing returns do not exist, and generally it’d not difficult to connect the bypasses to existing tracks so that the disruption effect of #5 is not in place.

Surreptitious Cost Escalations and Spurious Cost Savings

In response to my previous post regarding the extreme cost of Amtrak’s new Northeast Corridor Vision plan, people both on forums and on blogs have said that it’s actually a cost saving coming from bundling the Vision with the earlier Master Plan. Although the original cost was $117 billion and the current one is $151 billion, the current one is still lower than the sum of the original cost plus the cost of the Master Plan, by $15 billion. This looks like a cost saving, but it’s actually not.

The explanation is that the Master Plan still contains elements that are unnecessary if large portions of the line, including nearly the entire New York-Boston segment, are bypassed. The list of projects on PDF-page 21 of the plan contains additional tracks in eastern Connecticut and a replacement of the bridge over the Connecticut, boosting capacity. However, if the intercity trains are removed from the line, there is no need to boost capacity. Low-performing branch lines – and this is what Shore Line East is without intercity trains – can be and are spun off to regional agencies: JR East abandoned the northern reaches of the Tohoku Main Line as it extended the Tohoku Shinkansen, spinning them off to the prefectures to run as it is not interested in running regional rail at the low densities of northern Japan and the intercity functions were all rolled into the Shinkansen.

So in that sense, any cost saving was spurious: Amtrak simply removed some, but not all, Master Plan projects that are obviated by the plan for a bypass. It’s no different from the fact that the Tokaido Main Line and the PLM Line are still double-tracked, as in both cases the national railroad chose to build high-speed rail parallel to them instead of to quadruple-track them to boost capacity.

But on top of that, there is at least some cost overrun implied in the plan. The cost breakdown is not detailed enough to make this clear, but the cost of the Gateway Tunnel is up to $14.7 billion, from $10-13.5 billion last year. It’s buried deep enough that it’s hard to see, or discern what the total overrun is, but it’s there. So Amtrak has a surreptitious cost escalation for the Gateway project at the same time as a spurious cost saving from partially merging the Vision and the Master Plan.

The CAHSR-SNCF Bombshell

The most important HSR news right now is the recent revelation on the LA Times, strategically made immediately after the state legislature had voted to appropriate the required money to begin construction, that the California HSR Authority had brushed off an offer from SNCF, which came with funding attached, to take over and build the project. SNCF’s offer would run trains through I-5 all the way instead of the chosen route vaguely along State Route 99, bypassing Bakersfield and Fresno.

Stephen Smith, who’s talked to the same sources who spoke with the LA Times, says that SNCF was interested in either I-5 or a greenfield alignment just west of SR 99 that would serve Bakersfield and Fresno with edge-of-urban area stations, though I-5 was “the only alignment… that private backers felt was financially viable.”

Although in 2009 SNCF submitted a document proposing to build the project along the chosen alignment, serving Bakersfield and Fresno at city-center stations, the document is stamped “Do not circulate outside government,” and the source says explicitly that the HSR Authority had pressured SNCF not to say anything about alignments, and more recently rejected its I-5 (or west-of-99) proposal out of hand. The HSR Authority responded, brushing off some of the article’s concerns and raising what is essentially FUD: HSR Authority Chair Dan Richard made sure to mention the manufactured controversy over the fact that SNCF had been forced by the Nazis to help ship Jews to extermination camps.

I do not have any access to sources, confidential or otherwise, but at least some analysis of this can be made from public information. The key cost numbers the LA Times provided are,

The I-5 route would have been the shortest, fastest and lowest-cost alignment, with a price tag of about $38 billion — sharply less than the rail authority’s current route, which has been estimated at various times to cost $34 billion, $43 billion, $98 billion and now $68 billion.

The problem: the cost of the Central Valley segment is a sufficiently small portion of the cost that it can’t possibly make the entire or even most of difference between $38 billion and the current price tag. It’s unclear to me what $38 billion should be compared to – 2010 dollars or year-of-expenditure dollars, and the Blended Plan ($68 billion YOE) or the full Phase 1 ($98 billion YOE) – but the lowest number, the Blended Plan in 2010 dollars, is $53 billion, $15 billion more than SNCF’s proposal. I have asked what exactly the comparable Authority number is and will update when I get an answer.

In contrast, the Initial Construction Segment, which includes a large majority of the Phase 1 Central Valley segment (though not the most difficult part, through Bakersfield) is $5.2 billion in 2010 dollars (see PDF-page 15 of the 2010 business plan); the actual money appropriated is just over $6 billion, but if we’re doing YOE numbers then we must compare $38 to $68 and then the difference doubles. Since the cost of construction along I-5, although lower than along the chosen route with its viaducts and grade separations, is nonzero, we get that a relatively small fraction of the cost difference, perhaps a quarter or a third, is attributable to this design choice.

So if it’s not just I-5, what is it, and what can we learn from this? I believe the results should if anything make the HSR Authority look even worse than it already does in light of this story and its lackluster response. This is because it means the entire amount of money required to build to SNCF’s specs but serve Bakersfield and Fresno, at edge-of-urban-area stations if the cities object to the noise of trains through downtown (which at least Fresno does not), is a small number of billions of dollars. This means that if service to those two cities was the true dealbreaker, the Authority could have asked SNCF to change the alignment back to the chosen route or a greenfield route just west of it, and then demanded that Fresno and Bakersfield pay for the difference.

Fresno had been hoping to use statewide HSR money to bundle its own project of grade-separating the freight tracks through the city along the Union Pacific right-of-way. The poor relationship between the HSR Authority and Union Pacific dashed the plans to use its right-of-way where it is superior to the BNSF alignment. That said, the threat of being left out of the network entirely could have induced it to come up with money for this on its own; the segment of the project through the Fresno area is $1-1.5 billion. A downtown station in Bakersfield is more difficult, especially if one gets from the Central Valley to the LA Basin via the Grapevine rather than via Palmdale, but in Bakersfield there are some complaints about the impacts that a downtown alignment would cause, and at any rate even I-5 would come close to serving the urban area.

In addition, portions of the cost savings that do not come from alignment choice have to be attributed to superior cost control. Part of the difference between American and rest-of-world construction costs has to come from more mundane issues such as proper supervision of contractors, since the difference is large and persistent and remains in place even after one controls for such issues as the percentage of the route that is in tunnel. (For example, recall that the Tohoku Shinkansen extension cost $4.6 billion for 82 km, of which a third is just one long tunnel and another sixth additional shorter tunnels).

The other lesson we can learn from this episode is political, regarding cost escalations and strategic misrepresentation. Too many political transit supporters downplay the issue. LightRailNow claims that a cost escalation that occurs before construction starts is not a cost escalation, but just a more accurate cost estimate; Robert Cruickshank did not quite say the same when the 2010 business plan for CAHSR revealed costs had doubled, but came close to it by describing the plan as more careful and thorough. In reality, large bombshell reports shortly after money has been obligated are a hallmark of secretive, untrustworthy planning, precisely the kind likeliest to lie about costs.

The main problem with megaprojects is not the dollar cost. In the grand scheme of things, a lot of them can generate enough social rate of return, and sometimes even a purely financial rate of return; at any rate, even when they are cost-ineffective, they are a small proportion of total GDP. The problem is getting politicians to vote for them. This means that issues such as institutional inertia are in play. It’s harder to get people to rescind money than to get them to vote against spending money.

If the primary cause of cost escalations is unforeseeable challenges, then we will see them come in timed with engineering developments, contract awards, and actual construction. If instead it is strategic misrepresentation, then they will be timed to come just after major political hurdles regarding funding: the passage of a referendum, legislative funding, an electoral victory by a supportive politician. The California HSR bombshells aren’t quite this clean, but they come a lot closer to the outright lying hypothesis.

Cost Bundling

It’s common to bundle multiple construction projects into one, either to save money or to take advantage of a charismatic piece of infrastructure that can fund the rest. For example, on-street light rail is frequently bundled with street reconstruction or drainage work, and rail lines can also be bundled with freeway construction in the same corridor (as in Denver) or widening the road they run under (as in New York). Combining different constructions into one project can be a powerful cost saver, as seen in the Denver example and also in Houston.

The problem is when it leads to scope creep. In case there is one charismatic project that carries the rest, it’s always tempting to add more features to the project to get more funding. If the funding comes from a pot specific to one use – in the examples in this post transit, but it could be anything – then it will also lead to a misleading reporting of the total cost, making it look higher than it is. Part of the surreptitious underfunding of transit in the US comes from such bundling, for example parking garages for commuter rail. More commonly the projects in question will be transit, just not necessarily cost-effective on their own.

Because one agency tends to have the lead on such projects, there is no incentive for cost control. The worst case I know of is high-speed rail construction on the Caltrain corridor; the segment from San Francisco to San Jose incurred the highest cost overrun in the system, its cost rising by a factor of nearly 3 versus a systemwide average of 2, and most of the overrun came from tunnels and viaducts reinforcing various agency turf boundaries.

The flip side is bundling projects not so that a charismatic major project can support others, but rather so that a major project can get the support of others by throwing them bones. This is essentially Amtrak’s Vision plan for the Northeast: Gateway is meant to get support from New York and New Jersey now that ARC is canceled, Market East is meant to get support from Philadelphia on the dubious idea that the city wants a Center City stop, and so on. In this case, there is a symbiotic relationship: the charismatic project, in this case HSR, gets to brand all these separate projects as necessary for a grand goal, while the presence of the smaller project ensures that local politicians, whose priorities rarely include providing intercity transportation maximally efficiently, support the project.

Quick Note: How Much Tunnels Really Cost

New York is currently building a 3-kilometer tunnel between Brooklyn and Staten Island, using the same EPB method that Madrid uses to build subway tunnels. The cost of the single-bore tunnel is $250 million, and the project will be completed by 2014.

Of course, this is a water tunnel rather than a train tunnel. The diameter of the tunnel is somewhat smaller than that of a single-track train tunnel. Double-track tunnels, even ones built to high-speed rail standards, are substantially wider, but the amount of concrete lining required is proportional to radius rather than to cross-sectional area. For example, the double-track Seikan Tunnel is 9.7 meters wide, little more than single-track HSR tunnels in Europe, as Japanese construction tries to minimize tunnel clearances to cut costs and instead equip Shinkansen trains with elaborate aerodynamic noses. While 9.7 is more than 2.5 times the diameter of the water tunnel in question, 250 million times 2.5 is still far below the construction cost of any recent tunneling project in New York.

The expensive part of tunneling, then, is not the actual tunnel. It’s everything else, especially the station caverns. Both ARC and East Side Access included multilevel deep caverns in Manhattan with full-length mezzanines; of course they’d be more expensive.

For what it’s worth, an 8-kilometer long, 9.7-meter wide tunnel from Staten Island to Manhattan would cost $1.75 billion at the same per-km, per-meter cost of this water tunnel. Of course stations at St. George and especially Lower Manhattan would add much more, forcing a lot of difficult choices about location, but the basic infrastructure is not all that expensive.

More on Cost Comparisons

Some of my past posts on cost comparisons are getting play on mainstream publications including Slate, Salon, The Economist, and The Atlantic Cities, and one of the consistent points I see is that the difference between the US and most of the rest of the first world is so glaring that projects that are locally considered boondoggles suddenly look good.

A list containing multiple projects at over a billion dollars per kilometer can legitimize anything below it. Thus projects approaching half a billion per kilometer look downright reasonable. In reality, Tokyo Metro said that there will not be further subway construction, and I have read elsewhere that it repeated this promise in advance of its impending IPO. And in Amsterdam, an inquiry into the North-South Line’s factor-of-2 cost overrun concluded the project should have never been built.

It seems that there’s an Overton window analog, in which higher costs legitimize the previous decade’s work, making it look good when at the time it was criticized for poor cost control. In fact, this could explain the decades-long trend toward increasing real costs – an explanation that is usually given in terms of rising wages and worker safety rules, but in reality poor countries build subways for not much less money than non-Anglophone rich countries.

I contend that the best practice should still be to compare with the average, rather than with either the worst (London Crossrail, Amsterdam North-South Line, Munich Stammstrecke 2) or the best (most projects in Spain). Being more expensive than one city could be a fluke. Being five or more times more expensive than upward of 90% of subway projects is less excusable.

Most interesting to me in this discussion is the explanations for US/Europe cost differences. Although most people regrettably keep comparing the US to China, never mind that European and Chinese costs are similar, some stay on target and avoid explanations that assume the entire first world is like the US. One comment on The Economist follows:

Observations on the public construction process, having seen it in action relatively up close:

1. Failure to embrace technology except in the most expensive cases. We are behind in construction techniques overall. We will bring in European methods when the case is made they are necessary. These methods therefore tend to be used when the expense is higher. This means we don’t upgrade technology overall, just at the costly fringes. Examples come from the methods used to construct the new tunnels in Boston; one used a method developed mostly by the Dutch because our domestic methods weren’t up to it.

2. Our project management is not equivalent. European large scale construction projects run more just-in-time. Even really big ones require very large things to be built and then to arrive on a schedule. Our system can’t handle that so we build in lots of slack expecting stuff will come late and will need to be adjusted – sometimes substantially – to fit the need. That is very costly.

3. Our system is very bad at prioritizing. My experience with this is mostly at the state and local level. I have seen very competent people working at both levels. They exist in a morass of work that needs to be done. They don’t have the resources to do things properly. They have to put repair, snow, etc. way, way, way ahead of planning.

4. My overall comment is this: Europeans understand they exist in a high cost environment so they squeeze out the inefficiency to be competitive. They focus on value-added design and on efficiency in planning and scheduling. We don’t.

Quick Note: Don’t Overlearn From a Case of Success

I’ve been asked in comments to my previous post about construction costs what can be done to contain them, and tempting as it is to just repeat listing good cases, in the wrong context it can do more harm than good. Whenever we are faced with a success story, it’s tempting to confuse a good system with individual competence, in both directions.

The list of conclusions given by Madrid Metro CEO Manuel Melis Maynar is a good place to start for discussing low-cost subway construction. So is Calgary Transit’s explanation for how it keeps costs low. But things are always more complex than a short list of principles, and details always matter, and those can be easily lost when trying to port cases of success. I think it’s obvious that Madrid’s EPB method is not easily ported to the harder rock of Manhattan, but the administrative factors could be problematic, too: is there enough expertise within the MTA to complete projects with an in-house staff of six? After all, in California, the small size of the in-house staff is one reason why the consultants can run circles around everyone and propose multiple billions’ worth of concrete to solve problems that good organization could fix for no money.

Of course, in the other direction, it’s easy to attribute to individual genius what is the result of good business culture. Compare, for example, the praise heaped on Steve Jobs, with the more sober description by Malcolm Gladwell of the office cultures involved in the birth of the Macintosh. But even this opposite problem can be shoehorned into the same issue.

To be more precise, in both cases, what’s really needed for optimal performance is good organization and business culture. This does not mean that individual lessons about keeping design and construction separate and choosing contractors based on more than just cost are bad, or that they shouldn’t be implemented everywhere. They should. Obtaining average performance is not difficult; that’s why a large majority of cities have it. What’s difficult is obtaining optimal cost control.