Why it costs $4 billion per mile of subway track
Last month, U.S. Department of Transportation Secretary Pete Buttigieg announced nearly $500 million in new funding for the 1.76-mile Phase 2 of the Second Avenue Subway. The project has been waiting for federal funding ever since 2017, when Phase 1 — extending the Q train from 63rd Street and Lexington Avenue to 96th Street and 2nd Avenue — opened, itself only about 1.7 miles.
The U.S. DOT’s announcement is good news for the Metropolitan Transportation Authority, but with a huge asterisk. While the whopping $500 million infusion for Phase 2 of the Second Avenue Subway is an enormous sum, it is only a 7% contribution to the $7 billion project. Unless and until we squarely face the problem of inflated transit costs and start changing the underlying dynamics behind them — government leadership, expensive designs, a diminished civil service, low labor productivity and overstaffing, for example — we’ll be throwing pile upon pile of good money after bad.
Why are American transit projects so much more expensive than those in low-cost countries like Italy, South Korea, Turkey, Sweden, Switzerland and Spain?
At New York University’s Marron Institute of Urban Management, I study the cost drivers of transit projects. Specifically, our team has spent the last three years answering the question, “Why are American transit projects so much more expensive than those in low-cost countries like Italy, South Korea, Turkey, Sweden, Switzerland and Spain?” According to our database of more than 900 rapid-rail projects from nearly 60 countries across the globe, the average project costs almost $350 million per mile. Phase 2 of the Second Avenue Subway is projected to cost close to $4 billion per mile, or more than 11 times the global average. Through our detailed case studies, we show how politics and decision-making, civil service and internal capacity, procurement and risk allocation, utilities and agency coordination, labor, and cost-effective design explain this massive cost differential.
We emphasize costs for two distinct reasons. First, American rail projects defy global averages by multiples rather than mere percentage points. This helps explain why agencies from New York to Atlanta to Austin to Seattle to the Bay Area are struggling to afford rail projects. Second, as transit projects’ price tags climb higher, the ability to build even one mile of transit becomes more challenging because assembling the money becomes a political fight that requires a ballot measure, a bond act or a new funding stream.
Costs are high throughout the United States, but they’re especially high in the city that relies on trains the most: New York.
One simple way to think about transit construction costs is to divide total project costs by the number of projected daily riders who will eventually use it. For Phase 2 of the Second Avenue Subway, the math works out to $6.95 billion divided by 111,500 daily riders, or around $62,000 per rider. This cost-per-rider metric gives us the ability to compare costs across projects by focusing on riders. Compared to the 1.7-mile Phase 1 of the Second Avenue Subway, which is now the most expensive completed subway project on a per-mile basis in our database, Phase 2’s cost per rider will be more than twice as high, after adjusting for inflation.
Phase 1’s high costs delivered enormous benefits, as evidenced by the high pre-pandemic ridership, which approached 200,000 riders per day. When we compare these ridership figures to projects in San Francisco, Seattle, Los Angeles, Chicago, Washington D.C., or Boston, none even crack 100,000 daily riders. As costs continue to increase, Phase 2 — more expensive than Phase 1 and serving fewer riders — becomes harder to justify.
The “what” and “by how much” are important, but even more important is the “why.” If we don’t understand the drivers of these inflated costs, we’ll never be able to reduce them.
The MTA should lead the planning effort and take a larger role in construction management.
As a prerequisite, we need elected leaders who support transit. Early indications suggest that Governor Kathy Hochul does. Governors and mayors matter because they control the local agencies that transit agencies need to coordinate permits with and own land that could be used for siting station entrances, construction staging areas and ventilation plants. These officials often control large budgets and have a say in how funds get allocated to transit agencies, which is especially important early on in a project as the details are being worked out prior to applying for a federal grant.
Yes, the federal government does write large checks, but the Federal Transit Administration’s New Starts program caps federal contributions at 60% of total project costs; thus, the remaining 40%, at a minimum, has to be made up locally.
Next, we need to reinvest and reinvigorate our civil service. During Phase 1, planning, design, engineering and construction management were all farmed out to consultants to the tune of $656 million. Consultants are helpful and should be called on to design stations, tunnels and other specialized elements, but based on examples from low-cost countries like Italy and older practice in New York, we believe that the MTA should lead the planning effort and take a larger role in construction management so that it develops and articulates the project’s vision clearly to the public, consultants and contractors and pushes back when third parties offer unproductive recommendations or when inevitable challenges emerge during construction.
During the engineering phase of East Side Access, now christened Grand Central Madison, the project’s consultants developed a plan that would have brought Long Island Rail Road (LIRR) trains into Grand Central’s existing Lower Concourse platforms. After working up this design, a task that took the work of a team of expensive consultants, the MTA told the designers that bringing LIRR trains into the existing Grand Central was unworkable. By not defining the project clearly from the start, the MTA’s consultants wasted valuable time working on a design that was never going to be acceptable to the agency.
If, on the other hand, the MTA had led the planning process, it would have analyzed multiple alternatives and selected its preferred alternative which would have determined where the trains would end up, and the consultants’ job would have been to realize that vision rather than develop the vision.
Longer construction timelines lead to more expensive projects.
When we started our research, interview subjects routinely pointed to New York’s high labor costs and work rule inflexibility as key cost drivers. New York absolutely does have among the highest labor costs in the world, and work rules do add costs by duplicating efforts and slowing down construction.
Against this backdrop, we should prioritize productivity and amend work rules to allow labor to thrive. In practice, we do the opposite. Worksites are teeming with supervisors and craft laborers, without improving overall output. We impose restrictions on construction, such as when muck can be carted off-site, that slow down our high-priced workforce and increase total project costs.
Finally, we need to implement more cost-effective designs that match the needs of the project, and we need to prioritize speed. Longer construction timelines lead to more expensive projects.
When we examined Second Avenue Subway Phase 1 stations, we noticed that they had enormous back-of-house facilities — areas reserved for train operators, signal maintainers and other MTA staff who operate and maintain the subway — that dwarfed anything we could find in our scan of stations in France, Turkey, South Korea, Sweden, Italy and Spain. The 86th Street Station, the smallest Phase 1 station, has a total station box length that is just shy of 1,000 feet while the station platform is only 615 feet long. Thus, the station box is 60% longer than the platform. When we compared this to stations abroad, we routinely found station boxes that were only 3% to 20% longer than the platform.
This is important because station construction is expensive. Phase 1’s station contracts accounted for 77% of the project’s $3.16 billion in total construction costs. Thus, shrinking the station’s footprint from 1,000 feet to 750 feet or less, speeding up station construction timelines, and using the cheaper but more disruptive cut-and-cover technique versus mining, has the ability to save hundreds of millions of dollars by reducing the total labor hours, property takings, and materials required to build each station.
New York is a rich, expensive city. Constructing anything, from schools to baseball stadiums to housing to subways, is likely to wind up more expensive than in most other places. But building transit doesn’t have to be this expensive. With an injection of $500 million from the federal government, one would assume that the opening ceremony for Phase 2 of the Second Avenue Subway is only a station or two away. In truth, New Yorkers will be waiting for years because, given limited resources, high construction costs inhibit our ability to build transit infrastructure at more than a mile or two at a time. The MTA opted to chop the 8.5-mile, $16.8 billion project into four affordable phases rather than taking on the whole alignment at once. While it is easier to afford $4.6 billion than $16.8 billion, we have traded smaller bites at the Second Avenue Subway for a longer timeline and a higher overall cost.
While we see the impact of high costs on the Second Avenue Subway, what is more concerning is the projects that never get built or even seriously considered because high costs make them cost-prohibitive — projects like a subway extension to LaGuardia Airport, a 6 train extension to Co-Op City, or potentially the Interborough Express. The more efficiently and cost-effectively we can build, the more of these we can get done.