How New York City’s subway construction costs got so high

If you need something to make you even more enraged at the MTA than you probably already were this year, well, here it is: The New York Times dropped a doozy of an investigation into the MTA’s construction costs, and it’s … illuminating, if we’re being charitable; enraging, if we’re being honest.

The fact that the MTA’s construction costs are high, particularly when compared to those of other cities around the world, is not new; journalist and Curbed contributor Alon Levy has been covering that beat for some time now. But the Times investigation, which came from dozens of interviews with experts in and outside of the MTA, lays bare the bureaucratic inefficiency, red tape, and corruption that drives these costs up.

The piece, by Brian Rosenthal, starts with an anecdote about East Side Access, one of the agency’s capital construction projects, that sets up what’s to come. An accountant discovered that while 900 workers were employed, only 700 had jobs to do. “Officials could not find any reason for the other 200 people to be there,” per the Times—and they were being paid $1,000 per day to do nothing.

It gets worse from there. Here are some of the reasons that things have gotten so bad:

Overstaffing

The Times got its hands on documents that show deals brokered between the MTA and labor unions for jobs like East Side Access, and according to the paper, they “reveal a dizzying maze of jobs, many of which do not exist on projects elsewhere.”

Or, more specifically:

In New York, “underground construction employs approximately four times the number of personnel as in similar jobs in Asia, Australia, or Europe,” according to an internal report by Arup, a consulting firm that worked on the Second Avenue subway and many similar projects around the world.

The Times also pointed out that trade unions, which staff subway construction projects, have plenty of political clout—per their investigation, “unions working on M.T.A. projects have donated more than $1 million combined to Mr. Cuomo during his administration.”

Lack of competition

This quote pretty much sums it up:

“In other cities, you get eight bids for projects,” said Gary Brierley, a consultant who has worked on hundreds of projects in the last 50 years, including the No. 7 line extension and the Second Avenue subway. “In New York, you get two or three, and they know that, so they’ll inflate their bids if they think they can get away with it.”

Political pressure

That’s not the only way contractors drive up costs, though—the Times spoke with more than a dozen MTA contractors, who explained:

First, the contractors said, the vendors add between 15 and 25 percent as an “M.T.A. Factor” because of how hard it can be to work within the bureaucracy of the transit authority. Then they add 10 percent as a contingency for possible changes. And then they add another 10-12 percent on top of all that for profit and overhead.

And then there’s this…

More than a dozen M.T.A. workers were fined for accepting gifts from contractors during that time, records show. One was Anil Parikh, the director of the Second Avenue subway project. He got a $2,500 ticket to a gala, a round of golf and dinner from a contractor in 2002. Years later, shortly after the line opened, he went to work for the contractor’s parent company, AECOM. Mr. Parikh and AECOM declined to comment.

So-called “soft costs”

The Times defines these as non-construction aspects of larger projects—things like project managers, or preliminary design. For the Second Avenue Subway, those costs were around $1.4 billion; for East Side Access, they’ll be an estimated $2 billion. The problem? That’s way higher than other major cities.

And as the Times notes, the MTA is to blame for this. The agency hired the same engineering firm, WSP USA, for both projects; thanks to the number of former MTA employees that are now on its payroll, it’s garnered the nickname “the M.T.A. retirement home.” The agency is also guilty of “struggling to coordinate between vendors, taking a long time to approve plans, insisting on extravagant station designs and changing their minds midway through projects.”

As a point of comparison, the Times used an extension of the Paris Metro, called Line 14; where the Second Avenue subway’s first phase cost $2.5 billion per mile, Line 14 only cost $450 million per mile. The difference? Doing basically the opposite of everything laid out in the Times piece.

What happens next? That remains to be seen. The Times quoted MTA chairman Joe Lhota as saying “we recognize this has been a problem. We’re never going to deny history… This is an issue that needs to be addressed. It needs to be attacked.” But MTA officials were also quick to defend the state of things, or deflect when questioned about these issues.

There are plenty of critical takes on Twitter, too, including many trenchant ones from Second Ave. Sagas’s Ben Kabak:

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