Must-Read NYT Expose on Insane Subway Construction Costs in NYC

A lot of people glibly attribute NYC's crumbling infrastructure to underinvestment in maintenance, but if you read this, you'll see that a huge factor is that NYC's subway construction costs are 7x higher than what other developed countries spend, including countries with very strong unions like France.

https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region®ion=top-news&WT.nav=top-news&_r=0

That is crazy. Interestingly, it appears from the article that one real higher cost in the US is insurance (accounting for about one-tenth of the extra cost).  

Also interestingly, the hiring of hundreds of 'extra' employees seems to have been recognized in 2010... but was not publicly reported, nor dealt with in the past 7-8 years.

It also appears that the contracting oversight methods (or lack thereof) have set the stage for inflating budgets:

"Even though the M.T.A. is paying for its capital construction with taxpayer dollars, the government does not get a seat at the table when labor conditions are determined. Instead, the task of reining in the unions falls to the construction companies — which often try to drive up costs themselves.... Critics pointed out that construction companies actually have an incentive to maximize costs — they earn a percentage of the project’s costs as profit, so the higher the cost, the bigger their profit."

In addition, there are often only 1-3 bids per project from construction companies:  “Is it rigged? Yes,” said Charles G. Moerdler, who has served on the M.T.A. board since 2010. “I don’t think it’s corrupt. But I think people like doing business with people they know, and so a few companies get all the work, and they can charge whatever they want.”

Finally, the MTA itself: 

"The M.T.A. is partly to blame. Officials have added to the soft costs by struggling to coordinate between vendors, taking a long time to approve plans, insisting on extravagant station designs and changing their minds midway through projects... parts of the authority’s project management approach that have been “broken” and “self-defeating.” Changing plans midway through projects is a “huge issue,” as is over-customization of designs and poor management of consultants."

I don't mean to downplay the report, but it's been known that the MTA has been a hellhole of inefficiency and corruption for many, many years. The blame has to fall on the politicians who appoint the board members. 

In some ideal world, the Governor and Mayor would get together and appoint people who were determined to straighten the place out. Absent that, there will be no change.

It will never change until some people go to prison for corruption/fraud.

Until then, business as usual.

yahooyahoo said:

It will never change until some people go to prison for corruption/fraud.

Until then, business as usual.

Why would that change anything? People have gone to jail for corruption and fraud, and the lesson the corrupt and fraudulent take from it is to try much harder to not get caught.

Runner_Guy said:

A lot of people glibly attribute NYC's crumbling infrastructure to underinvestment in maintenance, but if you read this, you'll see that a huge factor is that NYC's subway construction costs are 7x higher than what other developed countries spend, including countries with very strong unions like France.

https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-spot-region®ion=top-news&WT.nav=top-news&_r=0

A good article, thanks for flagging. I think a partial explanation actually lies in your note about how it's different in countries with strong unions. A situation like what we have with the NYC subway would ideally open up space for a politician to run as someone committed to curbing costs in order to deliver better service. As the article notes, all this extra cost means fewer major projects, completed more slowly, and less money for maintenance and other basic needs.

Instead, what we get is people like Chris Christie, who rail against unions and waste and offer in its place -- nothing. And offered a choice between much needed infrastructure that costs 7x what it should, and not having that infrastructure at all, well clearly the overpriced infrastructure is the better choice. At least you actually get a tunnel at the end of it.

This is the cost of polarization -- we get to choose between grossly overpaying, or having the foundations of our regional economy actively undermined.