Why New York Can’t Have Nice Things
June 4, 2019 3:58 PM Subscribe
“People will say to me, ‘Why are MTA construction costs so high?’ And the answer is ‘Everything,’ ” says Julia Vitullo-Martin, a senior fellow at the RPA and co-author of its 2018 report comparing New York’s construction costs to those in peer cities. “Every factor you look at is flawed the way the MTA does business, from the first step to the end.” - It costs three times more to build a subway station here than in London or Paris. What if we could change that? (Josh Barro in New York Magazine)
Cities On The Move, a documentary about public transit in Singapore and Hong Kong, by Singapore's Channel NewsAsia. An interesting claim that it makes is that Hong Kong's MTR is one of the few public transit systems in the world that operates at a net profit.
posted by XMLicious at 4:53 PM on June 4, 2019 [1 favorite]
posted by XMLicious at 4:53 PM on June 4, 2019 [1 favorite]
^ I don't think that claim is entirely correct, most Japanese transit companies operate at a profit (and there are a lot of them).
posted by ripley_ at 5:33 PM on June 4, 2019
posted by ripley_ at 5:33 PM on June 4, 2019
This is my surprised face that a conservative journalist thinks the problem with transit projects is environmental review, organized labor, and too many people with government jobs.
posted by dusty potato at 6:32 PM on June 4, 2019 [23 favorites]
posted by dusty potato at 6:32 PM on June 4, 2019 [23 favorites]
This is a really astonishingly lazy article, even for Josh Barro. It contains no original reporting and is basically just a vehicle for his afactual political beliefs vis a vis labor unions and government. The Times did an amazingly-reported piece on NYC subway construction costs, which I recommend anyone read instead of this thing.
posted by Automocar at 7:06 PM on June 4, 2019 [19 favorites]
posted by Automocar at 7:06 PM on June 4, 2019 [19 favorites]
Japanese transit companies make s profit because they just run the rolling stock & operate the stations
The actual assets are run by a government agency.
MTR is profitable but mostly as a developer.
But why do we care if mass transit is profitable? I assure you it's cheaper than a fully loaded car operating cost.
posted by JPD at 7:16 PM on June 4, 2019 [5 favorites]
The actual assets are run by a government agency.
MTR is profitable but mostly as a developer.
But why do we care if mass transit is profitable? I assure you it's cheaper than a fully loaded car operating cost.
posted by JPD at 7:16 PM on June 4, 2019 [5 favorites]
Japanese transit companies make s profit because they just run the rolling stock & operate the stations
The actual assets are run by a government agency.
I'm pretty sure that's not correct, see page 3 here. Specifically: "Most Japanese companies hold a Class 1 license, as they provide service operation on rail infrastructure they own themselves."
posted by ripley_ at 8:31 PM on June 4, 2019 [1 favorite]
The actual assets are run by a government agency.
I'm pretty sure that's not correct, see page 3 here. Specifically: "Most Japanese companies hold a Class 1 license, as they provide service operation on rail infrastructure they own themselves."
posted by ripley_ at 8:31 PM on June 4, 2019 [1 favorite]
Just to clarify on the point about Hong Kong's MTR, as JPD mentioned it is profitable because it is a property developer and landlord in addition to running the rail lines here. They are given the area around the rail stations to develop as they see fit, and their strategy in the last couple of decades has been to build a mall on top of each station and then high density housing on top of that. One of the benefits is that it increases the utilization of each station so that there are almost no stations that are completely dead on the MTR network, each station is a hub of activity and a valid choice for living. The downside is that it has gentrified and made the areas immediately surrounding the stations feel a bit generic.
The fact that the MTR corporation is profitable does have one benefit for the general populace in that they've been constantly expanding their network and the addition of new stations has generally been welcomed. The MTR system is pretty cheap and the stations are laid out mostly intelligently and in a user-friendly manner. I personally believe that it's the best inter-city rail network that I've ever used, beating out NYC, Chicago, Tokyo, Singapore, London, and Paris. It also runs fairly smoothly and covers most of the day (first train starts up at about 6am and train coverage ends a little past midnight). They've had some operational issues recently, but nothing systematic yet.
posted by C^3 at 10:26 PM on June 4, 2019 [2 favorites]
The fact that the MTR corporation is profitable does have one benefit for the general populace in that they've been constantly expanding their network and the addition of new stations has generally been welcomed. The MTR system is pretty cheap and the stations are laid out mostly intelligently and in a user-friendly manner. I personally believe that it's the best inter-city rail network that I've ever used, beating out NYC, Chicago, Tokyo, Singapore, London, and Paris. It also runs fairly smoothly and covers most of the day (first train starts up at about 6am and train coverage ends a little past midnight). They've had some operational issues recently, but nothing systematic yet.
posted by C^3 at 10:26 PM on June 4, 2019 [2 favorites]
This is my surprised face that a conservative journalist thinks the problem with transit projects is environmental review, organized labor, and too many people with government jobs.
posted by dusty potato at 9:32 PM on June 4
What would a liberal journalist say the problem is?
posted by AugustWest at 1:20 AM on June 5, 2019
posted by dusty potato at 9:32 PM on June 4
What would a liberal journalist say the problem is?
posted by AugustWest at 1:20 AM on June 5, 2019
A liberal (or objective) journalist would actually take some time to explore the comparison with Paris that Barro mentions, but doesn't pursue in any detail. The factors Barro opposes, like heavy government and union involvement, are also present over there, but don't increase cost as much. See the NYT piece linked above.
posted by demonic winged headgear at 3:25 AM on June 5, 2019 [3 favorites]
posted by demonic winged headgear at 3:25 AM on June 5, 2019 [3 favorites]
Lack of political will to spend large amounts of capital in the short term to develop a better and more useful system in the long term.
posted by kyrademon at 3:25 AM on June 5, 2019 [2 favorites]
posted by kyrademon at 3:25 AM on June 5, 2019 [2 favorites]
Nestled in this cavalcade of whimsy is this gem, in which The Big Dig is held up as a model of how construction bidding should work:
This was a choice Massachusetts officials faced in 2015: The Green Line Extension project, a planned 4.7-mile, seven-station, aboveground extension of Boston’s light-rail system, was expected to cost $2 billion. When the bid came in, it turned out the price was going to be $3 billion. So the state announced it would delay the project, tear up its existing contract, and put it out to bid again with a mandate: The project could cost no more than $2.3 billion. If the bids all came in higher than that, the state would cancel it. In the end, Massachusetts obtained a fixed-price bid of $2.3 billion, and the project is now in construction.
I'm laughing so hard at this description that I'm having trouble typing. You make sure to tell me how on-budget and on-time the GLX is, Mr. Barro. I look forward to the mea culpa followup article in about five years.
posted by Mayor West at 5:11 AM on June 5, 2019 [8 favorites]
This was a choice Massachusetts officials faced in 2015: The Green Line Extension project, a planned 4.7-mile, seven-station, aboveground extension of Boston’s light-rail system, was expected to cost $2 billion. When the bid came in, it turned out the price was going to be $3 billion. So the state announced it would delay the project, tear up its existing contract, and put it out to bid again with a mandate: The project could cost no more than $2.3 billion. If the bids all came in higher than that, the state would cancel it. In the end, Massachusetts obtained a fixed-price bid of $2.3 billion, and the project is now in construction.
I'm laughing so hard at this description that I'm having trouble typing. You make sure to tell me how on-budget and on-time the GLX is, Mr. Barro. I look forward to the mea culpa followup article in about five years.
posted by Mayor West at 5:11 AM on June 5, 2019 [8 favorites]
The GLX is even more ghastly in comparison to London's Crossrail - a high-speed rail tunnel under ALL OF FREAKING LONDON that looks to cost about $21BN USD when all is done. GLX is running above ground on an existing rail right-of-way, for a set of trollies over 4.5 miles at a cost of 10% of Crossrail.
[whoops, scolbath, RTFA before posting :-) ]
posted by scolbath at 9:12 AM on June 5, 2019
[whoops, scolbath, RTFA before posting :-) ]
posted by scolbath at 9:12 AM on June 5, 2019
The Times did an amazingly-reported piece on NYC subway construction costs, which I recommend anyone read instead of this thing.
I don't think that article is any better -
They make so many of the same assumptions and unsubstantiated points - for example they list a bunch of jobs they deem extraneous, and then post the labor rate of the 'sandhogs' - the actual drillers- and at a labor rate that is not particularly high ($111 per hour), which implies that the extraneous breakroom cleaner is paid the same amount. Is he? Maybe? They imply the 'weekend overtime' rate ($400), which is rarely achieved , is excessive.
"That is not a problem in the private sector, where the possibility of nonunion labor can force unions to be more competitive, or in parts of the public sector that involve more potential bidders." So the NYT is advocating for union busting?
It also declares that the city has no power or knowledge when considering project costs (allowing firms to continually inflate), but that's wrong, which is detailed later in the article: City engineers (generally city employees) estimate costs, and the city council approves or denies work based on those costs. It details a few cases where the estimates were low, but it doesn't analyze whether the estimating engineers are regularly dramatically wrong or lazily inflating costs.
"A Times analysis of the 25 M.T.A. agency presidents who have left over the past two decades found that at least 18 of them became consultants or went to work for authority contractors, including many who have worked on expansion projects." So subway contracting is a relatively small world. It's not different than how former players get to be in the broadcasting booth. Or any other line of work. Contacts and working relationships matter.
"The firm was the only vendor to bid on the engineering contract for the Second Avenue subway, records show. " Bidding for city projects is typically open. The most common platform is I think called BidSync - where proposals go out to every firm with an account in BidSync in the entire country. If they only got 1 bid, that means there was only 1 firm in the US who felt they could do the work for close-enough to the engineer's estimate. That says to me that the engineers doing the estimates are perhaps a bit conservative on the costs, not out of control. It also says that subway work is so novel in the US that major engineering firms don't even hire staff to consider it. That's a problem.
This is soft sold - "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." This is the #1 thing you can do to dramatically increase costs - change your mind midway because construction work is so front-loaded towards the requirements stage.
"The project plan called for the hiring of 500 consultants from a dozen different companies, according to a 2009 federal oversight report."
There are these things called 'regulations', and you have to hire people to make sure they are complied with. Also journalists, it's 2019 - do you call the person who cleans the bathrooms in your building a 'consultant' even though they are generally are, and do you question if their motives are aligned appropriately? If you don't then don't do it here. These people are 'independent contractors'. You may also be hiring legit 'consultants' to help you comply with 'regulations' because they are generally not written in such a way that details the actual steps taken to comply with them. Don't like the costs associated with regulations, then get rid of them, but don't invent regulations and then complain that complying with them costs too much. Also very 2019 - if you work to comply then you are wasting money. If you ignore them you are crook. There is no way to win.
I would also note they didn't do much actual analysis of any costs that could be used to compare. I would also note that the company I work for outsources plenty of work to Europe (and specifically France) generally because they simply get paid less than US workers. It's true across many industries. The $60 per hour rate the French construction workers quoted is $30 lower than the loaded labor rate that we use for US employees for example. Call it less income inequality, less consumerism, better social benefits that are offloaded onto individuals in the US, whatever. But it exists.
I would love to see such an analysis of the costs of this subway and how it compares to other construction projects, at home and abroad. It would be insanely valuable. I also don't mean to imply that all of this is above board and there is no fraud and no crookedness. There probably is, but they didn't document much of it.
posted by The_Vegetables at 10:20 AM on June 5, 2019 [3 favorites]
I don't think that article is any better -
They make so many of the same assumptions and unsubstantiated points - for example they list a bunch of jobs they deem extraneous, and then post the labor rate of the 'sandhogs' - the actual drillers- and at a labor rate that is not particularly high ($111 per hour), which implies that the extraneous breakroom cleaner is paid the same amount. Is he? Maybe? They imply the 'weekend overtime' rate ($400), which is rarely achieved , is excessive.
"That is not a problem in the private sector, where the possibility of nonunion labor can force unions to be more competitive, or in parts of the public sector that involve more potential bidders." So the NYT is advocating for union busting?
It also declares that the city has no power or knowledge when considering project costs (allowing firms to continually inflate), but that's wrong, which is detailed later in the article: City engineers (generally city employees) estimate costs, and the city council approves or denies work based on those costs. It details a few cases where the estimates were low, but it doesn't analyze whether the estimating engineers are regularly dramatically wrong or lazily inflating costs.
"A Times analysis of the 25 M.T.A. agency presidents who have left over the past two decades found that at least 18 of them became consultants or went to work for authority contractors, including many who have worked on expansion projects." So subway contracting is a relatively small world. It's not different than how former players get to be in the broadcasting booth. Or any other line of work. Contacts and working relationships matter.
"The firm was the only vendor to bid on the engineering contract for the Second Avenue subway, records show. " Bidding for city projects is typically open. The most common platform is I think called BidSync - where proposals go out to every firm with an account in BidSync in the entire country. If they only got 1 bid, that means there was only 1 firm in the US who felt they could do the work for close-enough to the engineer's estimate. That says to me that the engineers doing the estimates are perhaps a bit conservative on the costs, not out of control. It also says that subway work is so novel in the US that major engineering firms don't even hire staff to consider it. That's a problem.
This is soft sold - "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." This is the #1 thing you can do to dramatically increase costs - change your mind midway because construction work is so front-loaded towards the requirements stage.
"The project plan called for the hiring of 500 consultants from a dozen different companies, according to a 2009 federal oversight report."
There are these things called 'regulations', and you have to hire people to make sure they are complied with. Also journalists, it's 2019 - do you call the person who cleans the bathrooms in your building a 'consultant' even though they are generally are, and do you question if their motives are aligned appropriately? If you don't then don't do it here. These people are 'independent contractors'. You may also be hiring legit 'consultants' to help you comply with 'regulations' because they are generally not written in such a way that details the actual steps taken to comply with them. Don't like the costs associated with regulations, then get rid of them, but don't invent regulations and then complain that complying with them costs too much. Also very 2019 - if you work to comply then you are wasting money. If you ignore them you are crook. There is no way to win.
I would also note they didn't do much actual analysis of any costs that could be used to compare. I would also note that the company I work for outsources plenty of work to Europe (and specifically France) generally because they simply get paid less than US workers. It's true across many industries. The $60 per hour rate the French construction workers quoted is $30 lower than the loaded labor rate that we use for US employees for example. Call it less income inequality, less consumerism, better social benefits that are offloaded onto individuals in the US, whatever. But it exists.
I would love to see such an analysis of the costs of this subway and how it compares to other construction projects, at home and abroad. It would be insanely valuable. I also don't mean to imply that all of this is above board and there is no fraud and no crookedness. There probably is, but they didn't document much of it.
posted by The_Vegetables at 10:20 AM on June 5, 2019 [3 favorites]
I'm pretty sure that's not correct, see page 3 here. Specifically: "Most Japanese companies hold a Class 1 license, as they provide service operation on rail infrastructure they own themselves."
yes they like to tell people that, but the reality is the government builds the shinkansen lines and then transfers or leases them to the JR's @ preferential rates.
The rest of the network was gifted to them at the time of privatization (and I guess for non-maintenance capital spend the government would belly up)
Its an accounting dodge. But again who cares. Its only damaging in the context of western politicians using it as a cudgel against mass transit in their own part of the world.
posted by JPD at 10:26 AM on June 5, 2019 [1 favorite]
yes they like to tell people that, but the reality is the government builds the shinkansen lines and then transfers or leases them to the JR's @ preferential rates.
The rest of the network was gifted to them at the time of privatization (and I guess for non-maintenance capital spend the government would belly up)
Its an accounting dodge. But again who cares. Its only damaging in the context of western politicians using it as a cudgel against mass transit in their own part of the world.
posted by JPD at 10:26 AM on June 5, 2019 [1 favorite]
there is a large library of of data comparing western european construction costs to the US. Really the wage rate of the workers barely plays into it. Mostly what the data says is that the hollowing out internal capability has allowed outsourcers to overcharge and over spec their services.
Its weird to turn this into a union busting piece, as its actually most a call for more public sector employees. Its an argument against the profit motive.
posted by JPD at 10:31 AM on June 5, 2019 [3 favorites]
Its weird to turn this into a union busting piece, as its actually most a call for more public sector employees. Its an argument against the profit motive.
posted by JPD at 10:31 AM on June 5, 2019 [3 favorites]
yes they like to tell people that, but the reality is the government builds the shinkansen lines and then transfers or leases them to the JR's @ preferential rates.
OK, I get it now - you're only talking about Shinkansen lines run by JR companies. That's quite different from your initial comment which just said "Japanese transit companies", there are plenty of non-JR companies.
posted by ripley_ at 12:18 PM on June 5, 2019
OK, I get it now - you're only talking about Shinkansen lines run by JR companies. That's quite different from your initial comment which just said "Japanese transit companies", there are plenty of non-JR companies.
posted by ripley_ at 12:18 PM on June 5, 2019
There are unions and there are unions. Some are good (fighting for a living wage for hotel workers) and some are bad (police unions automatically defending cops no matter what they've done). The ridiculous and wasteful practices described in this earlier post make me think there is room for improvement.
posted by Bee'sWing at 6:05 PM on June 5, 2019
posted by Bee'sWing at 6:05 PM on June 5, 2019
Mostly what the data says is that the hollowing out internal capability has allowed outsourcers to overcharge and over spec their services.
As someone who has worked on outsourcing and in-sourcing for over 20 years, I disagree. Outsourcing vs insourcing vs fixed bid vs hourly bid have differences, of course, but they are less dramatic than any of the detractors or cheerleaders say. If it were so obvious, this wheel would not be still turning. I mean, you think other contractors aren't interested in saving money? Then why is practically every construction job sub-contracted?
That's why you always get things like 'overcharging' or 'over-spec' - which are ultimately meaningless. I mean, if you in-sourced those positions and they didn't 'over-spec', then you would have people sitting at their desks collecting paychecks twiddling their thumbs while some other middle manager tries to come up with some other way to make sure they are budgeting their time appropriately, which ultimately would lead to 'over-specing' and delays while people write documents. How much work someone does is only tangentially connected to how much they are budgeted for.
Per this article: the MTA board doesn't actually make many decisions, and it's run by the Governor of NY. That's a bigger problem than salaries or unions.
https://nyc.streetsblog.org/2019/06/06/anatomy-of-a-resignation-why-polly-trottenberg-quit-the-mta-board/
posted by The_Vegetables at 11:24 AM on June 7, 2019
As someone who has worked on outsourcing and in-sourcing for over 20 years, I disagree. Outsourcing vs insourcing vs fixed bid vs hourly bid have differences, of course, but they are less dramatic than any of the detractors or cheerleaders say. If it were so obvious, this wheel would not be still turning. I mean, you think other contractors aren't interested in saving money? Then why is practically every construction job sub-contracted?
That's why you always get things like 'overcharging' or 'over-spec' - which are ultimately meaningless. I mean, if you in-sourced those positions and they didn't 'over-spec', then you would have people sitting at their desks collecting paychecks twiddling their thumbs while some other middle manager tries to come up with some other way to make sure they are budgeting their time appropriately, which ultimately would lead to 'over-specing' and delays while people write documents. How much work someone does is only tangentially connected to how much they are budgeted for.
Per this article: the MTA board doesn't actually make many decisions, and it's run by the Governor of NY. That's a bigger problem than salaries or unions.
https://nyc.streetsblog.org/2019/06/06/anatomy-of-a-resignation-why-polly-trottenberg-quit-the-mta-board/
posted by The_Vegetables at 11:24 AM on June 7, 2019
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