Why Doesn’t the MTA Actually Tell Us What It’s Paying For?

Why does this hole in the ground cost as much as it does? Photo: MTA
Why does this hole in the ground cost as much as it does? Photo: MTA

Data is the best disinfectant.

The MTA needs to release information on what it’s paying for if the agency is going to tamp down prices on its mega-projects, according to an upcoming study — one that is tough to even conduct because itemized spending on mega-projects like the Second Avenue Subway is kept under lock and key.

“In New York, there are itemized costs prepared by independent cost estimators to inform the MTA when evaluating fixed-price bids, but … those costs are considered a trade secret of the agency, not to be publicized or else it would interfere with the bidding process,” researchers Eric Goldwyn, Alon Levy, Elif Ensari and Marco Chitti wrote in an upcoming report from the NYU Marron Institute of Urban Management.

That transparency practice sets the MTA apart from transit agencies in places such as Italy and Turkey, where the researchers noted that the agencies “use official benchmark unit prices, which have proven to be an important tool for transparency and symmetry of knowledge between the clients and contractors.”

The lack of daylight on the construction costs means the public can’t determine if the MTA is overpaying for what it needs, said one of the Marron Institute researchers.

“If I win a contract to build station X, and I can deliver it for $200 million, that $200 million represents all of the concrete, the steel, the finishes, the escalators, elevators, all that stuff,” said Goldwyn. “Some agencies will get an itemized cost list after the winning bid has been accepted. But that list is not going to be public, you do not get access to that. And if you’re a watchdog organization, you have no sense of where things are and you can’t say, ‘You’re overpaying for this thing or that thing.’ Because I have no idea how much you’re paying for escalators, I have no idea how much you’re paying for a cubic yard of concrete.”

MTA officials pointed out — as the report also does — that the agency uses independent cost estimators and itemized prices. True, that information stays in-house, but the agency contends that the secrecy helps it avoid being undercut at the bargaining table.

“Releas[ing] that information doesn’t help with the competitiveness of our bids,” said MTA President of Construction and Development Jamie Torres-Springer. “Putting those numbers out sometimes can create a sort of expectation or a floor on what somebody’s going to bid in the future. We want the lowest bid for those items. And so we want to keep the market in a position where there isn’t all this information that’s out there, we want our contractors to come in and give us the lowest bid.”

Construction costs at the MTA have been a constant source of agita for both the agency and for transit advocates who want to see New York City as America’s transit capital by more than just a default ranking. Expansion projects like the first leg of the Second Avenue subway, the Long Island Rail Road expansion to Grand Central and the 7 line extension have all been pilloried for cost overruns on top of high budgets to begin with.

“It’s insane that the MTA maintains such a lack of transparency, despite being well aware that we have the highest infrastructure costs in the world,” said Liam Blank, the policy manager for Tri-State Transportation Campaign. “They often point to these high costs as reason to not build many critical projects. Best-case scenario, the agency is overly siloed, myopic, and suffering from ‘New York exceptionalism.’ Worst-case scenario, it’s done this way intentionally, for example, to sandbag certain projects like Penn Station through-running and QueensLink that MTA leadership sees as lacking political support, or threatening the status quo. No matter how you cut it, it’s unacceptable.”

And even as the MTA has brought out the “on time and under budget” banner for its Third Track expansion of LIRR service, it’s been taking whacks for the $3.9-billion-per-mile cost of the Second Avenue subway extension into Harlem, a price tag even higher than the $2.5-billion-per-mile cost of the first branch of the subway line.

Transparency could also help keep costs down on future mega-projects in the MTA’s 20-Year Needs Assessment process, which is currently weighing ideas like a Utica Avenue subway, a W train extension to Red Hook and a southern expansion of the Second Avenue subway. The agency also has to eventually put a price tag on the Interborough Express between Jackson Heights and Bay Ridge that was priced at “single digit billions” when Gov. Hochul first pitched the reuse of existing freight lines for passenger service.

And of course, a lack of transparency around construction costs were behind what proponents of the QueensLink subway expansion through eastern Queens called the “sandbagging” of the MTA study of their proposal.

“Things like reference prices and itemized costs help keep things transparent so you have a sense of what’s going on. It’s not this static thing, you do it in 1990 and you never change it again. You get better with practice, so if you implement things that allow you to do it in a better way, you can learn from it, you can improve upon it. And you can build phase two, phase three, phase four, in a much more timely manner,” said Goldwyn.

MTA executives say that their current system of managing large projects — putting it in the hands of a project CEO who can manage the aspects of it — works for the organization. Rather than judging the MTA on the total cost of projects, the public should see if the agency is able to come in at or under the original price for a project.

“What we ask people to look at is when we’re getting an independent cost estimate, we’re bringing our bids in under those independent estimates, which is estimated by professionals. And then we’re bringing the project in on budget or under budget and on time,” said Torres-Springer. “That’s really what we think we should be measured by.”

But transparency watchdogs insisted that even a new program could stand for a little daylight.

“So they adopt this new construction approach that they’re happy with? Fine,” said Reinvent Albany Executive Director John Kaehny. “One way of measuring it, and its success, is to compare stuff that’s apples to apples, aka unit price cost, with each other historically. So you can be say, ‘Look, we’ve we’re achieving savings if you look at this inflation-adjusted price per square foot. We just did this station renovation, and it’s actually cheaper than what we were doing five years ago.'”

Subway stations, whether new or renovated, are where publicly itemized cost lists could show how things are going with cost containment, Kaehny said. Stations cost hundreds of millions dollars more than the previously reported $425 million each on the Second Avenue subway, a prime driver of the bloat on the project. The MTA has also struggled to explain why it cost $30 million to renovate a set of steps at Times Square or how costs ballooned from $28 million to $43 million per station on its Enhanced Station Initiative renovation project.

“Of course they should make that historical data available so that you can see what the cost drivers are and why you get this insane inflation,” said Kaehny. “It’s important if people could look and say, ‘On these 300 subway jobs, the tile price was $150 to $170 per square foot, and on this one it was $700? Well what the hell? Why?’ because the MTA will not ask “why” unless they’re forced to from outside.

“And the problem is, is if that data is not out there, the people that hold the MTA to account, which is really the legislature and the press, don’t know what’s going on.”

ALSO ON STREETSBLOG

Will Cuomo Help the MTA Make “Every Dollar Count”?

|
The MTA has made big strides in recent years to streamline its operations, but without political leadership from Governor Cuomo, the agency won’t be able to tackle the high costs and inefficiencies that continue to hamper the city’s transit system. In 2010, after an acute budget crisis, the MTA began a program to cut costs […]

The Last Thing New York Needs Is a Tax Break for Drivers

|
The MTA capital program, which funds maintenance and expansion of the transit system, is on the final year of its five-year cycle. A new plan is being developed, and the big question is how the state is going to pay for it. At a hearing of the Assembly Committee on Corporations, Authorities and Commissions, state […]

MTA Maps a Five-Borough Network for Select Bus Service

|
At a press event yesterday to announce service restorations and upgrades, the MTA also went public with a citywide plan to expand Select Bus Service. With tunnel-boring mega-projects consuming billions of capital dollars apiece, the agency is featuring low-cost bus improvements more prominently in its strategy to increase transit capacity. Stephen Smith at the Observer reports: […]

Citizens Budget Commission: MTA Capital Program Must Change Course

|
The fight over how to fund the MTA’s next capital plan is just starting to heat up, with worries over disappearing federal dollars, ever-expanding debt, and proposals for new revenue sources. Before the funding discussion gets going in earnest, a new report from the Citizens Budget Commission [PDF] begs the region’s transportation policymakers to take a […]