By Eric Murphy
Fires and electrical problems at Penn Station ahead of World Cup matches have contributed to a global spotlight shining on America’s lackluster transit systems this summer. The price tag for an upgrade at Penn Station? Seven billion dollars—larger than Arkansas’s entire annual budget. The United States has some of the highest costs to build transit in the world, but smart reforms and investment in public capacity could bring some of those vertigo-inducing price tags back down to earth.
New York isn’t the only place facing a steep bill for transit projects. Chicago’s Red Line train extension will cost about $1 billion per mile, up more than 50% from initial estimates. A soon-to-open bus rapid transit line in Denver will cost more than a quarter-billion dollars. California’s high-speed rail project is famously expensive, already estimated to cost three or four times more than the $33 billion initially approved by voters.
Some of the high and rising costs for transit infrastructure are due to inflation, the cost of materials, the legal environment, and other factors that are difficult for agencies to control. But the Institute for Progress’s new Transit Abundance Playbook offers a variety of cost-reducing ideas that states can use, from planning to design to inter-agency coordination. One area the playbook highlights is an erosion of in-house capacity at public agencies:
“Excessive use of consultants to manage large capital projects is a significant cost driver in transit project delivery. Over the past 40 years, public agencies have outsourced a large share of their core work to consultants. […] The result is a system in which public agencies pay significant markups for private expertise while losing the capacity to oversee projects themselves. Costs grow, timelines expand, and every project becomes more dependent on consultants than the last.”
Yale University law professor Zachary Liscow agrees that public agencies delivering infrastructure are dealing with an increased workload without the needed staff, and the staff they do have work for pay that can’t compete with the private sector. While reduced staffing and low pay may cut short term costs, retirements and other departures strip agencies of human capital. The difference between an experienced and an inexperienced engineer can amount to 14% of project costs, far outpacing the engineer’s salary.
Liscow focuses on highways rather than transit, but finds that higher government employment correlates with reduced infrastructure costs:
“Evidence suggests that increasing capacity—as measured by state DOT employment—actually reduces construction costs. Recall that contractors, rather than government employees, perform the construction work; government workers design or supervise design of the project, put it out to bid, and manage the contractor. Hiring more government workers could thus enable better project management.”
Liscow and colleagues found that as DOT employment per-capita went up, infrastructure costs went down. “Increasing employment by one person per thousand in a population reduces costs by 26%.”
A recent analysis from Transportation For America found that it would take an investment of $4.6 trillion over 20 years to build, operate, and maintain “world-class” transit systems across the U.S. That’s a daunting number, and shocking sticker prices on transit and other infrastructure projects are not in short supply. But, as research shows, investing in agency capacity and the public workforce can help bring down those costs and help agencies spend and build more efficiently.
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