Over the last decade or so we’ve seen our governments far more to build (or at least talk about building) a proper rapid transit network for Auckland. Yet over the same time we’ve also seen the costs to deliver such a network dramatically increase to become some of the most expensive projects per km in the world, for example, as we’ve covered before, even the Auckland light rail team’s surface option was 2-6 times more expensive per km that is achieved in most cities overseas.
We’re not the only country to see very high costs for delivering public transport projects though and a group of researchers, some of whom we’ve covered on the blog in the past, have been investigating why similar projects in the United States are so much more expensive that most places around the world as part of what they call the Transit Costs Project. They’ve just released their final report on why (exec summary here) and there a ton from it we could learn it, especially when we think about the light rail.
We started the Transit Costs Project to understand how to reduce the costs of transit-infrastructure projects in the United States and other high-cost countries so that we can build more transit infrastructure. In significant parts of the United States, there is political consensus behind the need to improve the state of public transportation.
There are only five countries that on average cost more per km for rail projects than the US, and one of those is us – though we have that from only one project, the City Rail Link.
The cost of these projects matter because increased costs often result in projects taking longer, the public losing faith in agencies to deliver and it threatens support for future investment, both locally and in other cities around the country – it wouldn’t surprise me if there were people in some of our public agencies that fear an affordable, efficiently delivered light rail project in Auckland would spur calls for similar projects in cities like Christchurch, Hamilton and Tauranga.
Much like our government who have been willing to spend more money on PT, in the US the federal government recently agreed to spend hundreds of billions on transport infrastructure with a decent chunk of that going to PT projects.
With such large sums at stake, it is critical to spend money productively. The reason governments spend money on infrastructure, transportation, and public transit rather than just giving people money as welfare is that these investments are framed as opportunities to improve connectivity, stimulate economic activity, rebuild old infrastructure, reduce emissions, create good paying jobs, and catalyze innovation (The White House 2022). Unfortunately, as we show in the rest of this report, the United States has among the highest transit-infrastructure costs in the world.
The report finds three primary factors as to why costs in the US are higher than most other places. These are:
- Physical Structures – this is further broken down into
- Stations and Tunnelling
- Systems and Standardisation – a lack of standardised designs results in fewer economies of scale,
I’m not sure how much all of that applies to our context but the one that certainly seems to is Procurement.
Our contracting model, in which we try to outsource most parts of the process to private companies, gets a mention where it’s noted that a push to privatise the risk has ended up with projects costing more.
Across the English-speaking countries other than the United States, there are some striking similarities. The institutional problems we have heard about from experts in Britain, Canada, and Australia are largely the same, and it appears that Canada, Australia, Singapore, Hong Kong, and New Zealand are imitating British practices. Moreover, the cost histories of this region are similar. Where New York began displaying a large construction costs premium over the rest of the world in the 1930s, London only did between the 1970s and the 1990s, shortly followed by Hong Kong, Canada, and Singapore.
Imitation of British practices is also seen elsewhere: as detailed in the Stockholm case study, some of the British aspects of privatization and devolution of expertise to private consultancies are making their way to Scandinavia. We cannot definitively connect such Anglicization with higher costs, as the process is in its infancy, but the Anglicization process correlates with cost increases across countries.
The second paragraph in this section sounds like a lot of our transport planning processes where projects are studied endlessly resulting in business case after business case.
Because few American transit agencies have decades of experience building rail projects, there is no pool of inhouse expertise. American agencies from Hawaii to Utah to North Carolina have compensated for this lack of expertise by hiring consultants to deliver rail projects, as teams can be scaled up and down more quickly than inhouse staff without worrying about long-term commitments, including public-sector benefits and pensions.
However, our cases show that consultant teams need a client who knows what it wants and is technically competent enough to direct the consultants rather than allowing them to design overly elaborate stations or propose additional studies that don’t advance the project. In our GLX case we saw that when the project scope ballooned and consultants studied project alternatives that were obviously unviable, such as constructing a tunnel under an existing right-of-way, there was no one at the agency to rein in the consultants and direct them effectively. In New York, we were told that consultants were seen as an endless resource to study every challenge that emerged multiple times rather than an expensive, specialized unit hired to execute the MTA’s vision.
Mixing these procurement issues with political desires can have dangerous consequences for project costs
The flip side of the issue of political meddling is that if there is too much political support for a megaproject, its costs are likely to rise due to the problem of early commitment. Early commitment, as identified by Cantarelli et al. (2010), means that the political decision to go forward with a project is done at too early a stage of design. Once that commitment is made, it is hard to walk away from the project, it becomes easier for external actors to extract surplus and harder for the planners to engage in value engineering or fight feature creep.
When the government originally agreed to light rail, it was on the back of quite a bit of design work completed by Auckland Transport but the shift to starting from scratch with a tunnelled option has likely put them in a bind because any change to the project now will be pounced on by the media and opposition parties and claimed as a failure, even if it is the right thing to do.
The researchers note that there are very few road projects that reach the size and complexity of big PT projects so most go ‘under the radar’, even if they add up to being a lot more than a PT project. But because there are so many of those projects, they’re essentially commodities these days.
The difference between roads and urban rail extends beyond data collection. An engineer in Los Angeles who has worked on both road and rail projects explained to us that American road projects are essentially commodities (Personal Interview 2020). For example, a new public parking garage would be one of thousands of such structures built, which means that the costs and risks are well-known. It is also a simple project—just a parking garage. In contrast, an urban light rail or subway line, besides being one of dozens in the last generation rather than thousands, has many distinct parts: the civil structures, the tracks, the signaling system, the maintenance facility, the rolling stock. Far more prior planning is needed in the latter case, and the engineer told us that Los Angeles County’s preference for outsourcing planning to private consultants with little public oversight works well for simple projects like parking but not for more complex ones like urban rail.
In terms of design, this stands out, first because we’ve seen a lot of bespoke stations being designed recently, this includes in the CRL, various station upgrades and new planned rail stations south of Papakura as well as on the likes of the Rosedale busway station. The second sentence particularly applies to light rail.
First, agencies that follow consistent national or international standards for design and construction build projects cheaper and quicker than agencies that turn to bespoke solutions for every project element. Second, cities should be willing to tolerate somewhat more surface disruption to get construction done more quickly.
Another area where I found a lot of commonality with what we see here is coordination between agencies. The below example from New York sounds a lot like some of the things we’ve heard between Auckland Transport and CRL and I’m sure other stations that are funded for them.
In New York, we were told numerous times that MTA Capital Construction needed a sign off from New York City Transit (NYCT), the entity that operates the buses and subways in New York, before starting construction. In New York this meant adding more back-of-house space to stations than was necessary, building more crossovers along the line than were needed because NYCT wanted them (for example, at 72nd Street), and even changing the size of tiles to conform to NYCT standards
the capital construction arm shouldn’t be held hostage by the operating arm.
There’s a lot more detail about what I’ve covered here and other aspects too in the report. The used their research to come up with this diagram to explain why costs end up over 9 times higher than they should.
It feels like with light rail we’re falling into many of the traps highlighted in the report that result in increased costs. That’s will be a bad outcome for both Auckland and the country.