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,
  • Labour
  • Procurement

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.

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  1. We should be talking to Portugal, Spain and South Korea first…. Seems obvious. NZ contractors have no experience in this, and are pricing in an excessive amount of risk, hence cost over-runs before we even start. Go straight to Spain and hire their best consultants and contractors.

    1. There’s at least 4 multinational contractors with experience of building surface and underground transit systems currently active in NZ, now many more do you want?

      The issue is at the delivery agency level where the decision on what to build is driven by political whim and power games within the competing agencies (WK, Kiwirail, AT, AC etc etc) to get their slice of the pie.

      The contractors can only build what has been designed.

    2. I think that was listed as a problem we don’t want consultants and privatised construction. We need to go to those countries and offer really good employment contracts to the in-house designers and constuction crews to give them in-house jobs in AT or Waka Kotahi. Using the best consultants in the world is still using consultants – and that puts the price up. The whole idea of privatising the risk by outsourcing clearly doesn’t work – because once the project has spent even a moderate amount of money it gets too big to be allowed to fail so the public body still ends up swallowing the risk, budget blowouts and cost over runs.

  2. Firstly, what does:

    “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.”


    Secondly, it’s funny that this should be the subject of today’s post when I decided to rewatch S3E6 of Utopia, which is probably the episode most relevant to this subject yesterday. (Spoilers: It’s the one where the former Ministry of Works type ends up in the NBA, and is fired for proving this procurement strategy is full of rent seeking.)

  3. In other words, any politically proposed construction project,is immediately seized upon by consultants in the first instance,as some sort of feeding trough,from which they gleefully eat till ,they are bloated.
    There is an oft quoted analogy of a 10 cent nut ,being sold to NASA,as a mechanical retention device for 10 dollars.
    Not sure what the answer is.as the money being spent is not real,ie it is other people’s money.

  4. And the expensive stuff we do get isn’t very good.
    “Expect delays & cancellations to all train lines, due to a signal issue at Britomart,” An Auckland Transport travel alert said shortly after 6am on Monday.

    1. Britomart was cheap compared to the CRL. I remember in 2003, they were trumpeting the station as the “largest underground diesel train station in the world” lol. It’s like trumpeting the largest horse feeding station in the world. NZ is so backward in public transport plan and builds

  5. The obvious answer is if you want the same cost per km as the USA then all you need do is reduce the percentage of tunneling from 100% to 40% like the USA. Is anyone surprised our rail costs more?

  6. They should really break it down into multiple seperate stages and deliver and price it that way, like mentioned, nobody asks for the full cost of our Motorway network, its just delivered in seperate pieces. Simply say we aim to have a multi line Rapid Transit netowrk and are starting with City to Dominion Road, or Mangere to Onehunga.

    Would also be good if they presented a cost to run a line that gave up road and parking space aka not having to widen roads, buy properties and show the public what that cost looks like.

    Once it’s underway the political noises fall away a bit, so they need to be braver with their options to keep costs down e.g they should have started when they first had the political capital in 2017

  7. I know that GA don’t agree with this, but PT solutions seem so low tech to me. I find it hard to understand why we would spend billions running a rail line these days on an existing road that is capable of moving 40 tonne trucks. What does the rail do other than provide a fixed route (which could be done with a guidance wire)?
    The attitude seems to be “someone else tried it 10 years ago and failed” rather than “we could have rubber wheel trackless trams on every road in the isthmus for less than the price of surface level LR on Dominion”. Why not at least try it somewhere?

    1. They reach a point where they’d need to be so big to carry the same number of people as Light Rail that you end up needing the same road space corridor anyway, and that’s before factoring in the wear of a huge heavy vehicle’s rubber on the road, whereas steel on steel is far more efficient and easier to maintain than repeatedly digging up the same piece of road and relaying it over and over again.

      1. For just the isthmus (not running to the Airport) its hard to see the demand ever being particularly high, especially if every main road was done which would spread the demand. Probably something capable of 200 pax would be sufficient.
        As for the wear, I’m sure any business case will tell you that relaying the road over and over again is significantly cheaper than the billions needed to lay rail. Maybe they could put a slight bit of randomness in to spread the wear a bit. And add more axels too. Or lay concrete.
        Are 6 fairly good solutions costing $500 million each better than one perfect solution costing $3 billion? At least do a business case, but I am pretty sure the outcome is obvious.

        1. Do you ever ride the Southern or Eastern line trains as I do.
          It is a great enjoyable experience.
          Often full trains with relaxed people caring about climate change, reducing their weekly transport costs and road congestion.

        2. The major problem in this city is the overlapping services due to unreliable rail. Everyone agrees that heavy rail is the backbone, light rail the ribs, and buses the veins. The space and base infrastructure exists, but AT has bought so many buses and so many trains that all they seem to worry about it maintaining them even when their is no need. Too many toys in the cot. The eternal, I daresay particularly male obsession. Less stuff means concentrating on the public transport network and less catering to weekend cyclists. I ride a bike and will defend cycling infrastructure with my flat feet, but this city needs mass transport rapidly and neither AT nor AC are capable of delivering that. This is a generational shift away from the private motor vehicle and there is no generational representation in the halls of power in this city.

        3. “less catering to weekend cyclists”??

          You’re falling into a trap there. Any tug you feel between investment in “weekend cycling” and “weekday cycling” is a manufactured tug; it’s due to a deliberate ploy to divide and conquer from the BAU dinosaurs.

          Different people have different needs – often the infrastructure you might classify as “weekend cycling” is the very infrastructure that children need for their independent mobility (which is required for their healthy development) and for people who don’t work office jobs in town.

          Supercharging walking and cycling is extremely important. Mass transit is too, and no one is denying that, so please don’t dismiss the need for quality cycling infrastructure of all types.

          The tug that you should be concerned about is the tug between investment in (all) sustainable transport modes and continued investment in driving.

    2. There’s enough rubber particles going into the harbour now, let’s get a few more core routes with steel wheels instead.

    3. Trackless trams are just more expensive buses. First driving a trackless tram has to be significantly harder than a regular bus. Seen any bendy buses lately? They have been basically discontinued in favour of doubledeckers.

      Second, anything driving on the road causes both rubber particulates and also road wear – the heavier the vehicle, the more particulates and wear. Rails by contrast can carry in the order of hundreds of tonnes of load at high frequency with by comparison – minimal maintenance, and produce only steel particulates which quickly rust and become benign.

      The versatility of buses becomes useless when you have permanent high demand for certain routes. A rail corridor can transport many times more passengers than even the highest capacity bus rapid transit – and if you are going to have a dedicated bus way, why not make it light rail in the first place if its not made impossible by something like a road only bridge

  8. The huge Otahuhu station is a good example of gold plating.
    $40 million, 500 meters of covered platforms and large areas of concrete.
    Actually stations like Manurewa, Ellerslie, Remurewa and Greenlane which are similar to a busy bus stop with enough cover for 50 or 100 people are OK.

    1. Otahuhu is essentially a toilet block with a covered bridge. It also has, what, twice as many bus stops as Manurewa? It’s quite far from what I’d consider to be gold plated.

      Most stations in Auckland have too little shelter and no toilets. I would argue both of these things are need to haves, not nice to haves.

      1. Otahuhu is a crap version of New Lynn, but these are examples of good transport centres. Puhinui is the shiny station because it connects to the airport, proving that this city cares very much about its visitors, but not so much about its residents. Public transport should serve the residents of its city as they are who pay for it through their labour.

  9. The quicker you guys get over your grieving cycle about light rail the better.
    It’s dead. Won’t be revived. Shuffled off it’s mortal coil. Stiff.

    The great big sucking noise on NLTF and Budget 2023 is well underway. Anything without a committed TOC is having the ruler over it.

    Start singing the great Frozen anthem “Let it go, let it go”

    1. Ah but Ad, there’s a lot to gain from pro-actively laying out how the planning paradigm hurts us all, and that departing from good process – simply to protect BAU thinking – is a problem of professional integrity.

      Surely the time has come. The children of officials and consultants will be soon be asking (if they’re not already) why their parents wouldn’t make the obvious links between these sorts of poor decisions and our continued climate and safety failures.

      1. It would be worth Matt interrogating the many reports of the Infrastructure Commission about why infrastructure costs in New Zealand are high rather than comparing us to Qatar.
        Matt might want to look at:
        – Major PT projects are rare here, so the skill always resides outside New Zealand. In the case of CRL Vinci is the constructor lead and we should expect a single foreign lead in both construction and design. The comparison I would make is to geothermal power: we were global design and construction leaders for a few years in this, but we just let it go. Same will occur in light rail and CRL teams are packing up in many areas now.
        – Skilled labour availability. There are no construction workers to be had here, let alone A Grade tunnellers (for example) who get easily double their salary in Australia, and that will never change.
        – Materials and supply chain. New Zealand is last on the list for Maersk, we have zero pulling power, and frankly nothing to offer in return except bulk milk powder. There are no contra deals to be done that could accelerate this.
        – Decision instability. We have had a light rail proposal for Auckland since 2017 and it took massive interference in the last procurement in 2018 which cost a Minister his job, and of course cost the bidders millions of dollars in marketing budget to actually bid to go nowhere … only for it to dribble on in life support for a further 5 years trying to get global teams interested again … only for it to finally die after 8 years of mucking around. You cannot underestimate the reputational damage this has caused to the companies with even the remaining interest inside to bother bidding.
        – Floods, inflation and other exterior forces. The NLTF and EQC are about to get sucked dry just to rebuild what we’ve got, and the Budget 2023 completely re-written. Reality check for all those with dreamy PT projects: they are dead. Same with inflation: we’ve had an unreal 15 years of low inflation, but that era is dead so prices will go up.

        Matt needs to start reconciling procurement ideals to what we really have to deal with, and it ain’t in local procurement teams. There’s good reason we are one of the least corrupt countries who are also the easiest to do business with.

        1. If you think they’re rebuilding the same dumb roads in the same dumb places, you’re dreaming. I reckon greater infrastructure investment (including higher taxes to pay for it) now has broad public support. The era of penny pinching is over – cheap is now seen as dangerous & leading us to third world status. In that new paradigm, major public transport investment has a future.

    2. Because every time there is a television news item filmed in Australia, there is a light rail vehicle in the background. See it often enough and it gets into the general public psyche that light rail is a modern and efficient public transport system.

  10. As an engineering consultant, I couldn’t agree more. We love working for clients who really know what they need, and don’t spend excessive time exploring rabbitholes. We also want to spend our taxpayers dollars wisely!
    I cringe whenever I hear politicians grumbling about salaries at CCOs – they need to employ good project managers, engineers and planners to build up their in-house capabilities. You can usually find these good people working at consultancies.

    Quote: “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.”

    This needs to be emphasised. CCOs who think they’re controlling risk by offloading it to the contractor are just pushing their costs up. Public agencies need to fully understand and manage their risks and keep their contingencies in-house, rather than just paying out to the Contractor up front (regardless of whether the hazard eventuates)

    1. But there is two types if risk. Project risk and personal risk. The CCOs that unload project risk onto a contractor are increasing the price and probably also increasing project risk. But the managers of the CCO don’t care about that, that is other people’s money and other people who face the consequences. They offload that project risk in order to reduce their own personal risk of being found out as incompetent.

      1. Yes. And of course organisations will keep ticking along with damaging BAU in an environment that is screaming “Change or We’ll All Suffer” is that there are protections for whistleblowing staff from losing their jobs. But what kind of protections are there for whistleblowing consultancies from losing future contracts?

        I realise now that contracting the work out means the people actually doing the work have less protections than if they were directly employed. Hence, more conservatism and resistance to change, and less professional behaviour.

        1. I know an engineer who wrote something critical of AT for a client. He was then called in by AT and dressed down and told that people who contract to AT are not allowed to do that. So much for impartiality.

  11. Great article about sociology-technical systems behind coast escalation! I wonder if there is any evidence about the role of commercial interests in artificially inflating costs for projects that will harm their long-term business model? building in great PT means less need in the future for new roads and road maintenance, in a context where there a small number of substantial companies making a lot from the status quo.
    How would we know if this was the case?

  12. Christchurch knows how to lay tram tracks. Maybe we should ask them or even Motat rather than consultants. And could we give some consideration to have some sections only single tracked with what is effectively a loop running on adjacent streets. It common to have the end of line only single tracked. Single track just makes things so much simpler and takes up less space.

    1. On the other hand, if you single track for too long, you end up with (annoying) sections like bus transfer at Britomart where you have to walk a few 100 meters in order to catch a ride in the other direction. So loops at the end are fine with maybe two or three stops on it (so it doesn’t really matter which stop you take) but more than that will be annoying.
      Also, this is for trams – with the more distant spacing between stops for Light Rail, this should really be avoided in my opinion.

  13. Yeah, keeping costs contained would be good for all centres. Labour promised Otautahi urban rail in 2017, but we’ve only seen a talk fest to date.

    1. How many other projects did Labour promise? LR to airport. LR to West Auckland. Cycle and pedestrian bridge across the harbour. Regional rail to Hamilton, Tauranga, and other hamlets. LR to North Shore was talked about, although don’t know that it was promised.
      Why pick on just one project that they have failed to even start let alone deliver? And these are the folk in government while the cyclone rebuild starts. Will they build even one bridge or one house?

      1. They’ll build more than National whose main reason for existing is to do nothing (it’s actually the meaning of conservatism)

  14. This really strikes me:

    “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”

    Opposition are going to do opposition for political reasons, though I really hope that we don’t end up with a political system whereby we get one party spending three years undoing the previous government changes just through sheer bloody minded desire to undo whatever the other team did

    But media also seem to jump on the band wagon of beating up governments for changing stance. Which is completely wrong. The right thing to do in the face of more evidence is to actually change policy.

    What we seem to end up with though, is governments not changing policy in the face of more evidence, but responding to changes in public opinion

    1. Governments should listen to the majority voice of the people. That is their job. Green Party public transport wish-lists represent at best 7% of the voters. That’s what gets you voting share around the cabinet table.

      This was the most left-and-public-transport leaning government in living memory, but Minister Wood saw no-one defending the Auckland Waitemata shared path cycleway. It was neither financially, technically nor publicly defensible so he stopped trying to defend it. Which was fair.

      Even if Auckland Light Rail had stayed on life support, there was another election to mandate it. And that is entirely reasonable given the scale of public finding that would have been reallocated from elsewhere.

      Also, we need to accept that all those big light rail projects for Wellington are also dead. Nothing we can do about it.

      All we are doing for the next few years is rebuilding what we have.

      1. Governments are obliged to do several things.

        One is to listen to the voice of the people and balance their response to the various voices, whilst abiding by current legislation and international treaties we are party to. Amongst these laws and treaties are ethical obligations – such as the LGA’s requirement to plan for future generations. Some people mistakenly believe this can be overridden by the majority voice of the moment. This is simply not true, and it’s an outdated might is right value that has no place in modern society. It’s complete nonsense when you look at how the majority voice is being measured. It’s also nonsense when you consider that democracy isn’t just about having your say, it’s about being informed.

        You are wrong in saying the Waitemata walking and cycling bridge was neither financially, technically nor publicly defensible.

        It was financially defensible: the minimum we should be spending on walking and cycling according to the UN Is 20% of the transport budget. That means, over the next decade, we should be spending $7.4b, which – if AT would only start doing as they’ve been directed, and start reallocating road space properly – will create extensive walking and cycling networks both sides of the bridge. Using 10% of the walking and cycling budget on a bridge would clearly make financial sense; the demand for walking and cycling would quickly become so huge over the harbour that an entire clip on would be required to accommodate it, leaving the current bridge slightly under sized… but not sufficiently undersized to warrant a PT+active bridge or any other crossing.

        The bridge was technically defensible: it was the logical second step in improving connections across the harbour:
        1/ liberate a lane
        2/ build a W and C bridge
        3/ reallocate lanes on the existing bridge to public transport

        All other solutions I’ve seen proposed to date retain or increase vkt. They are the ones that fail on the technical planning side.

        It was publicly defensible. It just needed WK and AT to use best practice democratic processes, quickly demonstrating that road reallocation leads to significant traffic evaporation and mode shift.

        Alas, WK and AT are stuck in a timewarp of about 1950. They are absolutely wedded to their predict and provide planning methods because it leads to lovely big construction projects. Being stuck in this paradigm is what has impoverished the city and country.

        1. Are you equating urbanisation with traffic? De-urbanisation with vkt reduction?

          I think it’s more correct that higher vkt is associated with (and causes/is caused by) **sub**-urbanisation. Through better land use and transport planning we can increase urbanisation while reducing vkt.

  15. Should have a collection of super cheap prefab assets that are preconsented structures and they can place as needed rather than reinventing the wheel for every location.

    Bus shelters that can just be bolted into the footpath (or platform), plugged in to electricity and finished.

    Ticket machine and shelter, which again can be bolted in, plugged in and finished.

    Standardised bridge segments/lifts – basically the cookie cutter Network Rail assets to minimise costs, like here: https://www.youtube.com/watch?v=gvrYdPyOESg

    Needs to be more general than specific to one org though, as the same prefab culvert structure can work for a rural road in Southland, a state highway in Taranaki, a bridge on the ECMT, a cycleway on Levin to Otaki and a private driveway in Northland.

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