Tackling Transit Cost Overruns: Strategies for Efficient Project Delivery

The Growing Problem of Transit Project Cost Overruns

In recent years, transit advocates and planners across the United States have observed a troubling trend: an unprecedented level of cost and timeline overruns affecting major public transportation projects. This issue has become increasingly prevalent, with project after project experiencing significant delays and budget increases. The problem is not limited to a single region or city; it's a nationwide concern that's also affecting other English-speaking countries.

This article will explore the root causes of these cost overruns and delays, drawing on expert opinions and comprehensive studies to provide a thorough analysis of the situation. We'll also discuss potential solutions and policy recommendations that could help address these challenges and improve the efficiency of transit project delivery.

The Scope of the Problem

To understand the magnitude of the issue, let's look at some examples from Los Angeles, a city that has been particularly affected by transit project delays and cost increases:

• The Crenshaw Line, originally scheduled to open in 2018, didn't begin partial operations until October 2022. The southern portion of the line is still not open and is expected to launch in 2024.
• The Vermont BRT project spent a decade in the community engagement and scoping phase before finally entering environmental review.
• Link Union Station Phase 1, initially fully funded and set to open by 2028, is now facing a potential delay until 2033 due to contract issues and budget shortfalls.
• Environmental review periods for projects in the design phase have been extending by years compared to similar projects from the previous decade.
• The "quick build" BRT on Broadway, intended to be completed within one year, is now projected to take at least five years.

These examples from Los Angeles are not isolated incidents. Similar problems are occurring across the United States, with transit projects consistently costing more and taking longer to complete than their counterparts in other developed countries.

Comparing US Costs to Other Countries

According to the NYU Transit Costs Project, the cost per kilometer of tunnel construction in the United States is nearly six times higher than in countries like Spain and South Korea. This stark difference raises questions about why US transit projects are so much more expensive and time-consuming to build.

One key factor is the lack of consistent expertise in rail construction within the United States. As Ethan Elkind, an expert on transportation policy, explains:

"We don't have the same level of expertise at building rail projects that you see in other countries where that really is a more major mode of transportation. Whereas in the United States, because we're a more rural country and we're dominated politically at the federal level by rural states' rural interests, we're much more about building highways. So when rail is built, it's sort of sporadic and ad hoc."

This lack of consistent experience leads to a reliance on consultants and outside expertise, which can drive up costs and extend timelines.

The Role of Consultants and Soft Costs

One significant difference between the US and other countries is the extent to which transit agencies rely on consultants for various aspects of project planning and execution. While other countries also use consultants, the US tends to outsource a much larger portion of the work.

Alon Levy, an author on NYU's Transit Costs Project, notes:

"In Spain, I was told the third-party costs are 5%, and then in New York, it's 21%. So one of the things that we found in the study is that the soft cost multiplier is much higher in the US than in our comparison cases."

These "soft costs" include design, engineering, and overall project management. The heavy reliance on consultants not only increases costs but can also lead to a lack of institutional knowledge within transit agencies themselves.

The Culture of Generalists vs. Specialists

Another factor contributing to the problem is the cultural emphasis on generalists rather than specialists in US organizations. Levy explains:

"Part of it is just an ideology that the private sector is more efficient than the government. The consultants don't like being subordinated to the government. But also, the US and UK have a culture of generalists. You're not supposed to be a subject matter expert. If you're a subject matter expert, then you are too siloed - that's the language that's being used."

This cultural preference for generalists can lead to a deemphasis on engineering expertise within transit agencies. In contrast, countries like Italy and Spain place a high value on engineering prestige, which can contribute to more efficient project planning and execution.

Political Influence and Fragmented Jurisdictions

One of the most significant challenges facing US transit projects is the decentralized nature of governance and the influence of local politics. Elkind highlights this issue:

"In the United States and in California, our system of governance is really decentralized. Many of these rail transit projects span multiple local government jurisdictions, and then you've got county jurisdictions over that. So all of those entities end up having some sort of veto in many cases over these projects."

This fragmented system of governance can lead to projects being held hostage by local interests, resulting in costly concessions and delays. The need to appease multiple stakeholders often leads to scope creep and unnecessary studies, further driving up costs and extending timelines.

The FTA's Risk Assessment and Contingency Requirements

In recent years, the Federal Transit Administration (FTA) has implemented changes to its risk assessment process that have had a significant impact on project budgets. The FTA now requires transit agencies to budget for higher contingencies, increasing the "risk threshold" from 50% to 65%.

While this change was intended to reduce cost overruns, in practice, it has led to artificially inflated budgets that can cause more problems than they solve. For example:

• The East San Fernando Valley Line in Los Angeles saw an over $800 million increase for required contingency funds, totaling nearly 30% of the previous project cost.
• The West Santa Ana Branch project's contingency requirements increased the budget from $4.9 billion to $7.1 billion, a 45% increase.
• The Eastside L Line extension had a 47% contingency applied, more than doubling the project budget.

These inflated contingencies can force transit agencies to delay projects while scrambling to secure additional funding, potentially leading to further cost increases due to inflation and extended timelines.

Environmental Laws and "Citizen Voice"

California's environmental laws, particularly the California Environmental Quality Act (CEQA), have been both a blessing and a curse for transit projects. While these laws were designed to protect the environment and ensure public input, they have often been weaponized to delay or block transit projects that would ultimately benefit the environment.

The issue of "citizen voice" in transit planning is complex. While public input is crucial for creating projects that serve community needs, the current system often allows wealthy interests to stall projects through litigation or threats thereof. This can lead to excessive studies and compromises that drive up costs and extend timelines.

However, Levy suggests that the impact of citizen lawsuits may be overstated:

"When challenged, the government almost always wins. For example, the California High-Speed Rail Authority got their chosen route to San Jose despite citizen outcry. Metro will probably win any lawsuit that Bel Air brings against it."

Nevertheless, the threat of lawsuits and the desire to avoid them can lead transit agencies to make costly concessions or engage in excessive community outreach, as seen with the Vermont BRT project's decade-long scoping phase.

The Role of Caltrans and Interagency Conflicts

In California, the state's transportation agency, Caltrans, has been criticized for its apparent bias towards highway projects and reluctance to accommodate rail transit. This can create additional hurdles for transit projects that interact with highway infrastructure.

Recent controversies, such as a whistleblower being demoted for raising concerns about Caltrans violating its own environmental rules, highlight the need for reform within the agency to better support transit and sustainable transportation options.

Potential Solutions and Recommendations

Addressing the complex issues surrounding transit project cost overruns and delays will require a multi-faceted approach. Here are some potential solutions and recommendations:

1. Create a State-Level Transit Authority

Alkine suggests creating a state-level agency with the expertise and authority to oversee transit projects across multiple jurisdictions:

"We should essentially, at the state level, think about standing up an agency that can go into almost any jurisdiction that has the knowledge and the in-house capacity and expertise and can build rail projects. Not to steamroll locals, but there's no point in having every city sort of reinvent the wheel."

This agency could provide a "strike force team" with the necessary expertise to guide projects efficiently and avoid common pitfalls.

2. Reform Environmental Laws

Updating and reforming CEQA to streamline the process for transit and active transportation projects could help reduce delays and costs. This could include:

• Expanding exemptions for transit projects
• Limiting the ability of local interests to use environmental laws to block transit projects
• Streamlining the environmental review process for projects with clear environmental benefits

3. Grant Master Permitting Authority to Transit Agencies

Providing transit agencies with master permitting authority could help reduce delays caused by conflicts with local jurisdictions. This would allow agencies to move forward with projects more efficiently while still considering local concerns.

4. Improve In-House Expertise at Transit Agencies

Encouraging transit agencies to develop and retain in-house expertise could reduce reliance on expensive consultants and improve project management. This might involve:

• Offering competitive salaries to attract top talent
• Creating a culture that values and respects technical expertise
• Providing opportunities for ongoing professional development

5. Reform Caltrans

Addressing the apparent bias towards highway projects within Caltrans and encouraging greater cooperation with transit agencies could help streamline project delivery and reduce conflicts.

6. Revise FTA Contingency Requirements

Revisiting the FTA's risk assessment and contingency requirements could help prevent artificially inflated budgets while still maintaining fiscal responsibility.

7. Develop Consistent Funding Mechanisms

Creating more consistent and reliable funding sources for transit projects at the state level could reduce reliance on federal funding and help agencies plan more effectively for long-term projects.

8. Build Broad Coalitions for Transit Reform

Alkine suggests building coalitions that include:

• Urban mobility advocates
• Environmentalists
• YIMBY groups
• Conservation groups concerned about sprawl
• Labor unions
• Infill real estate developers

These diverse stakeholders could work together to push for reforms at the state level.

Conclusion

Addressing the issues of transit project cost overruns and delays in the United States will require a concerted effort from policymakers, transit agencies, and advocates. By implementing reforms at the state and local levels, improving in-house expertise, streamlining processes, and building broad coalitions, it may be possible to bring US transit project costs and timelines more in line with international best practices.

While the challenges are significant, the potential benefits of efficient, cost-effective transit projects are enormous. Improved public transportation can enhance mobility, reduce carbon emissions, promote equity, and support sustainable urban development. By tackling these issues head-on, we can work towards a future where transit projects are delivered on time and on budget, benefiting communities across the country.

Article created from: https://www.youtube.com/watch?v=aWtbdJ1VUrQ