It's not an easy time to manage a capital program in America. Between inflation, tariffs, uncertain funding from the federal government, and urgent infrastructure needs, public authorities are looking to cut costs however they can.
But the New York Metropolitan Transportation Authority's Construction & Development Department is taking another victory lap.
The department, which claims it
The MTA stands alone among U.S. transit agencies in size, ridership, and reputation for cost overruns. But it also faces the same challenges facing any infrastructure project in the country. Are these savings out there for other transit agencies, too?
Some are, said New York University's Eric Goldwyn.
"Costs across the country seem to be going higher and higher," Goldwyn said. "Places are starting to look more and more like New York."
Construction & Development has a lot on its plate: the MTA's
The project completions included 41 elevator replacements, which is double the MTA's previous record for elevator completions in a single year, according to the agency. The replacements were finished roughly two months faster on average. The agency also created a plan to extend the useful life of its escalators, saving $140 million.
The MTA has been replacing its subway
The agency completed work on Verrazano-Narrows bridge rehabilitation three months ahead of schedule, according to its report, $10 million under the estimated cost, with 44% fewer outages.
The report listed the next cost-saving initiatives for C&D, including a "new bundling strategy," "project baselines and design review," "new risk management approaches," and "attracting [contractor] competition in priority areas."
The areas where C&D has seen success reining in costs could serve as examples for other agencies, according to C&D President Jamie Torres-Springer.
"I don't think it's rocket science that we've engaged in here," Torres-Springer said.
Planning
Much of the MTA's cost savings come before a contract is even awarded. The agency estimates it will save $1.3 billion for Phase II of the Second Avenue Subway extension by building smaller stations.
Goldwyn said transit systems across the country could save money by following the MTA's lead and downsizing individual projects. He pointed to Seattle and Los Angeles as examples.
"A lot of these agencies rely on the same consultants, so they get pretty similar stuff… a lot of the same mistakes or similar assumptions were being sort of carried out over and over again," Goldwyn said. The stations Los Angeles builds are nearly twice as long as they were in the 1990s, he said, even though the trains are the same size.
Contracting
William Goodrich, author of the book "Second Avenue Subway: Building New York City's Most Famous Thing Never Built," said contracting methods are a driving factor in the MTA's newfound efficiency.
When Goodrich led the MTA's Second Avenue Subway and East Side Access projects before departing in 2018, New York state would only allow the MTA to use design-bid-build contracts, he said.
"We had workshops and we had sessions," Goodrich said, "'exploring' design-build [contracts]."
By the time the state was convinced of the benefits of design-build contracts, the MTA had already completed the contracts for design of Second Avenue Subway Phase I, Goodrich said.
Today, C&D has embraced design-build contracting — C&D President Jamie Torres-Springer said nearly 70% of the agency's work is now done through design-build. The agency also employs public private partnerships, progressive design-build, and A-B bidding, which weighs "cost and schedule in selecting contractors," according to a C&D report.
This structure of contracts allows the agency to shift risk for cost or schedule overruns, inflation, and other unforeseen obstacles onto contractors, Goldwyn said. It also minimizes the number of contracts the MTA has to deal with.
Last year, the MTA negotiated a private public partnership with JP Morgan and Vornado to rebuild the Grand Central Terminal trainshed under Park Avenue; the companies will contribute $75 million to the project. P3s were unheard of when the agency was developing the Second Avenue Subway, Goodrich said.
The C&D report said the agency is developing "new 'skin in the game' incentives for vendors," but did not add any further details.
The MTA has also bundled projects across different stations to benefit from economies of scale. Last year, the contractor for a nine-station package of accessibility upgrades on the Long Island Rail Road completed the project for $4 million under budget.
Goldwyn agreed with the MTA's strategy generally, but worried that sometimes the agency takes these new practices too far. He pointed to a $2 billion utility relocation project the MTA issued for the Second Avenue Subway Phase II. Design-build was a good model for that project, but bundling all of the work together meant that smaller companies couldn't be qualified bidders.
"We didn't get the dynamism of the market to come in and provide innovation," Goldwyn said. "We only had two bidders. And one of the bidders was the group that built Phase I of Second Avenue."
Goldwyn doubts that other transit systems could emulate the MTA's design-build contracting, at least on a large scale, because the practice is "out of vogue" in some parts of the country.
"Contractors have not had a good experience with it," Goldwyn said. "In Seattle, I know that there are a number of prime contractors who are like, 'We're never doing another design-build again,' because of the experience that they had."
Management
The MTA used to hire an extra contractor just to manage each project, Goodrich said. In the last five years, C&D has hired staffers to manage and consult on projects in-house.
Now, when an employee successfully manages a project, Torres-Springer said, C&D assigns them to oversee its similar work.
"The construction industry is hugely unproductive," Torres-Springer said. "The world economy loses, by one estimate, $1.4 trillion a year because of a lack of productivity in the construction industry."
The industry has been slow to adapt to the digital age, Torres-Springer said. But the MTA is adopting a centralized digital project management information system, he expects will save the agency a lot of money, although he doesn't have an estimate yet.
"The point is to take an organized and integrated approach to managing the scope of work for what you're building, the contract, the budget, the staffing, the resources," Torres-Springer said.
The software is an off-the-shelf model, he added, so other public agencies could adopt it too.
Some of the MTA's cost-curbing wouldn't work elsewhere, Torres-Springer admitted.
"I can't emphasize enough that creating a separate agency that has the authority to get all that done is really the key to it, and not every government agency [can do that]," he said. Plus, the savings from economies of scale wouldn't exist in smaller entities.
But on the whole, Torres-Springer said C&D's success is "highly replicable."
"Being clear up front about what you want to build, using the best delivery models — including contracts — that you can find, being relentless about project managing on-schedule and on-budget, and then putting together a whole integrated set of management practices. Those are pretty standard, I think, in at least in non-governmental sectors," Torres-Springer said.
