The real reason it costs so damn much to build new subways in America.
For the past decade, as the cost of building American mass transit has soared to world records, advocates have found themselves in a bind. Should they draw attention to the problem, fighting for top-to-bottom reform now so that future investments don’t make the mistakes of the past? Or should they stay quiet, because such an effort would be politically ugly and further cement the American double standard by which transit spending is endlessly scrutinized but highway widening rolls on, no matter how many times state transportation departments fudge their numbers?
So far, the country is going down the second path. Despite constant crowing from bloggers, newspaper investigations, Elon Musk starting his own tunnel company, and a scathing federal report, there has been no real effort to address spiraling transit costs, either from Washington or local authorities—even as the Bipartisan Infrastructure Law starts distributing $105 billion to intercity rail and public transit. When I asked the CEO of Amtrak in 2021 about why the company’s train tunnel beneath the Hudson River would cost $11 billion—many times more than similar projects in peer countries—he disputed the premise of the question: “I don’t know that that’s an astronomical number.”
A mammoth report from New York University’s Transit Costs Project makes a good case that the numbers are indeed astronomical, and there’s something we can do about it. Not just because bringing American transit construction into line with international best practices will make it possible for America to build big again—but also because what’s true for transit is true for the moribund public sector in general, and transit might be an object lesson.
According to authors Eric Goldwyn, Alon Levy, Elif Ensari, and Marco Chitti, there’s a lot going wrong with American transit projects—more on this in a moment—but many of the problems can be traced to a larger philosophy: outsourcing government expertise to a retainer of consultants. “What I’ve heard from consultants, which is surprising because they make so much money off this stuff, is, ‘Agencies don’t know what they want, and we have to figure it out,’ ” Goldwyn said.
By 2011, the MTA trimmed its in-house capital projects management group of 1,600 full-time employees to just 124.
For example, when the Massachusetts Bay Transportation Authority got to work on the Green Line Extension, the agency only had a half-dozen full-time employees managing the largest capital project the MBTA had ever undertaken. On New York’s Second Avenue subway, the most expensive mile of subway ever built, consultant contracts were more than 20 percent of construction costs—more than double what’s standard in France or Italy. By 2011, the MTA had trimmed its in-house capital projects management group of 1,600 full-time employees (circa 1990) to just 124, tasked with steering $20 billion in investment.
Perhaps the most notorious case in this business is the debacle of the California High-Speed Rail project, which in its early years had a tiny full-time staff managing hundreds of millions of dollars in consulting contracts. California Gov. Gavin Newsom has tried to right the balance more recently: “I’m getting rid of a lot of consultants,” he said in 2018. “How did we get away with this?”
There are certainly advantages to hiring highly specialized experts who can come in, complete a task, and go on their way. Subway construction is not a regular government function in most of the United States, so you can see why small agencies are reluctant to staff up—especially since federal funding is unreliable. But that excuse does not apply to organizations in cities like Seattle or Los Angeles with multi-decade pipelines and voter approval to spend tens of billions of dollars.
There’s another, bigger drawback to being so reliant on outside help. The second megaproject is easier than the first, and resurrecting lost expertise is always challenging. (Just ask the French, who are struggling to complete the country’s first new nuclear reactors in decades—everyone who worked on its admired ’70s nuclear program is long gone.) When it comes to building mass transit, America is a bit out of shape. Unfortunately, it’s not getting into shape. The report specifies (italics mine):
“With Phase 1 [of the Second Avenue Subway] complete, knowledge and lessons learned from Phase 1 have been retained by the consultant teams, and many of the most experienced managers from Phase 1 who learned by doing have left the agency, some have retired and others now work in the private sector. An agency staffer at another large North American agency we spoke to about its reliance on consultants explained that at her agency, it was the consultants who knew everything about past projects rather than agency staff.”
In any case, the benefits of hired guns apparently do not justify the evisceration of public-sector expertise. “Consultant teams need a client who knows what it wants and is technically competent enough to direct the consultants,” the Transit Costs Project concludes. Most U.S. transit agencies are too hollowed out to fit the bill. Even at the MTA, the nation’s biggest and busiest transit agency, engineering consultants like WSP, Aecom, and Arup function as a “security blanket” to handle endless studies, basic problems, and even core design guidelines.
“They studied everything,” Goldwyn said. “Whether or not the agency was well-equipped to absorb that information, I don’t have a good answer. Who’s in charge of capital construction at transit agencies? Many of these people have never delivered a transit project, and that’s not good.”
It’s that lack of institutional know-how, of which consultants are both a symptom and a cause, that really hampers projects. The lack of a good in-house team, for example, leads to farming out so-called “design-build” contracts, which ultimately produces more expensive projects by offloading risk to contractors, who bid accordingly. It means staff are overwhelmed by change orders as projects evolve. In the case of New York’s Second Avenue subway, the lack of a powerful, effective team of civil servants may also explain some inexplicable conflicts and mistakes: misunderstandings and feuds with local agencies, hugely overbuilt stations, and so little standardization that the escalators in the three new stops were built by three different companies.
Not all problems can be laid at the feet of consultant culture. Transit routes picked at the ballot box are bound to be worse than those drawn up by experts; transit’s role as a “job creation” bonanza doesn’t create incentives to be particularly efficient. But the takeaway here might be relevant for the public sector at large. That consultants are draining state capacity is also the argument of a forthcoming book by a pair of London-based academics. In The Big Con, Mariana Mazzucato and Rosie Collington argue that consultants have hollowed out government functions well beyond transit construction.
As the title suggests, they take a view that consultants are not simply the beneficiaries of a reduced bureaucracy. On issues as diverse as vaccination campaigns and climate change preparedness, the role of consultants, they argue, is like a “psychotherapist having no interest in her clients becoming independent with strong mental health, but rather using that ill health to create a dependency and an ever greater flow of fees.” An overreliance on consultants, they argue, is actually to blame for public sector debacles like the rollout of Healthcare.gov.
That’s the story of the U.S. federal government since the 1960s, according to a theory outlined by John DiIulio in Bring Back the Bureaucrats. The shift to contractors in the place of federal employees, he argues, has created a federal apparatus that’s at once bigger, less efficient, and less accountable. It’s an apt description of what is happening to state and local governments, too, whose workforce is currently smaller than it was in 2008. Those diminished bureaucracies have trouble handling responsibilities like environmental review, which further erodes our ability to get things done.