Mass Transit: It’s the Contractors, Stupid

And the subcontractors. And the sub-subcontractors. One thing that bedevils mass transit in the U.S. is how much it costs to build. Occasionally, we can have nice things, but it’s so expensive we don’t get very much of them. While there are a lot of reasons, many moons ago, some asshole with a blog speculated:

When it comes to infrastructure, there is a lot of subcontracting. And it’s not just a single subcontract: sometimes these things end up looking like those Matryoshka dolls. One contractor hires contractors, who hires contractors. Leaving aside whether the work itself is shoddier under this system, every subcontractor gets a profit markup (they’re not doing this at cost). I’ve never dived into large infrastructure contracts (and have no desire to do so), but I suspect this plays a big role in why infrastructure costs are so high in the U.S. Part of this probably stems from state and local agencies lacking capacity to do many functions they used to do, including oversight (which is essentially what Whitefish is getting paid for). Might want to do something about this if we want shiny, new stuff.

Well, recent work by Alon Levy suggests subcontracting is a considerable part of the cost of building mass transit (boldface mine):

Some 15 years after these initial inquiries, Levy now has an answer. It is a dastardly combination of:

  • Hiring contractors to do the work in a manner so bizarre it almost seems intentionally designed to drive up costs
  • Hiring consultants to design and manage projects rather than having the staff to do so in-house (or not having the necessary staff expertise to manage consultants in a way that keeps costs manageable)…

…What does have to happen, first and foremost, is political and transit agency leadership has to actually give a shit.

…None of this is done in New York. The MTA has its own internal cost estimates it regards as trade secrets; contractors almost always come in 20 or 30 percent higher, and then make more money on changes once the project is underway. How much everything costs beyond top-line figures is shrouded in mystery, not just from the public but from other companies that could potentially do it for less.

In blue urban areas, the crisis of governance really isn’t one of legislation–though there’s always room for improvement–it’s about execution and the executive branch. We need better governance.

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1 Response to Mass Transit: It’s the Contractors, Stupid

  1. Kaleberg says:

    Back in the late 1960s, I used to read the DC37 newspaper. My father was an accountant for NYC, and DC37 was his union. There was a big article denouncing the trend towards contracting. Back then the city had a fair bit of design and execution capacity, but they were shedding it. The article gave an example of a small project being contracted out and pointed out that it could have been done in house by union members. To make the point, they highlighted a couple of much larger subway design projects that had been done by DC37 designers.

    By the 1980s, most of the city’s design and project management capacity had been gutted. Whether this was just an anti-union measure as implied by that article or just something that crawled out of the business schools is hard to say though I suspect it was a combination.

    I was thinking about this a few years back while reading an article on why it was so hard to get displays telling subway riders when the next train was going to arrive at the station. Most of the project was in development hell, but one group in the city had hired a bunch of young MIT engineers fresh out of school, and they quickly cobbled together a system for a handful of lines. I doubt that those guys are still working for the city. The city can’t pay as well as the private sector, and a civil service job doesn’t have the edge in benefits that it used to.

    Our free enterprise ideology has been a disaster, and this is just one piece of it. It isn’t even about government. It’s about a certain kind of fungibility, that people, institutions and things can easily be replaced by others. The Boeing 787 is a case in point in the private sector. Maybe, we’ll see some change in attitude, but I doubt it will have much impact in my lifetime.

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