New York City rail project costs balloon to $11.2B

Dive Brief:

New York City’s Metropolitan Transportation Authority (MTA) announced that the East Side Access project, which will connect the Long Island Rail Road (LIRR) to Manhattan’s Grand Central Terminal, will cost $1 billion more than a 2014 estimate, reported The New York Times and others.
The project was proposed in the 1990s and was projected then to cost $2.2 billion, Crain’s New York Business reported, but its progress has been hampered by construction delays and budget overruns. However, MTA announced last week a hard-and-fast December 2022 completion date.
The East Side Access tunnel is intended to alleviate crowding at Pennsylvania Station (on the west side of Manhattan) by providing Long Island riders direct service to Grand Central (on the east side), The Times reported. A new station will also be added about 15 stories under Grand Central and could eventually serve as many as 200,000 commuters, according to MTA.

Dive Insight:

Last year, The New York Times investigated the exorbitant costs of Manhattan transit projects. The article pointed to the East Side Access project as the poster child of budget overruns, predicting that it will cost more than $12 billion to complete, or $3.5 billion per track mile — seven times the global average. According to the study, similar projects in the U.S. and abroad cost an average of less than $500 million per track mile.

Other New York City projects that exceeded this average include the recently completed Second Avenue Subway project, which cost $2.5 billion per mile, and the 2015 rail extension to Hudson Yards, which cost about $1.5 billion per mile, according to the report.

Some of the causes The Times cited for the unusually costly subway projects in the city are limited competition, trade union deals that secured more laborers than necessary and lack of oversight from public officials. One union secured $111 per hour in salary and benefits for East Access tunnel workers, according to the report, with weekend overtime exceeding $400 per hour.

Three months after the investigation, the Government Accountability Office (GAO) announced plans to study the high costs of infrastructure in the U.S. and in New York City, in particular. The federal inquiry was approved by Congress as part of the $1.3 trillion spending bill passed in March, The Times reported. GAO plans to publish a report on its findings by the end of the year.