Scaffold law, inefficiencies to blame for higher New York construction costs

Dive Brief:

In its 2018 annual report, the General Contractors Association of New York identifies the factors it believes make the cost of public works construction projects so much higher in New York than in other states, and puts the majority of blame on the state’s scaffold law, which the organization says adds 10% to a project’s price tag. It said the scaffold law, which makes employers and owners 100% liable for falls, significantly increases insurance costs.
Other factors driving up the cost of construction are a slow-moving bureaucracy that, for example, can take as long as 110 days to approve a payment, 540 days to process a change order and four years to close out a project and issue final payment to contractors. Also contributing to higher costs were major changes to a project’s scope after a contract award; unworkable designs or clashes; too many change orders after the start of construction; regulatory requirements; subcontractor goals and compliance requirements; an unreliable flow of financing; unstable leadership; the planning necessary to work in the state’s dense physical environments and the lack of coordination between the multiple agencies involved in a construction project.
In addition to addressing public agency shortfalls, the GCA said contractors can also help to lower costs by using a skilled and productive workforce that is well-trained in safety procedures; pursuing corporate discounts for materials; adhering to the construction schedule; implementing policies and procedures that will maximize productivity; and selecting quality subcontractors.

Dive Insight:

Infrastructure construction projects in New York City are particularly notorious for how much they cost versus comparable projects in other metros around the world. The cost for the East Side Access tunnel, for example, which will connect the Long Island Rail Road to Grand Central Station, is estimated to cost $3.5 billion per mile, which is six or seven times that of similar projects in other countries.

Critics of the scaffolding law said it had increased insurance costs for the East Side Access project from $93 million to $584 million. However, other experts keeping tabs on the project said much of that increase is due to project delays, the rising cost of insurance in general, and penalties that the Metropolitan Transportation Authority (MTA) has had to pay for claims exceeding policy personal injury caps.

This past summer, city transit officials said they would try to revamp the policies and procedures that help drive up costs. The MTA said, for example, it could shave 53% off its construction schedules without having to enact new regulations. The authority bureaucracy has led some contractors to add a 25% “MTA fee” to their bids.