Why is it so expensive to build public transit in the US?

Tunnels, tracks, and dollar signs: Exploring the astronomical cost of public transit in the US.

For the United States, a country that prides itself on its technological prowess and economic vitality, the high costs of public transportation infrastructure pose a significant conundrum. Despite having some of the world's largest and most ambitious public transit projects, American cities are struggling to deliver these services cost-effectively. These financial burdens are evident in cities like New York, Los Angeles, San Francisco, and Chicago, where large-scale initiatives such as the Second Avenue Subway and the LA Metro’s Purple Line Extension are infamous for their extravagant price tags. In contrast, cities like Stockholm and Oslo demonstrate that high-quality public transit does not necessarily need to be synonymous with high costs.

The Struggle in the Subway: A Case Study of New York

Consider New York City, home to the largest subway capital program in the world. The Metropolitan Transportation Authority (MTA)'s 2020-2024 capital plan outlined an eye-watering $54.8 billion budget for subway, commuter rail, and bus projects. Yet, despite this substantial investment, the question arises – is the region getting its money's worth?

Let's examine the Second Avenue Subway, a project under planning since the 1920s and only partially completed today due to financial constraints. Phase 1, a short 2.7 km extension, cost $5.3 billion in 2020 dollars, making it the most expensive subway built in the world on a per-kilometer basis. This cost is about 10 times more than equivalent projects in Italy and Sweden, and more than 10 times as expensive as subways in Turkey.

Per KM, out of the five most expensive subway networks in the world, four are located in New York, USA:

Source: https://transitcosts.com/projects/

Comparing Costs: American Cities vs. European Success Stories

While U.S. cities struggle with high costs, cities like Stockholm and Oslo present successful examples of efficient and affordable public transit system expansion. Stockholm's urban rail expansion project, Nya Tunnelbanan, is currently projected to cost around $190 million/km, significantly less than the Second Avenue Subway's cost. Similarly, despite facing cost overruns, Oslo's under-construction Fornebubanen is projected to cost $300 million/km.

Notably, both Stockholm and Oslo maintain high wages and standards of living comparable to U.S. cities. So, what makes them more successful at cost containment?

Digging Deeper: Factors Driving High Costs

After detailed analysis, several factors have been identified that drive high construction costs in U.S. cities (Levi et al., 2022).

Intergovernmental Coordination and Utilities: Struggles to manage agreements with various governmental bodies and utility companies can significantly increase costs.

Labor Wages and Staffing: U.S. cities often fail to achieve cost savings in labor wages and staffing. In contrast, countries like Sweden have been able to maintain more cost-effective labor practices.

Procurement and Risk: Unlike their European counterparts, U.S. cities often fail to share risk equitably with contractors, leading to a lack of competition and higher costs.

Station Design: Excessive and costly station designs that differ from what's found in lower-cost cases significantly drive-up costs.

Reimagining Transit Expansion: A Path Forward

Addressing the high cost of building public transit in the U.S. requires a new approach. Empowering transit agencies to effectively plan, design, and manage construction projects is crucial. This includes adopting practices observed in low-cost cases like Stockholm, such as leveraging public sector expertise and implementing cost-effective labor practices.

The rising costs of transit infrastructure in the U.S. present an urgent problem. However, by learning from the experiences of cities like Stockholm and Oslo, it's possible to build affordable, efficient transit networks that keep pace with growing population demands. Only then can we truly unlock the potential of our cities and foster a greener, more sustainable future.