Home Second Avenue Subway Report: Expensive utility work behind SAS slowdowns

Report: Expensive utility work behind SAS slowdowns

by Benjamin Kabak

As the Second Ave. Subway chugs ahead late and over budget, the MTA Inspector General says that work slower and more expensive than anticipated on the utilities underneath the avenue is to blame for the project’s rising costs, The New York Times reported this morning. In a letter to Manhattan borough president Scott Stringer, MTAIG Barry Kluger said that the utilities relocation work has taken six months longer than expected and will cost $130 million higher than initial estimates.

While Kluger’s report isn’t available publicly, The Times says the Manhattan BP had asked the Inspector General’s Office to explore the reasons behind the slow pace of progress on the massive construction project. Michael Grynbaum has more:

The inspector general, Barry L. Kluger, who admitted “frustration” over the project’s progress, also found that the transportation authority’s troubles in awarding contracts have added $120 million to the bill and extended its completion date by a full year.

Mr. Kluger’s findings offer a rare glimpse at the item-by-item causes for the enormous financial woes plaguing the project. Federal officials now believe the first phase of the subway line will cost about $4.98 billion, nearly $1 billion more than the original estimate in 2007, when federal financing was secured for the project.

Federal officials now estimate the first phase of work will be completed in February 2018, while transportation authority officials have put the date at no later than July 2017. The transportation authority has acknowledged the project is over budget, but its planners say the ultimate cost for this phase will be around $4.45 billion.

The MTA has been toeing the 2016/2017 party line for nearly a year now despite the feds’ insistence than Phase 1 of the Second Ave. Subway — an extension of the Q line from 57th and Broadway to 2nd Ave. and 96th St. — won’t be ready for revenue service until 2018 at the earliest. Phases 2 and beyond remain in doubt.

For his part, Stringer was critical of the way the MTA has overseen this project. “What due diligence didn’t happen that we are having these cost overruns?” he said to The Times. “There is a sophistication needed for managing a capital program of this magnitude that is lacking…“The MTA must take a more realistic approach to managing expectations.” The authority hasn’t yet offered up much in the way of an explanation for the problems their capital programs have faced, but Kluger is working on a report that should see the light of day before 2010 is out.

Meanwhile, federal officials aren’t happy with the pace of work either. As Grynbaum notes, FTA officials have warned the MTA that they won’t spend “a single penny” to cover rising costs or delays. As always, the fate of even Phase 1 of the Second Ave. Subway remains unknown.

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7 comments

Underneath 2nd Ave., Adi plows quickly ahead :: Second Ave. Sagas September 10, 2010 - 12:10 pm

[…] will probably slow to a mark closer to that average pace. Still, for a project slowed by, well, just about everything, this fast mining work is a bright spot of good news. Categories : Second Avenue […]

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Ben September 11, 2010 - 6:39 am

It seems this is a good opportunity to point some fingers. Here are some observations and opinions I have of what’s been going wrong with the Second Avenue Subway project.

There have been fundamental political, business and management decisions and blunders that have brought on crippling slow, financially disastrous pace to the project and which could potentially doom the project from completion.

To begin with, there was no realistic project schedule or budget at the start. At a public meeting at Hunter College about a year before groundbreaking, a start date and a completion date for the project was presented to the public by the MTA and its contractors. There were numerous questions that people had about intermediate dates, such as, when will work be done on the 86th Street Station, and what would that entail. In engineering speak, all intermediate dates that were discussed were SWAGS (Stupid, Wild, Ass Guesses). The project was too far along in planning for there to be so little understanding by the project management of the intermediate steps. Anybody familiar with engineering will tell you that it’s impossible to determine costs and timelines without having a good handle on the project milestones. Ultimately, one of the MTA people told the truth when asked how did they come up with the completion date for the project without knowing the intermediate dates. “This is what we had to say in order to get the money.”

I think the single riskiest business decision, was that the MTA and Skanska developed a design that promised effectively 4 lanes of Second Avenue would be open for the free flow of traffic at all times. There was the unrealistic promise at the beginning of the project that there would be no disruption to normal life on Second Avenue. I think this has cursed the project. This false promise to maintain four lanes of open traffic led the designers to a cumbersome and risky method for rerouting the utilities, which requires work to shift from one side of the avenue to the other and back again and back again. It leads to a duplication of work, and ultimately the finished work has become a tangle of utilities under the ground that’s very difficult to maintain or manage (as has recently been discovered). In realty, rarely are all four lanes of traffic kept open under the present conditions. There are often traffic jams related to this construction site. It would have been better, in my opinion, to reroute traffic to First Avenue, or for a limited period create a managed traffic bottle neck on Second Avenue, and have a quicker, more effective and less risky way to reroute the utilities. Ditto for cutting the launch box…but at least the utilities.

Without me knowing much of the details of the project, there seems to not be a realistic assessment of schedule and financial risk to the project and oversight of that risk.

In the first couple of years, there were regular delays because of lack of proper coordination with the utility companies. Sometimes holes would be opened and unexpected problems would be encountered, this is normal. Many times it took Verizon or ConEd a day or two to send an appropriate crew to deal with the problem. Until they showed up to solve that problem, work would effectively cease in that area. There seemed to be a lack of coordination with them, DEP and the project, so small glitches became big time wasters. A discovery of hazardous toxic waste at 92nd Street required citizens to make a 911 call and the fire department to call in the DEP for immediate action. The workers hadn’t worked in the hole for days, because of fumes, but had nobody to call to get timely action on the problem. That part of the site was blocked off for weeks.

Lawyers being idiots. The project was held up for months, because of unsafe conditions found on buildings between 92nd and 93rd Streets. Those buildings were evacuated. While the lawyers wrangled with the owners of the buildings about who would pay to shore them up, there was a moratorium on the use of dynamite on the project, which took months. Without dynamite, rock was chiseled with machines. Eventually, the MTA decided to shore up the buildings without fully resolving the issues with the landlord, so that blasting could start. If they did not, and the lawyers continued, the launch box would still be in the chiseling stage. Fortunately, this seems like a lesson learned, because the buildings are being shored up on the 96th Street Station site by the MTA. The previous position of the MTA was that it was the landlord’s responsibility, and the MTA would simply threaten to sue and wait for the landlord to do something. No way to build a subway. This approach by the MTA has ultimately cost the project at least a year in delays in itself and many millions of dollars in budget overruns.

Ok, all the above before even talking about the construction itself. It seems to me that the project is being milked by the contractors. Not all of them. For months, sometimes years hardly a worker is seen on portions of the site. Machines and materials are weathering the seasons, strewn about, but no work of significance. Each one of the sites goes through a similar pattern. Groundbreaking, fencing, materials delivered, a couple of holes opened and then nothing, no real work for months, then a little work for show, then nothing again. Eventually there’s a big push on, like what’s happening now at 96th Street in order to complete a phase (late and overbudget). The only crew that’s done serious work are the Sandhogs. They are ahead of schedule with the TBM. When blasting was going on they were blasting and clearing so consistently, you could set your watch to their work schedule. No other crew that I’m aware of has shown the same professionalism. The result? The TBM is currently ahead of schedule. The utility work (the easiest, most known part of the project) lags behind by years.

There is not proper project management by the MTA. The MTA has become an enabler of the bad practices that are being thrust on the project.

At Mack Trucks, the penalty for a vendor who has not delivered its parts to the factory on time is $1000/minute. That’s $60,000/hour. They know how to keep a factory moving.

What’s wrong with the MTA?

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Nathanael September 12, 2010 - 10:49 pm

Sounds like the utilities are the core and prime problem. Unfortunately, it seems the MTA has no actual authority over the utilities.

The irresponsible landlords who refuse to do their duty are another problem. The NYC Department of Buildings, which refuses to do its duty to make the landlords do theirs, is yet another problem.

Essentially, anything which is out of control of the MTA is being used to milk the MTA for money. This is a pretty irresponsible thing to do, and I don’t think the MTA can really be blamed for being held over a barrel by landlords, utility companies, and city departments who aren’t doing their jobs.

I’m not sure what to suggest, but hey, maybe the MTA should be given the power to fine landlords, city departments, and utility companies for failure to do their jobs.

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Ben September 13, 2010 - 8:30 am

The MTA uses others as an excuse for their incompetence in managing the project. There are always multiple parties in every project. Be it private or public.

When it comes to the landlords, the MTA finally did the right thing. It paid to reinforce the building itself. This is a 4 billion dollar plus project and the cost of reinforcing the building was less than a million dollars, but it caused tens of millions of dollars in delays and threatened the viability of the project overall. The MTA could have fixed the building, which it ended up doing. It could have bought the building, which has since been purchased for about 5 million dollars (by someone else) and made it into whatever it wanted. There are so many options. The worst one is to delay the project. It seems the MTA has learned this lesson, because it’s reinforcing buildings at 96th street and if you look at the project budget, money was added in 2Q 2010 for this kind of thing. Many of the delays show a complete lack of understanding or desire by the MTA managers of how to keep a project on time and budget. At the very least, the MTA should add third-party risk into the project schedule, if that was the case, and mitigate that risk when it’s in the critical path. The MTA managers are plain and simply second or third rate managers. This project requires better quality managers. There are zillions of successfully run projects in this world. This is a study in incompetence and worse.

Another question is the cash flow and allocation of resources of the project. Since moving the utilities are in the critical path and there is so much risk associated with it, why wait so long to award contracts for utility work and decking? When the launch box utilities and decking were a year or more over schedule, why not bump up the start dates for relocating the other utilities? It seems the MTA stuck to the original project timeline. Alarms should have gone off. Instead, they plodded along, as usual.

Which leads to another issue, the quarterly reports to the MTA has to file to the FTA (Federal Transportation Authority) are more an exercise in deception than they are in enlightenment. I’ve run many engineering projects, so I know a sham document when I see one. Everything is correct, I assume, as far as the dollars go, but there’s no real sense of the health of the project. These quarterly reports always make things sound great. It’s like a teenager coming home and saying he just repaired the family car for $5,000, and it just needs another $10,000! Perhaps it only needed $1000 to start with. There’s no way of knowing where the project really is and where it’s going. Just how much has been spent in relation to the budget of long ago. The chart on p.16 is, I am sorry to say, useless in understanding the project timeline and where the project really is. Again, there are just start dates and end dates. There’s no indication how much work has been preformed and how much is left to do. It needs to be broken down into “work hours” with finer increments for the project components. So…we know that 70% of the money has been spent on a certain component, but we don’t know how much of the project remains. It could be 70% was spent, but a majority of work hours remain to be done. An inexperienced eye will look at this document and think that the project is going along just fine. In reality, all it really tells us is how much money has been spent — not what has been achieved and how much is left to achieve. Also, no talk of risk and risk mitigation. Again, the project should have moved up the utility work at all the station sites to ASAP when it became clear the original estimate regarding the launch box utility timeline was in error.

Still, I ask anyone to go to the 96th Street location and the 86th location and see the difference in effort going on at these sites — today. The MTA should include performance awards and penalties that mean something, and hold the contractors feet to the fire. It’s inexcusable to have the tunnels dug and the utility work not complete — years after the project has started.

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Nathanael September 16, 2010 - 2:59 am

Oh, sure, you think the MTA did the “right thing”, by spending its own money to reinforce buildings which were already unstable and which the landlords were legally required to reinforce, and had already been ordered to reinforce, but were simply neglecting to do? (That *was* the situation, I was following along at the time.)

I’m not sure in what universe that is the “right thing”. It may be the pragmatic thing, but it’s an example of landlords and the building department bilking the MTA. Given an envrionment of pervasive irresponsibility and willingness by others to bilk the MTA, maybe it’s the right thing, but it indicates another problem which MUST be fixed.

Not going to argue with you about other contractor-related comments.

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Nathanael September 16, 2010 - 3:01 am

Or your other management-related comments. You’re quite right, the MTA’s management should have expected the bad behavior by third parties, and they need management who can work competently in such an environment.

It still doesn’t excuse the third parties, though.

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Justin Samuels September 13, 2010 - 10:00 pm

President Obama has announced a big infastructure package to start out at 50 billion, and to increase after that. Some of that money will find its way to the MTA and from there, to either this phase of the Second Avenue Subway or to future phases.

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