Home MTA Politics Empowering Capital Construction and calling for consolidation, AlixPartners’ $4 million MTA transformation plan falls flat

Empowering Capital Construction and calling for consolidation, AlixPartners’ $4 million MTA transformation plan falls flat

by Benjamin Kabak

The highly-anticipated MTA Transformation Plan was released to the public on Friday afternoon. Did it live up to the hype?

While I was away on vacation, the lead-up to Friday’s unveiling of AlixPartners’ much-ballyhooed MTA Transformation Plan seemed to reinforce the political nature of the plan. Amidst ever-louder rumors that the recommendations had been written long ago by someone other than the consultants with the $4 million contract, Gov. Andrew Cuomo warned that not everyone would be happy with the plan, and early reporting indicated that Andy Byford could be stripped of some responsibilities and power (largely, it was theoried, as a short-sighted move in Cuomo’s ongoing one-sided grudge match against the popular and highly competent NYC Transit President). Palace intrigue stories ruled the roost.

Late in the day on Friday, the actual report landed, and it landed with both a thud and a hint at things to come. It promises the bare minimum of transformation while failing to explore true efficiencies such as combining the two commuter rail agencies into one with streamlined service and operations. Despite early word to the contrary, it ultimately didn’t end up recommending an immediate split of New York City Transit’s buses and subways into separate divisions, though contemplated such a split down the line, and it recommended that many MTA functions, particularly with respect to construction, be centralized under Capital Construction, without acknowledging the cost and performance issues that have plagued Capital Construction seemingly since its inception. As I’ll explore, transit advocates are particularly concerned with this proposal.

And of course there is the $40 billion plan: How does this transformation plan affect Andy Byford and his Fast Forward plan that, if allowed to proceed, would fix and modernize the subways? On that front, the plan isn’t particularly clear. It includes recommendations for a series of improvements — centers of excellence for customer communications, an accessibility guru, and a focus on maintenance and safety — that Byford has spent months implementing both as part of Fast Forward and as part of his job in repairing the transit network, but it also calls for removing all construction work, implicitly including signalling, the backbone of Fast Forward, from agency head purview to the Capital Construction group.

But here’s where things get murky: Despite the actual words in the report, multiple MTA officials have told me Byford will retain control and oversight of the bulk of Fast Forward, including the key resignalling initiatives. It’s possible that when the dust settles, Cuomo may find a way to push Byford out of that role as well or attempt to step on the NYC Transit president’s toes as he is trying to do with Save Safe Seconds. But for now, a report that simply should have embraced Fast Forward as the best practices model for reforming the key parts of the MTA seems to muddy the waters. It’s ultimately a superficial report without clear indication as to which, if any, international best practices it was modeled after, and sources tell me AlixPartners have struggled to defend even some of the more basic recommendations (such as splitting up buses and subways). It seems more akin to political cover for Cuomo’s ongoing attempts at controlling the minutiae of the multi-billion-dollar MTA, but that would just be par for course.

Inside the Plan: The Seven Recommendations

So with that in mind, let’s take a quick look at what this thing, available here as a pdf, actually says. Here are the seven recommendations:

  1. Recommendation: The MTA should refocus agencies on service delivery, core safety, operations and maintenance activities, and centralize all support functions. In the new organization, the agencies should focus exclusively on service delivery, safety, day-to-day operations and maintenance, rather than general support functions. The agencies will have reporting lines to a Chief Operating Officer. All other services will be merged and coordinated centrally with a goal of driving a higher level of services at lower costs. This would result in consolidation of more than 40 functional groups within the existing MTA Agencies to six departments in the new MTA organization. Furthermore, the Transformation Plan calls for changes to the fundamental ways the MTA does business in order to achieve more effective and efficient performance.
  2. Recommendation: MTA should centralize all capital-related functions across MTA into a new central group responsible for planning, development, and delivery of a Capital Program that improves service, the customer experience and accountability. To address slow, costly, and bureaucratic processes and to create accountability, all Capital-related functions across the MTA should be merged into a central group. This new capital group will be accountable for planning, development, and delivery of the Capital Program. This group would identify optimal project delivery (groupings, timing, delivery), increase competition in a historically constrained supplier market, and complete important capital projects that improve service and customer experience quicker.
  3. Recommendation: MTA should create a new central engineering function reporting to a new Chief Engineering Officer to set standards, ensure quality and sustainability of infrastructure. To address inconsistent engineering methods across agencies and eliminate the duplication of processes and standards and ensure quality and sustainability of infrastructure, a new central Engineering group reporting to a Chief Engineering Officer will establish clear engineering and maintenance standards to be executed consistently across all agencies. This will provide consistent standards and specifications and eliminate unnecessary complexity and duplication.
  4. Recommendation: MTA should create a new central customer communication function to provide high quality and consistent customer engagement led by communications specialists. To address many existing differing communication types (i.e., service updates, timetables, customer feedback, etc.) from several different agencies, MTA should centralize communications to clearly and consistently manage the message, medium and content.
  5. Recommendation: MTA should centralize all operating support functions (i.e., operating standards and service design) focusing agencies on service delivery. To eliminate silos and enable multimodal network design optimization, the MTA should centralize operating standards and service design. Currently each MTA agency has its own internal operations standards and service design capabilities, which would be better managed under one integrated function serving all agencies.
  6. Recommendation: MTA should centralize all human resource functions to reduce redundancies (such as differing organizational structures and too many layers across agencies) and drive clearer lines of accountability. The MTA should create a centralized human resources department focused on attracting, developing, and retaining the talent required to improve MTA performance and service delivery. This new entity will be tasked with clearly articulating a new talent strategy. This will help to resolve issues of duplication and improve analytics, data consistency, and data integrity.
  7. Recommendation: To drive the transformation, the MTA will require a selection of new leadership roles and capabilities [including a Chief Operating Office reporting to the CEO and the MTA Board, if the Board chooses; a Chief Transformation Officer reporting directly to the Board; and an MTA Accessibility Officer reporting directly to the CEO].

As you can see, these so-called transformations are hardly that transforming. Consolidating true back-office functions such as human resources, legal and communications are true efficiencies that should have been realized decades ago but speak of the siloed nature of the MTA’s sub-agencies. The rest of the recommendations are either covered by plans put forward by current leadership or seem flimsy. Why, for instance, should a transit agency not be in charge of operating standards and service design for its own service delivery? It doesn’t make sense, operationally or otherwise, to, say, remove oversight of operating standards and service design for buses and subways from the auspices of New York City Transit and place these responsibilities under a centralized agency. There is no inherent benefit to placing service design for commuter rail with service design for local buses and subways, and it works instead to create communications and inter-agency pain points. The report itself fails to argue why this type of consolidation would be useful and doesn’t name a signal transit agency that has implemented such an approach to ops planning and ops execution.

With respect to the personnel recommendations, in addition to the accessibility overlap, it’s also worth questioning the call for a COO. Ronnie Hakim is currently the Managing Director of the MTA, reporting to the agency’s CEO and Chair. If she isn’t already fulfilling the COO role AlixPartners identified, what exactly is her job at the MTA and how could it be reformed so that she is essentially this COO? Questions such as these — ones probing the role certain Cuomo allies play at the agency — were seemingly ignored.

Reactions to a ‘Rush Job’

Ultimately, this $4 million plan reads more like a basic PowerPoint presentation of bare concepts that aren’t truly transformational and contain wrong information about the MTA’s structure and history. It reads very much like a rush job thrown together to support the political buried within. One MTA source acknowledged the conceptual nature of the report, indicating that the Board expects more detailed plans in the final report due in September. But this is what the Board will vote on later this month, and advocates aren’t impressed. Nick Sifuentes, the executive director of the Tri-State Transportation Campaign, did not mince words:

“A rushed, three-month process with no public input is a lesson in how not to do reform of the nation’s largest transit system. This brief report would be laughable if it wasn’t so serious for the millions of New Yorkers who rely on subways, buses, and commuter rail every single day. Especially with service improving, the governor should commit to an actual democratic process for MTA reform, not something done in, basically the dead of night.

The AlixPartners ‘plan’ relies heavily on the purposed ‘success’ of the governor’s Subway Action Plan, which has been wildly overstated by its proponents. Analysis by Aaron Gordon and others have shown that the SAP has actually not significantly improved service. If this plan relies on the SAP process as justification for wholesale change at the MTA, that foundation is pretty thin. The report’s revisionist history and factual inaccuracies just further the conclusion that this is not the way to handle sweeping reform of the single largest public entity in the state.”

Transit Center, too, released a strident statement objecting to the central tenet of the reorganization report. That transit watchdogs are so opposed to empowering capital construction, one of the more problematic elements of the MTA, with key modernization initiatives should be telling.

And so we’re left with an expensive report, an uncertain future for Andy Byford, the key leader with loads of public support, the most riding on the report and seemingly the touchiest relationship with the governor, and haziness around the recommendations. Will this transform the MTA or simply shuffle the deck chairs of this Titantic as Captain Cuomo steers the ship toward an iceberg? You can probably guess my answer.

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9 comments

Larry Penner July 15, 2019 - 1:22 pm

Metropolitan Transportation Authority’s reorganization plan was prepared by the consulting firm Alix Partners at the request of Governor Andrew Cuomo. Like all his previous special commissions and advisory committee reports over the years, it will not be worth the paper it was printed on. Promised savings by consolidation of Civil Rights, Engineering, Human Resources, Legal, Procurement and other NYC Transit, Long Island and Metro North Rail Road departments have been periodically discussed and promised for decades by every generation of MTA Chairman, Board Members, Executive Management and elected officials since the 1980’s. This will never happen due to work rules, seniority and contracts between different labor unions representing employees at NYC Transit, LIRR and Metro North. The same applies to anticipated savings by contracting out more work to the private sector. These cost savings are elusive due to a combination of union work rules, union contracts and safety concerns for non MTA employees performing construction on active track.

It makes no sense for the MTA to reassign management of major NYC Transit, LIRR and MNRR capital projects to MTA Office of Capital Construction. All three operating agencies already have their own experienced engineers, operations planning, procurement, force account, flagging, quality control and quality assurance employees. They also have already successfully managed numerous Super Storm Sandy projects along with other Federal Transit Administration and local funded capital improvements. In many cases, they were completed on time, within budget, accompanied by few design or change orders. Contrast that with MTA’s Office of Capital Construction’s track record. If all goes well with the most recent recovery schedule, LIRR East Side Access to Grand Central Terminal will be completed by December 2022 (eleven years late from the original 2011 date) and $8 billion more than the original $3.5 billion budget. (Not counting $4 billion more in other “readiness projects” necessary to support start of service carried off line from the official project budget). Second Avenue Subway Phase One and Hudson Yards #7 subway extension both suffered from delays, budget, scope and change order issues. MTA Capital Construction currently has their hands full trying to complete East Side Access by the most recent recovery schedule of December 2022 and begin Second Avenue Subway Phase 2. How would they be able to manage additional capital projects?
Project cost containment along with fast tracking procurements and contract change orders is easier said than done.

MTA union work rules sometimes prevent contracting out work to the private sector. Third party private contractors require MTA NYC Transit, Long Island and Metro North Rail Roads agency Force Account (their own employees) to provide both supervision and protection. when they work on or adjacent to active right of way track. There are sometimes excessive numbers of MTA supervisory or employees assigned, adding to costs.

At upcoming contract negotiations, the MTA must insist that future union contracts include more flexible work assignments. Salary increases should match the consumer price index. Employees need to increase contributions toward medical insurance and retirement pensions just like in the private sector. Future pensions must be calculated based on the final year’s base salary and not inflated by overtime. The federal employee civil service model calculates pensions based upon the average past three years salary prior to retirement. It doesn’t include overtime. Many federal agencies after 30 or more years service or reaching retirement age allow employees to remain part time. This affords senior employees time to train their replacements. Allow unions to bid on projects being offered to the private sector. Offer union employees bonuses just like private sector contractors when completing projects ahead of schedule or under budget. Share these cost savings with union employees.

The MTA receives $1.4 billion each year from the Federal Transit. Acceptance of these funds includes meeting “Buy America” requirements. This impacts the MTA’s ability get the best bang for the buck, when spending $7 billion in direct federal grant funds under the MTA $32 billion 2015 – 2019 Five Year Capital Program. The MTA has its own “Arts in Transit” 1% expenditure requirement. Cuomo has his own “New York Buy America Act” as well. These issues will continue under the next MTA 2020 – 2024 Five Year Capital Plan. Let private developers who benefit by adjacent stations pay for “Arts in Transit”. Do the same for existing major businesses, hospitals and colleges by also giving them station naming rights in exchange for adopting the station and adding elevators to make them ADA compliant. Abolish the NY Buy America Act. Lobby the NY Congressional delegation for more reasonable federal Buy America requirements.

Stop wasting millions of dollars on transportation feasibility studies for future system expansion projects costing billions that will never happen on our life time. Do not initiate any new system expansion projects until the MTA and each operating agency, including New York City Transit bus and subway, MTA bus, LIRR and Metro North Rail Road have reached a state of good repair for existing fleet, stations, signals, interlockings, track, power, yards and shops. Ensure that maintenance programs for all MTA operating agencies assets are fully funded and completed on time to ensure riders reliable service.

Governor Cuomo has promised to conduct the most transparent and open administration in history of state government. To meet this commitment, why not require the MTA to make public Federal Transit Administration Quarterly Milestone and Progress Reports along with Monthly Independent Engineering Reports on the MTA website. This is accomplished under the FTA Transit Award Management System known as TRAMS. MTA provides these reports on many other active capital projects and programs worth over $12 billion dollars. .
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(Larry Penner is a transportation historian, writer and advocate who previously worked 31 years for the United States Department of Transportation Federal Transit Administration Region 2 New York Office. This included the development, review, approval and oversight for billions in capital projects and programs for the MTA, NYC Transit, Long Island Rail Road, Metro North Rail Road, MTA Bus, NYC Department of Transportation along with 30 other transit agencies in NY & NJ).

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Stephen July 16, 2019 - 10:22 am

Just one quick comment: NO to any and all naming rights. It’s bad enough there is already one in Brooklyn, we do not need any more. Train trips take long enough. Imagine the extra time needed so that conductors and automated announcements can say the new names. “Next stop is Old name…New name.” Talk about wasting seconds. Besides, we never get enough money in return. We would need millions per station per year and for at least 20 years. Even still I don’t want them.

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J Adlai July 15, 2019 - 8:15 pm

There is definitely value in consolidating design and Program Management functions that are currently part of NYCT’s Capital Program Management department. There are some aspects of design that will be applicable at any agency. Structural bridge design is structural bridge design. Power infrastructure design is largely reproducible. Similarly, construction management would also likely benefit from sharing a pool of talent to fill the roles of Field Inspectors, office and resident engineers and construction managers. There would be efficiency from elimination of duplicate upper level management positions, consolidation of support roles and reduction of middle management. Identify the best talent across all agencies, and install them within the new organization. Keep in mind that MTACC largely drew its talent pool from the operational agencies when it was created. Some employees continue to move back and forth between the agencies now. It should be straightforward to consolidate them.

However, there are agency engineering departments that set overall standards, provide design input from an operational perspective and review/inspect projects to ensure that they meet operational standards. They probably should continue to remain under the purview of the individual operational agencies.

There’s one other worthwhile thing to make note of:

There is no inherent benefit to placing service design for commuter rail with service design for local buses and subways, and it works instead to create communications and inter-agency pain points. The report itself fails to argue why this type of consolidation would be useful and doesn’t name a signal transit agency that has implemented such an approach to ops planning and ops execution.

I’m not 100% sure, but SEPTA and MBTA use one agency to house all their operations, and I am pretty sure that their Ops Planning department oversees everything (and in the case of SEPTA, they have a central command center). Alon Levy has written quite a bit on the benefits of centralizing planning (some of it quite tongue in cheek). TransitCenter has also talked about how utilizing the commuter rail network more like a rapid transit system would help to expand transit usage. In short, there is quite a bit of benefit to centralizing planning, especially if it results in more multi-modal integration.

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Don Hartley July 15, 2019 - 9:22 pm

I comment to one of the main tenets of the recommended summary for consideration going forward – Safety.
To which, existing NYCT labor rules constrictions that need to be open to discuss a more progressive approach. As a former Director of Contractor Safety at NYCT Capital Program Management for 13 years, innovation with newer technologies was not always embraced fully with foresight to reduce risk while incorporating increased productivity. In doing so it often conflicted with labor’s field interpretations and/or rules negotiated for Transit employees but arbitrarily applied to private sector workers.
There is a balance to be achieved, but all parties need to have open conversations, provide constructive input, and be able to accept decisions for the greater good, that being the best service at all positions and job functions to the benefit of NYCT ridership. Lest we forget, that is the purpose for every employee within the MTA, isn’t it.

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Larry Littlefield July 16, 2019 - 9:19 am

It may be that $4 million sounds like a lot of money, but it isn’t.

I’d like to see a breakdown of which Alix employees with which credentials examined which documents and actual physical conditions before drawing their conclusions.

Do any of them even know that there is a massive acrimonious meeting between capital construction and subway operations to try to schedule GOs (service changes), flaggers, and work trains — off into the future — every week?

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The Hunkster July 20, 2019 - 4:23 pm

It’s virtually impossible to take the ultimate creature of NYS that is the MTA, a political Cthulhu since 1969.

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Al D July 24, 2019 - 11:32 am

It’s a shame that Cuomo must be the biggest dick in the room, no matter what. We have the same problem at the national level. This is all an elaborate ruse to eviscerate Andy Byford. Cuomo knows how bad he’ll look if he were to come out and fire Byford, so he’s got to do it another way.

This shows what a poor manager and how self-absorbed Cuomo really is. A good and effective manager empowers their people to do the best job, stepping in only when absolutely needed while letting their people shine. Transport in NY will be dysfunctional for as long as Cuomo is in office, the MTA exists, and politics factors into the equation.

Let transit managers alone to do their jobs.

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AMH July 31, 2019 - 5:01 pm

This feels very familiar. I remember when the “Subway Action Plan” was revealed; just a sloppy powerpoint thrown together with lots of buzzwords and few details. Cuomo seems to be on a mission to make the agency collapse from within so he can give more lucrative contracts to his consultant buddies. Eventually we’ll have the McKinsey-Alix-Accenture mobility system powered by synergizing vertical integration.

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bob lena August 30, 2019 - 12:11 pm

Larry Penner makes many good points but his description of the Pension Plans is several decades out of date. The NYCERS/MaBSTOA plan that applies to current NYCT/MaBSTOA employees uses 3 years Final Average Salary. There is a complex formula regarding overtime (that looks back 5 years) but it is subject to an overall 10% cap. So those costs are not nearly what some people claim. (And don’t forget employees pay into the pension.) The new Tier 6 passed at the start of Cuomo’s governorship is even less favorable and does not provide much of an incentive for an experienced employee to stay with the agency instead of jumping to a higher paying private firm. You can find the details on the NYCERS website.

I don’t know the details of the MNCR, LIRR, and MTA HQ plans but I doubt they are much more generous.

Regarding consolditation don’t forget they did quite a bit of the back-of-house units a few years ago into the Business Service Center. I have yet to meet any MTA employee (including those at the BSC) who thinks that improved efficiency or lowered costs. I expect the same with whatever happens now. They also consolidated IT; that seems to work OK but didn’t save any money. If you look at its org chart you can see separate units for different functions in each agency. Is that real consolidation?

Finally let’s not forget that the 7 extension, in addition to being late and over budget is missing a station.

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