For the last few weeks, Jay Walder has been preaching responsible investment and an increased attention toward improving surface transit. He knows that the agency he heads has long been plagued by an inability to manage its capital projects, and a CBC report issued last week confirmed a history of cost overruns and missed deadlines.
Today, in a short piece in The Post, Walder talks about his new approach toward cost overruns: They will not be tolerated. The first thing to go is a $2 million overrun for a public plaza at South Ferry. Tom Namako reports:
Hands off straphangers’ wallets! That was the message new MTA chief Jay Walder had for agency and city officials yesterday when he vetoed any move to spend an additional $2 million in cost overruns at the new South Ferry station.
Walder said he would rather scale down the last part of the project — an outdoor plaza connecting Staten Island Ferry service to the subway station — than lay out any more dough. “If we need to reduce the scope to stay within the budget, then we should reduce the scope to stay within the budget. But there is no more money,” Walder told the MTA’s head of construction at a public meeting.
Allan Cappelli, one of the board members from Staten Island, worried that ferry riders would be stranded “out in the rain.” That seems to be a bit of a stretch. But as Walder threatened to downsize other costly projects, I have to wonder if this is the right approach.
Currently, the MTA is facing capital funding gaps in the billions of dollars. The agency is facing cost overruns of the same magnitude along Second Ave. and at Fulton St. Does skimping on a public plaza for a mere fraction of the savings make sense?
The MTA needs to take a good hard look at the funding for its major billion-dollar projects and figure out ways to save. It makes sense to put forward a consistent approach to cost overruns, and for that, $2 million will be cut from the South Ferry project. This is but small beans compared to the MTA’s true fiscal problems.
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I don’t think the important thing is the $2 million in savings. I think he’s trying to use that project to send a message to his construction managers and contractors. Right now, the MTA always ponies up, no matter how outrageously overbudget a project runs. If Walder puts his foot down, then maybe people will get the message to start being frugal because their overruns won’t automatically be covered.
I am not exactly sure how “new” this is, and as Kit Twist observes, it may be mostly symbolic.
Plenty of projects have been downsized. The Fulton Street Transit Center lost its oculus. The #7 extension has lost (for now) its Tenth Avenue Station. The SAS lost the third track at 72nd Street. And now, South Ferry has lost its covered portico.
What all of these things have in common is that they’re dispensable, by some measure. We may regret losing these features, but the projects can still move forward without them. The public plaza at South Ferry is pretty minor. It can always be added later. In contrast, the deleted third track at 72nd Street is surely gone forever.
Walder’s promise won’t be meaningful until he’s faced with an overrun on a feature that can’t be deleted.
First, while $2 Million might seem like a drop in the bucket, there are plenty of other things that can still be bought with that money. Second, you can only get your costs under control if you are willing to cut things, and there will not be many cuts that will be tolerable that will save $1 billion. Third is like Kid Twist says, you have to habituate people to staying within their budget, or they will keep bleeding you dry.
At the end of the day, there is no money left for the MTA to raise taxes (and yes that includes congestion pricing), the citizens will not bear it. They need to get their house in order and keep within the budget, and stop running around begging for a new tax on a regular basis.
In it’s not about whether a tax is new or old; it’s who gets the money. The disconnect between things like congestion pricing and paying for MTA projects stems from the differences in how we value our time. Congestion pricing will save me (say) $20, but the union or contractor will put a value of $50 on doing the construction that saves me this time. Of course, considering the economies of scale inherent in mass transit, this improvement should cost less than $20.
If construction projects were presented on the open market, this problem would be priced away. I don’t know exactly who is to blame- unions or management- so I would prefer to blame Albany for creating such an inefficient system.
I certainly agree with what Kid Twist said. That didn’t come across in the post. To me, though, this seems similar to the station agent elimination project. The MTA is saving a pittance but inconveniencing a lot of people in order to make a point. If they keep skimping on minor projects, it’ll catch up. They really need to cut major projects and rein in those costs.
I agree with Ben. Saving 2 million on a plaza or whatever they save on a few station agents is a drop in the bucket compared to gross mismanagement on capital projects. With budget overruns of hundreds and hundreds of millions of dollars, they need to focus more on running tightly controlled construction jobs. When the Fulton St center is twice the budget someone made a mistake either at the front or the end of the project. Probably both. The $500 billion EXTRA for the Fulton Center could have paid for 250 improved plazas to keep people out of the rain all over the city.
But that’s the point, no one is taking concerned about the management of the project because they have this fail safe measure of “well if we didn’t get this right at this point, we’ll just figure that out later.” That’s bad management and bad fiscal discipline. Walder is saying look, you get it right at the beginning or we don’t do it at all. There’s not second chance to get this right.
I’m a graphic designer, and I’m always SHOCKED at clients that seem to think that the printer bluelines is an appropriate place to fill in details. No. You do all the work up front, and get it right. And when the project is being printed, all you are doing really is looking over the details of the printing process.
Now does that mean we should stop building large scale projects? Absolutely not. We need more subway lines, light rail, and better technology throughout. And we should be investing heavily in upgrading stations. What do need to do is figure how to build get our estimates and project management in line at the beginning. And how to increase the funding stream to be ambitious. Let’s not kill ambition, but let’s make our cost systems more efficient.
Soon I will again be proven to be a soothsayer. Without fail, if I make a prediction about the SAS, it comes true. It’s uncanny. Since reality ultimately bites every time, the fact that the SAS fiasco will be not 2 million, but, oh, about 2 billion overbudget, will mean drastic cut backs in the design of the stations. The whole project was a boondoggle from the beginning, but I was a Cassandra crying out in vain. And yet I never get the thanks I deserve.
You’re always right! How could we have questioned your wisdom, oh great purveyor of sublime and awesome truths!
We are not worthy!!!!!
The only thing this guy has done so far is bring in his friends from London, and posture and pose about changing the culture of the MTA. It is like he is trying to put his “mark” on the system, without actually doing anything yet. He is drawing the line in the sand for a relatively small overrun when the real problems are with the billion dollar projects. What some people may call symbolic and “sending a message,” I see as talking a big game while actually doing nothing.
He’s been in office for all of 22 days and hasn’t even had an MTA Board meeting yet. What exactly do you want him to do in that short time?
In fact, I’d say he’s doing exactly what he’s supposed to be doing. Politically, he needs to show that he’s ready to take the bull by the horns. As cliched as it is, these public comments show exactly that.
I agree with Ben. With Walder, it’s like the old Gov. Eliot Spitzer campaign promise – “On Day One, everything changes.” (only I suspect he’ll be more successful than Spitzer, though, in the long run). He’s showing the agency that it’s not Business as Usual anymore. Lets just hope the agency adapts to his ways, and that he doesn’t adapt to the old ways of the agency.
Maybe he will start to actually make real changes, but so far it is still all talk. I tend to take a wait and see approach with stuff like this.
Nicole Gelinas in the Post makes an excellent point when she says:
“As the Citizens Budget Commission notes in a new report, design costs on the No. 7 extension have doubled because the city and state decided to drop one station — a short-term decision we’ll pay for later.”
As OTHER people have pointed out, the distance between the Times Sq. and Javits Center stations will be the LONGEST gap between any two consecutive “local” stations in the system, except where you cross a river.
Cost overruns are a big problem because they are seen by the public as failures of managements. Sometimes they are and sometimes they aren’t. The problem with what I see happening is if I pay $100,000 for a Porsche and it costs $120,000 I am unhappy. If I pay $100,000 for a Porsche and I get a Chevy I may not have cost overruns but the situation isn’t any better… maybe worse. I don’t know how he’s going to stop cost overruns on SAS or any major capital problems, but if it’s removing a third track needed for increased capacity or not implementing a station then that’s not exactly good either. It’s about getting the most you can for the least money not about setting an arbitrary amount and getting whatever for it. (And I don’t want a Porsche of a Chevy… I want the east side to be better served alleviating pressure on the other lines).
I would be curious what’s driving the overruns. Is it poor estimates from MTA? Is it contractors getting what they can because they know the MTA will pay? Is it poor design leading to having to redo expensive work? A little more nuance and investigation in the mainstream news coverage would be nice…