Phase I of the Second Ave. Subway is one expensive project. Designed as a three-mile extension of the BMT Broadway line north from 57th St. and 7th Ave. to 96th St. and 2nd Ave., this route is, as SAS commenter Alon Levy has noted, the most expensive subway under construction. It’s budgeted at approximately $1.7 billion per kilometers while similar projects in Paris and Berlin have checked in at $250 million per kilometer and a London Tube extension cost $450 million per kilometer.
Over the last few weeks, I’ve tried to ascertain just why this subway costs so much. While New York is a very developed city and the MTA is digging through some very old neighborhoods, Paris and London have both been around for centuries longer than the Upper East Side. Labor costs are higher in the U.S. than they are in Europe but not by that much. Could it be utilities work? Design and engineering? A combination of everything?
I was at a loss until a few weeks when the MTA published a quarterly report about the Second Ave. Subway work with the most comprehensive budget presentations to date. The report is available here as a PDF, and the budget chart is on page 15. I’ll summarize the Current Budget here. Clicking the thumbnail at right opens a larger version.
First, the MTA tackles component design costs. The Environmental Impact Statement cost $11.6 million; PE & FP Engineering costs are projected to be $228.9 million; and the final design costs will be $192 million. The next few lines concern construction. So far, the agency has awarded $734 million in construction contracts with $2.7 billion in contracts still be awarded. Those figures constitute the bulk of the project costs but aren’t broken out further.
After that line item, the chart delves into some detail. The agency is keeping $122.7 million on hand for contingency awards and will pay $96 million for control center modernization. In-house Transit labor will cost $33 million, and $70 million will go for an engineering force account. Phase I has a $6 million artwork budget and a $292 million real estate acquisition fund. Insurance policies will cost $172 million, and the agency has a reserve of $160 million. The total project cost checks in at $4.451 billion, but the agency has also added another $816 million in estimated financing costs. The final price tag: $5.267 billion.
So now we have the numbers, but we still don’t have the “why” of it all. We don’t know what costs so much and how the MTA could realize savings that would put the budget for the Second Ave. Subway in line with similar projects around the world. The ambiguous construction costs — $3.4 billion — are clearly an issue, but where does those construction costs go?
If I had to guess, I’d say the bulk of the costly work involves installing the tunnel boring machine launch box and relocating numerous utilities. Real estate acquisition amounts to nearly five percent of the project, and in the end, everything just adds up. That doesn’t mean that the MTA can’t save costs.
When New York built its first subway route, the Interborough Rapid Transit Company bid a cool $35 million in 1900. That amounts to less than $1 billion in today’s money, and that route stretched from City Hall to 145th St. and Broadway. Then, the subways reached through some emptier neighborhoods and employed cut-and-cover just below surface level. Yet, the connection into Brooklyn through some populous neighborhoods cost just $8 million, insanely cheap by today’s standards.
The Second Ave. Subway is deeper than the IRT and is being built in an era of high costs. As unsatisfying an answer that is, it simply might be the reason for the costs: It just costs more. But can the city really sustain three more phases of multi-billion-dollar construction or will we be left with just a portion of the Second Ave. subway? Time, obviously, will tell.