East Side Access Project

After a month containing nearly 2400 controlled explosions, blasting has wrapped underneath Grand Central as part of the East Side Access work, the MTA announced today. According to the agency, crews blasted out 857,000 cubic yards of muck from the future LIRR terminal. It’s enough debris to cover the entirety of Central Park one foot deep.

“This is a very significant milestone for the East Side Access project,” Michael Horodniceanu, President of MTA Capital Construction, said. “The caverns are essentially now fully excavated. Much work remains to be done to build the platforms and tracks, and finish what is currently raw, cave-like space. But we now have a fully built shell in which all future work will take place.”

As part of the milestone announcement, the MTA released the video I’ve embedded above showing blasting and progress at the site. The East Side Access project is expected to wrap up eventually this decade.

In a sense, the MTA’s East Side Access project has gotten a pass from just about everyone. It’s a worthwhile project, but it was originally supposed to be in revenue service by late 2012. It’s nearly a decade over schedule and billions of dollars over budget, but few people seem to care. The media has barely covered it; the public doesn’t care. Unlike the Second Ave. Subway, it doesn’t disrupt lives, but it just goes on and on and on.

By and large, the MTA has been forthcoming with budget information on East Side Access. We know that the project will cost more than $8 billion, and we know that this figure is well beyond initial estimates. We know it’s been delayed and delayed again, and we know the agency is going to have to spend money on new rolling stock to meet demand. In all senses, managing the budget for this project has been a disaster.

Enter Thomas DiNapoli. The New York State Comptroller has the power to do any number of audits on the MTA with any sorts of conclusions, but I’ve often been frustrated by his results. He re-reports numbers that already available in MTA materials without offering guidance on controlling costs. This time around, DiNapoli has discovered that East Side Access is — gasp — over budget and late. Shocking news, I know.

“Time and again, the MTA has come up short on the goal to deliver the East Side Access project on schedule and within budget,” DiNapoli said in a press release. “While this project is an important addition to the regional mass transit system serving New York City and Long Island, taxpayers will have to bear the brunt of these unanticipated costs. There must be lessons learned at the MTA from this experience as they move forward with their capital program.”

Here are some of DiNapoli’s stunning conclusions:

The MTA’s current cost estimate for East Side Access is $8.25 billion, but that figure grows to $8.76 billion when the cost of additional passenger railcars needed to meet service demand is factored in.
The MTA has acknowledged that its initial cost estimates and schedules (which were released in 1999) were based on conceptual plans with virtually no engineering work behind them.

By the time design work had advanced in 2006, the estimated cost had grown to $6.3 billion and the completion date had been pushed back four years to December 2013.

Since 2006, the cost has grown by $2.4 billion, or 38 percent, and the completion date has been pushed back another six years. A range of factors, including overly aggressive schedules, the number of large concurrent infrastructure projects, a contractor that performed poor quality work and unforeseen construction challenges increased cost and contributed to delays.

The MTA estimates that there is an 80 percent probability that the actual cost of East Side Access may be at or below its current estimate, and that service could begin up to one year earlier than currently forecast. Conversely, there is a 20 percent probability of additional costs or delays…

Debt service on bonds issued by the MTA to fund the cost of East Side Access is estimated to exceed $300 million in 2019 when the project enters service. This represents nearly 11 percent of the debt service for the MTA’s entire capital program in 2019. Debt service is reflected in the operating budget and is funded with fares, tolls and tax revenues.

A rezoning of the area around Grand Central Terminal to permit higher density office buildings proposed by Mayor Bloomberg, in combination with the completion of East Side Access in 2019, is expected to increase overcrowding on subway platforms and surrounding passageways.

None of these bullet points were conclusions DiNapoli reached through his own analysis, and they were all available in MTA board books released to the public last May, if not earlier. DiNapoli is, in other words, telling us something we already know: The East Side Access project has turned into a boondoggle. Contractors are reaping the benefits, and we the taxpayers are getting worked over on a daily basis.

So how can the MTA control costs in the future? What does the New York State comptroller offer as to lessons for the future? Well, he offers up a big fat nothing. His ultimate bullet point concerning rezoning could be culled from recent newspaper headlines and has very little to do with the costs or completion of the East Side Access project.

I would love to see DiNapoli’s office do more. We all know there are problems, inefficiencies and massive budget overruns, but tell us why. Tell us how to avoid it for future problems, and add to the dialogue. Regurgitating public records is simply an additional waste of taxpayer dollars albeit from the Comptroller’s Office instead of the MTA.

Stick around for 100 years; get a stamp.

It’s a good time to be Grand Central Terminal. Currently being feted by politicians and rededicated for another century, the Terminal is celebrating its centennial today with a full slate of musical performances, celebrity appearances and a whole slate of fun and games. For such an iconic building and an important part of New York City’s transit infrastructure, the grand building deserves the accolades.

While not everyone may want to celebrate the landmark, over the past century, the building has seen a lot. It has lived through the age of the railroads, the rise of the car, rapid growth in Midtown, two World Wars, a New York City collapse and, more recently, a city revitalized. It has served as the grounds for many a romantic encounter. It has become such a sought-after destination that an Apple Store has taken up prime real estate and a Shake Shack may one day arrive in its lower level food court. No longer just a launching point for travelers from the north, the building is a destination unto itself.

Yet, for all the talk of 100 years, it’s not where Grand Central has been that counts; rather, it’s where it’s going. The next 10 years for the Terminal will set the stage for the next 100 and beyond. Under and around Grand Central, there is a lot happening that will impact the future of Midtown. An effort to rezone and up-build the area has taken off, and Grand Central will be the focal point. Along with investments in the Terminal, the city wants to improve the subway infrastructure in Midtown East as well, and I’ll have more on that next week.

Underneath, East Side Access is lumbering to completion. It’s a flawed project, with rampant cost overruns and an extended timeline well beyond its original projected completion date. It suffers from the same problems that the ARC Tunnel had — namely, that it’s about 15 stories underground — but will serve to bring around 160,000 daily LIRR riders into Midtown East.

Recently, The Wall Street Journal’s Ted Mann took a tour of the construction site and wiggled some choice words out of Michael Horodniceanu’s mouth. The head of the MTA’s Capital Construction unit spoke about the project:

“There’s no doubt in my mind that people will use it,” Horodniceanu said, walking through what was once a rail yard for trains on the existing lower level of Grand Central. The space is now on its way to becoming a concourse for travelers heading down to the unfinished platforms below…

“It’s always hard when you have a project that is, in many ways, visionary to accomplish it,” he said. “People, they want to know what’s on their plate tomorrow night when they have supper. They don’t want to know what’s going to be here in 2020 or 2019.”

Holding court with a group of reporters, Horodniceanu conjured a favorite image: Some future archaeologist uncovering the tunnel boring machine his crew buried into rock after completion of their tunnels, somewhere near 37th Street. In the meantime, he said, the station he and his workers are building would be destined to become as much a part of the city’s fabric as the grand edifice up at street level.

“After 200 years of Grand Central, they’re going to be able to see two pieces: the original Grand Central and what we’re building now,” he said.

By the end of the decade, when East Side Access work is completed, it may be tough to reconcile that experience with the one we know at Grand Central today. Tracks feed off of the main concourse or a lower level, and access is easy. In the future, it will take a few minutes longer to get down the tracks, and soaring historic ceilings will be a part of the ride but not the first sight for many. As the city grows, though, it may not matter. We need more rail capacity, and a Long Island connection to the East Side is long overdue.

Here’s to the next 100 years, no matter how imperfect.

The MTA now projects August 2019 as the East Side Access revenue date.

A few weeks ago while speaking to a group of Long Island Business owners, MTA Chairman Joe Lhota previewed what had long been rumored concerning the East Side Access Project. The MTA did not anticipate finishing the project until mid-2019. For an agency long accused of mismanaging large-scale construction projects, this news was not surprising, and on Monday, when the authority confirmed its projections in a presentation to its Capital Project Oversight Committee, we learned just how deep the delays and cost overruns ran.

On the surface, the bad news is, well, bad. According to the most recent MTA projections, the project will not wrap until August 2019 and costs could run as high as $8.24 billion. That price tag is up nearly $1 billion since the last official estimate was released in 2009, and the expected date for revenue service has been pushed back by nearly three years. Those are the 80-percent probability projetions, and the news is bad all around.

As this news broke on Monday, MTA Board members, reporters and train riders all wanted to know the same thing: How did we get here? Six years ago, the MTA had hoped to wrap the project by 2013; three years ago, that date had shifted three years forward. Now, we’re still seven years away from seeing this massive project realized, and skepticism over this newly revised schedule is entirely warranted.

Still, much as they did with the similarly troubled Fulton Street Transit Center a few years ago, MTA officials pledged to stick with the current schedule. “The era of underestimating the cost of big projects is over,” Lhota said. “We’re going to be realistic about the cost and we’re going to budget accordingly.”

Ascertaining how the MTA has botched this project requires two separate arguments, First, the MTA ran into internal problems three years ago when they last assessed their own timeline. In 2009, the MTA put forward their 2016 estimate with no official risk analysis and no determination of the completion percentage. In 2010, when they finally conducted the analysis, the authority determined that their estimate was wildly optimistic. They had a 20 percent chance of hitting the cost and timeline goals. The 80 percent figures were closer to 2017 and $8.01 billion, but the authority never pushed that in public.

In 2011, the authority opted to change its risk analysis figures. Instead of providing a 50/50 figure, they would offer up an 80/20 figure and conduct a risk analysis on every project. So this new figure is a more concrete one. The MTA says there is an 80 percent chance the project wraps at $8.24 billion and by August 2019. There’s also a 20 percent chance the project comes in at $7.81 billion and is ready by September 2018, but that’s clearly an optimistic estimate. The current 80 percentile projection does, for what it’s worth, contain a 12-month contingency period and a cushion of around $0.36 billion should things go wrong.

The other problem, though, highlights what happens when various agencies — city, state, federal — who need to share resources have to work together. The short of it is that the MTA and Amtrak seem to be unable to properly coordinate train schedules and work on the Harold Interlocking, thus leading to massive delays and other assorted headaches. Ted Mann went in depth on this issue in Monday’s Wall Street Journal, and I strongly urge you to read that article if you haven’t already.

As Mann relates, the interaction between the MTA and Amtrak reached inept proportions when the federal agency decided to move workers at the last minute to Grand Central for National Train Day, leaving the MTA out in the cold. In official documents on Monday, the authority stopped short of pointing fingers, but it’s clear the MTA is fed up with working with Amtrak. It is, Michael Horodniceanu said of the East Side Access problems, “like riding a bicycle while trying to change the tire.”

So as the feds gear up to audit the project, we are essentially left where we were when things began. The project is optimistically seven years away from revenue service and another billion dollars in the hole. The money has to come from somewhere, and the faith in the MTA does too. At some point, funding partners will dry up, and large-scale projects will never materialize right at the time the city needs them the most. So now we wait seven more years. It’s always seven more years.

These East Side Access corridors and the valuable retail space could be privatized when they open in 2019.

In a few years at some point, the MTA will have opened a great expanse of new retail space. The Fulton Street Transit Center will feature more than 30,000 square feet of retail space out of a total of 70,000 square feet, and the 360,000-square-foot East Side Access terminal will have 23,000 square feet of retail space. With the need to find an efficient and skilled operator for these spaces, privatization may be on the table.

In an article in Crain’s New York, Jeremy Smerd recently delved into the MTA’s plans for the spaces. While Metro-North currently operates the Grand Central retail space, the agency seems to recognize that transportation should trump its focus on the space. “Ultimately, our core competency is transportation,” an official said. “We want to try this method of operations at the Fulton Center, and we’ll see how it does.”

So what’s the plan at the East Side Access station? It’s going to be a few years before we have a definite answer, but right now, the MTA is thinking about privatizing some aspect of operations. Smerd reports:

The Metropolitan Transportation Authority is considering outsourcing the management and operations of the tunnels and 360,000-square-foot station being built to bring Long Island Rail Road trains into Grand Central Terminal under the East Side Access project. The authority paid Scottsdale, Ariz.-based InfraConsult $600,000 to determine the feasibility of outsourcing the operations of the concourse, 90 feet under Grand Central. The company completed its report in February. It has not yet been publicly released.

An MTA spokesman said the authority was particularly focused on whether it should outsource the maintenance of the 360,000-square-foot concourse, which includes 23,000 square feet of retail space. “We don’t know for sure if we are going to go the RFP route,” the spokesman said.

A British trade journal, PPP Bulletin, reported last week that the MTA was considering a public-private partnership at the site. The spokesman told Crain’s Insider Thursday that the privatization would be limited to the operations of the station, not the new tunnels, which will be run by the MTA. But the consultant on the project on Friday said the report examined privatizing both the station as well as the tunnels’ operations and maintenance. “Our objective was to determine whether it would benefit the long-term operations of the new East Side Access program to use the private sector to operate the tunnel component and the terminal component,” said Mike Schneider, a managing partner with InfraConsult.

It’s probably a bit premature to read anything into this development. It’s an exploratory move by the MTA, and the authority won’t have to confront the question head on until 2016 or 2017. Yet, with the public-private partnership moving forward for Fulton Street — the RFP will come out next month — it’s hard to envision the authority not following a similar path.

So should they? On the one hand, the authority should focus on transportation offerings. But on the other, rail companies across the globe have made significantly dollars on real estate. The MTR in Hong Kong is essentially a real estate company that operates the trains, and others have exploited their holdings far more effectively than the MTA has. I’ll be curious to see the terms attached to Fulton St., but such a deal there or underneath Grand Central isn’t necessarily a slam dunk.

While speaking with the Long Island Association earlier this morning, MTA Chairman Joseph Lhota let slip the news on East Side Access that has been a few months’ coming. “We were originally looking at 2018, but the most recent analyses puts the opening at 2019,” Lhota said. “I don’t want to see it go past 2019.”

LIBN.com has more:

The problem with East Side Access isn’t digging below Grand Central Station, where “cavernous tunnels” have been carved out, but on the Queens side of the project. Tunneling underneath the Queens rail yard near Jamaica, where trains from Amtrak and Acela are stored in addition to MTA’s own vehicles, has become an issue.

Contaminated soil languishes and must be disposed of properly, and unlike closer to the water, the ground is soft rather than rocky. Lhota said workers have also run into springs and brooks that nobody knew existed below the surface. The MTA has brought in experts from Europe to help with developing a plan going forward.

To call this a nightmare scenario for the MTA would not be hyperbole. Initial estimates, clearly optimistic, placed the completion date during 2012, and the timeline slipped first to 2014 and then to 2016 and then to some undetermined date in the future. Now, it seems, we will have to wait seven more years for this project, with substantial tunneling completed, to see revenue service.

There is, as yet, no word what this timeline will mean for the costs. I’ll have more info as I receive it. At least for now those bemoaning Metro-North service into Penn Station will have a good decade to refine their arguments.

* * *
(Update 5:30 p.m.): Later in the day, the MTA put out the following statement as the authority acted to temper down fears of a never-ending project:

The Metropolitan Transportation Authority is reevaluating the risks in the construction schedule for the East Side Access project, and plans to present its findings to the Capital Program Oversight Committee later this month. One preliminary analysis of risk factors has indicated the completion date may move to 2019, as East Side Access construction intensifies in the busiest passenger rail yard and the largest passenger rail interchange in the nation.

The analysis is not complete, and the MTA is identifying ways to mitigate those risk factors to allow the project to be completed as early as possible. The MTA continues to work with its partners at the Federal Transit Administration to update the East Side Access funding agreement to reflect the new schedule.

Amtrak and the MTA are working closely together on East Side Access and improvements to the East River tunnels and the Harold Interlocking to accommodate the roughly 500,000 passengers who rely on 1,200 train movements through the region each day. Senior executives at Amtrak, the MTA and NJ Transit regularly meet to coordinate construction activities and do everything possible to keep work moving forward.

We’ll have a more definite timeline later this month when the MTA Board gathers to discuss this delay-plagued project.

The escalators that will one day reach the East Side Acess Project terminal beneath Grand Central will the MTA's longest. (Image via WSJ)

Over the past few decades, the MTA has had a touchy relationship with its escalators. Those that exist in the subway system break down more often than we would prefer, and repairs take far longer to complete than initially expected. Some of the problem is due to the 24-7 pounding these machines take, and part of the problem is due to just about anything you could imagine.

Some time this decade, the authority will open its most escalator-dependent station yet. When the East Side Access terminal opens, 15 stories underneath Grand Central, the authority will be relying on 47 escalators traversing 180 feet into the depths. As Ted Mann wrote in The Journal on Friday, “The success of the new station is riding in large part on how well they work.” That may be a scary thought indeed.

Mann has more on the escalators:

Commuters might endure a short trudge up stairs, but few would have patience—or the stamina—for a heart-pounding slog to the surface that rivals a military workout. In public remarks about the East Side Access project, MTA Chairman Joseph Lhota has invoked the notoriously steep, and sometimes stalled, escalators of the Metro in Washington, D.C. With that in mind, the authority is leaving little to chance. Engineers have added extra capacity, so breakdowns won’t bring the station to a standstill.

And the MTA is experimenting with a first-of-its kind contract that will partially privatize the escalators. The company that designed the escalators and 22 elevators for the station won’t just install them, but also operate and maintain them in years to come. “The proof will be in the pudding,” one MTA official said, but the agency is counting on the arrangement to ensure its costly gamble to redirect commuter rail to Manhattan’s East Side will pay off.

Schindler Elevator Corp. won a $70.2 million contract to do the design, installation and long-term operation and maintenance of the system. “We’re putting the onus on the people who actually install them to operate them,” said Michael Horodniceanu, the president of the MTA’s Capital Construction division, which is building the project. The escalators will be the longest ever made at Schindler’s plant in Clinton, N.C., said Glenn Rodenheiser, the company’s project executive for East Side Access.

The key, of course, will be this privatization effort. Right now, commuters who know of the East Side Access plan have little sense of just how deep the terminal is, and the MTA will have no choice but to keep these escalators running. Otherwise, the traffic into and out of this deep terminal will suffer tremendously.