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Why Does Transit Cost So Much to Build in the U.S.?

With Manhattan's new Second Avenue subway expected to cost five times as much as comparable projects in Europe and Asia, Stephen Smith looks to transit-construction practices from abroad for lessons on how to contain costs in America.
August 27, 2012, 11am PDT | Jonathan Nettler | @nettsj
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New York City is not alone in paying outrageous prices for new rail infrastructure. As Smith notes, the "$151 billion master plan for basic high-speed rail service in the Northeast corridor is more expensive than Japan's planned magnetic levitating train line between Tokyo and Osaka, most of which is to be buried deep underground, with tunnels through the Japan Alps and beneath its densest cities."

So what makes transit so expensive to build in the U.S. compared with developed cities in Europe and Asia? Smith looks to Spain, which "has the most dynamic tunneling industry in the world and the lowest costs," for some lessons. "In 2003, Metro de Madrid Chief Executive Officer Manuel Melis Maynar wrote a list describing the practices he used to design the system's latest expansion. The don't-do list, unfortunately, reads like a winning U.S. transit-construction bingo card."

Among the obstacles to reducing costs in the U.S. identified by Smith are the slow pace of construction, complex and outdated legal requirements and procurement rules, conflicts of interest, and a lack of effective incentives and oversight.

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Published on Sunday, August 26, 2012 in Bloomberg View
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