New GAO Report Finds Issues, Posits Few Solutions

July 26, 2019

Support for capital investments in public transit is high in the United States. Evidence for this can be found in measures for new investments that voters approve with regularity at the ballot box, the state legislatures raising their own sources for capital projects, and the widespread recognition that boosting ridership requires investment in the right priorities.

However, while support for new transit investments is high, there is also considerable scrutiny regarding their costs and the time they take to construct. A few very visible projects—such as the California High Speed Rail, and Washington’s Silver Line—reinforce the narrative that both heavy and light rail investments have endemic issues specific to the United States, especially when compared to Western Europe.

In fact, it was a 2017 New York Times investigative story about New York City’s recently completed Second Avenue Subway that compelled Congress to order the U.S. Government Accountability Office to—among other things—figure out why rail transit costs are so high here in the United States. That much anticipated report was made public this week and, unfortunately, the findings (reported here by ETW in this issue) are underwhelming.

The report appears to go after the aforementioned question. It points out that there are many factors affect project construction costs: particulars of the design and site conditions; the legal, political, and market conditions for the specific locale; and way the project is executed. It even uncovers some anecdotal nuggets around the costs of relocating utilities, unexpected geological conditions, and the critical role of procurement decisions and how risks are shared between the project sponsor and the private contractor.

However, the GAO report stops well short of comparing U.S. projects to those in other countries due to what it refers to as “data limitations.” It uses the previous sections to bolster a key finding: that each project is too unique to make meaningful comparisons legitimate. There is certainly some truth to that but the report makes no recommendations about how to address the problem. It does make a good point that overruns are likely the result of initial costs estimates that are too low. But what about the central question about why rail transit costs are so high here to begin with? If a project is on budget but the original budget was bloated to begin with, that is still a problem.

In its own words, the GAO “works for Congress” and, in this way, the recommendations focus on elements the federal government can address. Accordingly, the report’s advice is for the Federal Transit administrator to utilize the GAO’s methods for estimating project costs and to make that kind of information accessible to its grantees. Okay. All fine and good, but it means that this report actually raises more questions that it answers.

Coincidentally, Eno is launching a major research, policy, and communications project this summer to analyze current and historical trends in public transit project delivery. The four-part project will include empirical research, practice insights, policy recommendations, and industry and stakeholder engagement and outreach.  The intent is to change the national narrative about systemic problems to opportunities for better mass transit project delivery.

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