In Boston, the Green Line light rail ends just across the Charles River
at the Lechmere station. As part of a Big Dig settlement with environmental
groups, the state was required to extend it by 2011. The Green Line is already
the busiest in North America and extending it to two dense suburbs with few
rail transit options was a no brainer. This project should have been relatively
simple, merely extend track a short distance along two existing railroad right
of ways and construct a replacement Lechmere station. The earliest cost
estimate was about $500 million, a number MBTA has since disputed. Unfortunately,
the state decided to turn over the entire project to contractors via a
contracting mechanism it did not understand,
and at one point, had only four
people overseeing the project on a part time basis. Unsurprisingly, the project
experienced exorbitant cost increases as contractors helped themselves to extra
scope and higher costs (ie costs unnecessary to the project or more expensive
than needed). Faced with that cost overrun, the state fired the contractors.
They then began to figure out what the project should actually cost in order to
move forward. MBTA recently released a proposed list
of cost cuts for the Green Line extension. To their credit, none of these cuts compromise
service or will impact ridership.
While technically a light rail line, the Green Line functions like a
subway in some parts as it runs in a tunnel. The original contractors seized
upon that characteristic to sell the state subway
stations than light rail stations. Those subway stations had multiple elevators
and escalators, large headhouses (an atrium over the station often housing
station manager offices and fare gates), and sheltered platforms. Those
features added up to $410 million for seven stations but the state has cut those costs
to $121 million. No escalators and only a handful of elevators will now be needed,
headhouses were eliminated completely, and platforms will be in open air. The
reduced stations would also save considerable maintenance costs on cleaning and
escalators. The state’s new plan gets the same
functionally for 30% of the original price. Instead of completely replacing
four bridges and widening one, the state will only replace one bridge. The new
maintenance facility’s costs were cut in half but the facility could be
expanded in the future as needed. The state finally put its resources to work
on this project and as a result, cut much of the contractors’ extra scope.
Implications for other projects
A coworker of mine recently remarked that the private section is really
good at earning profits. MBTA’s experience shows that contractors willfully add
scope and extra costs wherever they can in order to boost their profits. Many
other projects suffer from this same fate and as a result, American
construction costs are much higher than other countries and produce far fewer
benefits. In Maryland, Montgomery County did just that in its new proposed
a bus rapid transit line. The line could deliver the project with many but not
all of the original functionality for $67.2 million instead of $350 million. Much of the
savings would come from not having to widen the road. Going forward, any
government planning a capital project should ask themselves whether certain
elements are actually necessary and whether they provide any usable benefit to
customers.
