Even if you don't live in New York City, a recent New York Times report delving into why the city's subway construction costs are extraordinarily high is fascinating.
For example, Local 147, the union responsible for digging the tunnels under the city for New York's Metropolitan Transit Authority (MTA), has an agreement with the city to pay its members $111 per hour in salary and benefits. On Sundays, workers are paid $222. Weekend overtime is contracted to pay over $400 per hour.
The report, The Most Expensive Mile of Subway Track on Earth, says New York's regional transit network has the highest construction costs in the world - each new mile of subway track costs $3.5 billion. In other cities, a mile of subway track comes in at less than $500 million.
What drives New York's sky-high costs? If your first answer is the unions, you are only partly right. According to the Times' report, vendors add between 15 and 25 percent to their bill as an “M.T.A. Factor” because of how hard it can be to work within the bureaucracy of the transit authority. Then they add 10 percent as a contingency for possible changes. And then they add another 10-12 percent on top of all that for profit and overhead.
Lack of competition is also a problem for the M.T.A. A Times analysis of roughly 150 contracts worth more than $10 million that the authority has signed in the past five years found the average project received just 3.5 bids. Other cities routinely get an average of eight bids on a project.
And what would NYC construction be without political connections, consultants, and overstaffing.
“Is it rigged? Yes,” said Charles G. Moerdler, who has served on the M.T.A. board since 2010.
Follow the money in the NYT report. It's a great read.