Transit Projects

15 Ways to Cut US Transit Costs (And One Problem Nobody Wants to Talk About)

The Institute for Progress, a US think tank, has compiled a playbook to tackle the very high costs the country faces in building transit.

Key Takeaways

• Reform funding to encourage early transit planning.
  • Current federal grant programs for transit capital projects disincentivize good planning practices and place large financial risks on agencies.
• Focus capital investment grants on improved project delivery.
  • The Federal Capital Investment Grants (CIG) program has become extremely rigid, interfering with a project sponsor’s ability to adopt proven methods for delivering projects on time, on budget, and at a reasonable price.
• Reduce needless bus customization.
  • Agencies receive an uncapped 80–85% reimbursement for bus purchases, a bad incentive that has encouraged excessive customization and hindered scale economies.
• Eliminate redundant subway cross-passages.
  • US subway construction follows the NFPA 130 fire safety standard, which mandates cross-passages — side tunnels that connect adjacent train tunnels — every 800 feet. This spacing is significantly closer together than European cross-passage spacing requirements, adding to construction costs without measurably improving safety.
• We should know how much transit components cost.
  • Contracts for large, complex infrastructure projects such as urban rail lines are often lump-sum, obscuring the true cost of work and enabling cost inflation as the project inevitably evolves.
• Get the best value in transit procurement.
  • State and local procurement rules govern how federally funded transit contracts are awarded, and they overwhelmingly favor selection of the lowest-priced rather than the best-value bidder.
• Use AI to improve transit planning.
  • Empowering agency staff and moving more planning functions in-house is a demonstrated strategy for reducing transit project costs. The Federal Transit Administration (FTA) should develop a centralized data repository of past planning reports and an AI-backed platform to let transit agency staff access project insights.
• Transit projects need a single decision maker.
  • New transit construction must navigate potential vetoes from other government agencies that need to issue permits, utilities that need to agree to move or reconfigure their infrastructure, and many other affected asset owners.
• Let agencies do their own environmental review.
  • The Federal Transit Administration (FTA) requires transit project proponents to submit burdensome documentation to obtain pre-approval for a Categorical Exclusion (CE). To improve transit project outcomes and mitigate a major cause of cost overruns and project delays, Congress should authorize the Federal Transit Administration (FTA) to enter into programmatic agreements (PAs) with transit agencies.
• Fast-track democratically approved transit projects.
  • Congress should exempt democratically approved transit projects from the National Environmental Policy Act (NEPA), or limit NEPA alternatives analysis when voters have chosen a transit route.
• Let transit agencies buy land.
  • Barring transit agencies from acquiring land and preparing for construction until after NEPA review — which averages 5.7 years for transit projects — raises the price of land and adds years to project timelines.
• Close America's transit automation gap.
  • Section 13(c) of the Federal Transit Act conditions federal funding on a certification of labor protection from the Department of Labor. The provision blocks the modernization of transit operations.
• Put transit staff in charge of their own projects.
  • Excessive use of consultants to manage large capital projects is a significant cost driver in transit project delivery.
• Loans can stabilize transit funding.
  • Predictable multi-year funding is the norm in peer countries, and has enabled them to build in-house expertise and deliver projects at speeds and costs unmatched in the United States. To achieve more of these benefits in the US, Congress should enhance existing loan programs.
• Share the truth about transit project failures.
  • Transit agencies do not adequately document the lessons they learn from managing large projects because of perceived reputational, funding, and legal risks. Without this knowledge sharing, agencies repeat costly mistakes, leading to delays, cost overruns, and public distrust.

Comment

These are all good recommendations and should help improve transit in the US.

However, the countries leading in efficient transit construction often have a single agency that builds a pipeline of the same type of transit projects, continuously learning and building capability from one project to the next, driving down costs.

The fragmented system in the United States means that no one agency will have a continuous pipeline of similar projects to build this kind of capability, keeping costs high.

What Next?

Are there lessons that you can learn from these recommendations? Do you have outdated rules that impact the costs of building transit?

Infrastructure Costs

Gold-Plating, Lawyers, and Lost Expertise: Britain's Infrastructure Problem

This week has turned out to be infrastructure cost week. Whilst the previous newsletter article was all about the costs of building transit in the US, this week a UK think tank also published a paper looking at how the country can reduce the costs of building its infrastructure.

Key Takeaways

• On average, the UK pays 65% more per unit of infrastructure than comparable countries. This translates into around £8.3 billion a year wasted.
• Britain's approach to infrastructure procurement has hollowed out the engineering expertise that lower-cost countries retain within the state.
• When projects finish, teams disband, and institutional knowledge is lost. Each new project effectively starts from scratch, rebuilding expertise at cost.
• The feast-and-famine pattern of British infrastructure investment compounds this: Crossrail was the first major rail tunnelling project since the Jubilee Line extension in 1999, which was itself the first since 1979.
• Compared to peer nations, Britain's planning and regulatory system is more complex, more time-consuming, and more expensive to navigate.
• Consultation requirements, often backed by the threat of judicial review, add further cost and uncertainty. The result is sustained legal and consultancy expenditure, and projects that take years longer to approve than equivalent schemes elsewhere in Europe.
• A focus on process and risk aversion leads to gold-plating.
• Uncertainty deters investment in supply chains.
• Inflexible national rules block the use of proven construction methods that have worked well elsewhere.
• Public money gets spent on lawyers and consultants, as well as complex, often unique design specifications to meet bespoke requirements, rather than on actual infrastructure.
• Britain is also far more centralised, with far weaker fiscal devolution, than most comparable countries, which directly undermines cities' and regions' ability to build infrastructure on their own initiative.
• In comparable countries, places that gain from infrastructure raise the revenue to pay for it, but in Britain, the system leaves a range of bodies to impose requirements on a project, without any bearing of the cost on the taxpayer or residents who miss out on infrastructure.

Comment

I would agree with everything the report highlights as problems in the UK (much of it is also true in other Anglo-Saxon countries).

However, the report does not suggest solutions to these problems. How should Britain undertake fiscal devolution, how should it change consultation, planning and environmental regulations, and how should the UK amend its procurement rules?

What Next?

Are there lessons you can learn from the mistakes that Britain is making?

Strategic Planning

Nobody's in Charge: Why New Zealand's Station Precincts Are Failing

Many countries have been developing transit-oriented developments - mixed-use precincts near high-quality transit. However, success is patchy. New Zealand is a laggard, and this report makes recommendations to put that right.

Key Takeaways

• The primary barrier to transit-oriented development in New Zealand is that no single entity has responsibility for building cities around railway stations.
• When it comes to transit-oriented development, the institutional landscape is highly fragmented, with complex, overlapping and competing mandates and misaligned fiscal incentives.
• The report makes seven recommendations, all underpinned by the overarching principle of decide and provide, or vision-led planning, in which public authorities decide what kind of cities they want.

1. Central government should designate New Zealand’s strategic public transport growth corridors in the Government Policy Statement on Land Transport (GPS). This means naming the service investment commitments for each corridor and protecting corridor land before designation announcements inflate values.
2. Establish Station Investment Zones (SIZs). These are statutory designations that would activate a default ‘yes’ for housing development and a government commitment to fund enabling infrastructure.
3. Enable unitary authorities to establish Urban Development Corporations at priority station precincts. These would be delivery entities with statutory land assembly powers, a dedicated capital base, and a clear mandate to build.
4. Enable value capture at scale. This will ensure that the land value uplift generated by public investment flows back into funding further investment.
5. Enable the cheap loan financing model available for greenfield development to be applied to brownfield as well.
6. Undertake a stocktake of Crown and council land holdings in rapid transit station catchments.
7. Capture the returns from transit-oriented development that current benefit-cost ratio calculations overlook.

Comment

I have worked on TOD policy and delivery in both the UK and Australia and would support the recommendations in this report.

However, I would add two things:

Firstly, it is important to select station investment zones, where the development economics are strong. It is no good selecting places that are politically convenient but where demand for housing is relatively low. The result is often no development.

Secondly, the design of TODs really matters. A common mistake is to design them in a way that is heavily car-centric, but just happens to be near a station. They need to be designed for very low levels of car use, with services like car sharing to support people who occasionally need a car.

What Next?

How good is your TOD policy?

Quick Adventures in Transport Wonderland

Here is what else I came across this week:

• ​Slow buses: Big cities should take note of TfL’s answer to London bus speeds - A blog post from the Centre for Cities think tank summarising what London is doing to increase bus speeds.
• ​A Taste of M&Ms: Reflecting on the Monitor and Manage Approach to Vision-Led Transport Planning - A LinkedIn article discussing the use of Monitor and Manage, a framework that combines continuous data collection, performance monitoring, and flexible interventions for vision-led planning.
• ​Demand-agnostic assessment of on-demand pooled transit services - Research proposing a method to assess the potential of pooled on-demand transit feeder services in urban areas.