Why does US subway construction cost so much more than the rest of the world?

Gregg Easterbrook points out that constructing subways in the United States often costs much more than it does elsewhere:

A recent TMQ chronicled many cases of government-funded infrastructure projects costing way too much and taking way too long. Reader Matt Thier of San Francisco adds more: “How come it’s almost ten times less expensive to build an underground subway in Barcelona versus the United States? Barcelona: 30 miles of brand-new subway tunnels and track, 52 stations, in 10 years, for $8 billion, or $265 million per mile. New York City subway construction is costing $2.25 billion per mile. Here’s a list of major transit projects broken up by cost per kilometer. All three major U.S. projects on the list are in the top four.

“The huge price difference can’t be labor or union costs — there’s a higher unionization rate in Spain than here, and wages are in the same ballpark. Land acquisition costs are in the same ballpark — Barcelona land isn’t as expensive as NYC but is not cheap by any means. Both subways use the same equipment to dig: the massive tunnel boring machines (TBMs) are only produced by a handful of companies due to their complexity, and prices don’t vary much.

“So if labor, land, and equipment costs are roughly the same, what’s causing the U.S.-based subway to cost so much more than comparable overseas ones? This Bloomberg article notes byzantine contracting processes that hand over management authority to firms whose incentive is to maximize cost and minimize pace.”

Insane cost overruns aren’t limited to underground projects. The Purple Line trolley expected to be built a short drive from the White House is up to $153 million per mile for mostly surface construction. The projected cost has risen $80 million during 2014 though absolutely nothing has been built yet — a 3.4 percent cost overrun in a year when inflation has been 1.7 percent.

We generally need more large infrastructure projects completed more rapidly at lower cost. At the least, cutting the cost of each major project would free up more funds to spend on other needed projects.

For a quick look at the cost of a number of subway and rail projects in the US and elsewhere, see here.

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