Rail projects in the US take longer and cost more than in other countries

U.S. railroad projects take longer and are more expensive than similar projects being built in other countries, according to a new report.

American railroad projects with minimal tunneling take about six months longer than similar non-US projects, while construction completely underground can take almost a year and a half longer than overseas, according to an analysis by the Eno Center for Transportation.

In addition, domestic rail projects cost an average of about 50% more per mile than Europe and Canada, a figure that increases to about 250% when you factor in the disproportionately expensive New York City projects.

Tunnel projects are not only cheaper abroad, but also more common, the report says. Just under 12% of US rail projects were built primarily underground, compared to 37% of non-US projects.

Many international projects that are built underground have costs similar to those that are on an equal footing in the United States of America. For example, a 9.3-mile metro line in Toulouse, France, was built completely underground and cost about $ 176 million per mile, while the Houston Metro’s 3.2-mile Green Line is completely at ground level and is $ 223 million cost per mile.

Even international projects are often more complex than comparable routes in the USA, despite the lower construction costs. These projects tend to have more stations built closer together than U.S. projects, run through crowded city centers, and share street space with cars and other vehicles, the report said. US railroad projects are typically conducted along “paths of least resistance,” such as freight rail or highway corridors, rather than in dense areas where transit would make most sense for passengers, according to the report.

But even with these simple routes, US projects with minimal tunneling take around six months longer than similar non-US projects.

Average construction cost per mile (USD)
Percent tunneled Non-USA US Difference (US premium)
0-20% $ 81 million $ 118 million 46%
20-80% $ 286 million $ 323M 13%
80-100% $ 346 million $ 1.2 billion ($ 511 million excluding NYC) 247% (48% excluding NYC)

SOURCE: Eno Capital Cost Database

According to the report, there are many reasons for the cost and time required. U.S. public transportation companies seldom have the structure, authority, or experience to undertake a large public transportation construction project that requires the support of local jurisdictions, the ability to purchase land if necessary, local road closures and permits utility relocation as well as rental flexibility requires talent to lead the project, the report said. The agency’s staff also need appropriate training to manage projects, construction staff and consultants, she added.

labour costs

Much of the delays and high costs are largely due to higher labor and performance costs in the United States, according to the message. A major source of increased labor costs in the US can also be traced back to the inclusion of health care and pensions in a project’s direct cost of capital, according to the report. This differs from some other countries where nationalized health and retirement plans are paid for through general taxes rather than employers, said Nicole Gelinas, a senior fellow at the Manhattan Institute, a nonprofit U.S. think tank focused on domestic and urban affairs .

“One big reason is labor costs,” said Gelinas. “A good part of the labor costs, [around] 20% to 30% are benefits – pensions and health care. “

These high labor costs are due to state and federal wage laws combined with specific labor regulations negotiated by individual unions. In other western countries like England, Spain or Denmark, health care costs are cheaper and are usually paid for by the national government or collective insurance programs, not by contractors, Gelinas said. Comparable developed countries typically have government-provided health and retirement plans, which the report says will reduce tremendous cost burdens on agencies and contractors.

Without a significant reform of U.S. health and pension policies, the problem will likely persist, Gelinas said, adding that solving this problem will require a push from federal, state and local governments. She said there is currently no political will for this type of reform on Capitol Hill.

Increased transparency of the agreements between contractors and unions could help alleviate this problem, Gelinas said. This would mean that projects receiving federal funding would unblock all contracts and terms. Currently, these are considered private agreements even though they are government funded, Gelinas said.

Other challenges

Some US projects are also subject to location restrictions. For example the Los Angeles’ underground environment presents a particular challenge and is routinely cited as a source of high costs, the report said. Many underground parts of Beverly Hills and Century City are high methane zones.

According to the report, many US projects have increased the regulatory effort. Seattle’s light rail system also serves as a useful case study as it has significant portions of the track that are elevated and tunnelled, according to the report. Public entities must be approved by the Washington State Project Review Committee, which can take several months, while change requests often add millions of dollars to a project.

Unexpected underground ground or water conditions caused $ 79 million change orders, 46% of the total, while other changes were due to technical details, either due to design or contract errors. Officials also noted that the process for handling change requests is very regulated, takes too long and involves too many people, according to the report.

“Increased investment in early underground exploration and a stronger design review process with standardized checklists could help limit a significant portion of change orders,” the report said.

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