15 ideas to reduce transit costs and build more
The Transit Abundance Playbook, from the Institute for Progress
The Institute for Progress is a pro-growth US think-tank. Last week they released a Transit Abundance Playbook, a set of 15 ideas in the form of short essays, written by people like Alon Levy and Brian Potter.
Of course the challenges faced by major projects in Metro Vancouver, like the Broadway Subway and the future UBC subway, aren’t going to be exactly the same as those faced by US projects. But as a layperson, it’s still fascinating to read about some of the key factors determining the success or failure of a major transit project.
Eric Goldwyn - Reform federal grants to include early, small, milestone-based grants to reduce project risks.
Steph Pollack - Cut procedural requirements, fund early right-of-way spending, require accelerated state and local permitting, and loosen procurement rules.
Rohan Aras and Alex Armlovich - Cap federal cost-sharing and encourage joint procurement to reduce bus overcustomization.
Brian Potter - Cut redundant subway cross-passages to bring our fire safety standards in line with Europe’s.
Anthony Potts - Allow and encourage agencies to do procurement based on the best value, not just the lowest cost.
Alon Levy - Require itemized bidding in procurement to increase transparency and reduce mid-stream change orders.
Anonymous - Adopt Italy’s “Conference of Services” model to empower a single decision-maker to ensure permitting disputes are resolved up front.
Lizzie Speed and Bennett Capozzi - Create a repository for federal transit reports and project data, along with an AI-based system for querying it.
Jamey Tesler - Give transit projects the same delegated permitting authorities that states have over highways and roads.
Hayden Clarkin - Exempt voter-approved transit projects from costly and redundant permitting to deliver projects the voters asked for.
Aidan Mackenzie - Allow transit agencies to buy land and prepare for construction while permitting occurs.
Paul Lewis - Reduce dependence on expensive consultants by encouraging more capacity within transit agencies.
Andrew Miller - Enable transit automation by spelling out worker protections explicitly instead of requiring a veto-prone process.
Jackson Moore-Otto - Streamline access to federal loans to create an alternative funding model for transit projects.
Philip Plotch - Provide confidential ways for agencies to share lessons learned with each other.
Naturally each essay includes a summary up front.
Stop Paying More for Less Transit. Introduction by Will Poff-Webster and Arnab Datta.
Reform Funding to Encourage Early Transit Planning, by Eric Goldwyn.
Current federal grant programs for transit capital projects disincentivize good planning practices and place large financial risks on agencies. As a result, projects receive federal funding without resolving obvious constructability challenges, such as utility conflicts, and some agencies expend hundreds of millions of dollars on planning and design without ever winning a federal grant. A more iterative approach with phased payments and milestones, similar to the Federal Railroad Administration’s Corridor Identification and Development Program (Corridor ID), would enable agencies to work with federal partners to iterate on their projects and share financial risk during project development, allowing the federal government to shape projects early and ensure on-budget delivery.
Focus Capital Investment Grants on Improved Project Delivery, by Stephanie Pollack.
The largest and most expensive transit capital projects in the US often receive at least part of their funding from the Federal Transit Administration’s Capital Investment Grants (CIG) program. Although CIG provides invaluable funding and oversight, the program’s structure has become extremely rigid, interfering with a project sponsor’s ability to adopt proven methods for delivering transit capital projects on time, on budget, and at a reasonable price.
To ensure CIG selects projects that can be built and put into revenue service expeditiously and cost-effectively, substantial changes need to be made throughout the CIG process. These include: (1) de-proceduralizing requirements to streamline project delivery and promote innovation; (2) encouraging and funding early investments in right-of-way and early works projects; (3) requiring a commitment to accelerated local and state permitting timelines before a Full Funding Grant Agreement (FFGA) is signed; and (4) loosening rigid procurement approaches to ensure best value in the selection and use of delivery teams. These changes will set projects up for success well before full construction begins.
Reduce Needless Bus Customization, by Rohan Aras and Alex Armlovich.
US transit agencies pay from $500,000 to over $1 million for each transit bus they procure, while our international peers regularly pay under $400,000 for comparable vehicles. At the root of this problem is the structure of federal cost sharing. Agencies receive an uncapped 80–85% reimbursement for bus purchases, a bad incentive that has encouraged excessive customization and hindered scale economies. We propose a three-pronged solution: cap the federal cost share, address the over-customization habit directly, and jump-start scale economies for bus manufacturing.
Eliminate Redundant Subway Cross-Passages, by Brian Potter.
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. NFPA 130 requirements should be changed to align more closely with European cross-passage spacing requirements, or agencies and jurisdictions should modify these standards themselves when adopting NFPA 130 or requiring compliance.
We Should Know How Much Transit Components Cost, by Alon Levy.
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. Bidders should instead be required to itemize costs in project bids, estimating labor costs by job, material costs by commodity, and systems cost by individual manufactured product. Under the supervision of a new unit within the US Department of Transportation (USDOT), transit agencies should establish a reference point for costs by publishing the expected cost of each component used for transit projects. Publicly itemized costs will reduce conflict over change orders by pricing in each change, whether it is due to market conditions, unexpected delays resulting from geology affecting underground construction, or any other reason. This provides both transit agencies and bidders with greater certainty, reducing costs by an average of 15-20%.
Get the Best Value in Transit Procurement, by Anthony Potts.
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. Despite evidence against low-bid selection, many states and localities mandate the lowest-bid method, and even states with more flexibility still require most of a bidder’s score to be based on their initial bid amount. Common misconceptions about the low-bid method, including its supposed cost-effectiveness or ability to limit corruption, entrench its use. On the contrary, low-bid selection is linked to higher infrastructure costs, contributes to chronic cost overruns and delays, and is more vulnerable to bidder manipulation. These risks are greatest for high-complexity projects like transit construction, where technical mistakes can derail performance.
Best-value selection is an evidence-based alternative shown to result in more cost-effective projects. This method selects contractors on the basis of technical merit, experience, and lifecycle costs in addition to factors such as bid price. Federal intervention can accelerate state and local authorization and use of best-value selection by (1) conditioning major infrastructure grants on the use of best-value selection; (2) tailoring federal-grant scoring to incentivize the development of best-value expertise; (3) establishing clear guidance on appropriate cost and non-cost weights for selecting bids; and (4) charging federal agencies to develop guidance to assist implementation of best-value selection. These reforms would modernize transit procurement processes in line with low-cost models in other countries and curb waste.
Use AI to Improve Transit Planning, by Lizzie Speed and Bennett Capozzi.
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 follow the lead of other federal agencies and develop a centralized data repository of past planning reports and an AI-backed platform to let transit agency staff access project insights. These investments would cut duplicative data wrangling, build in-house transit agency expertise, enable teams to manage their own projects, and help agencies anticipate cost drivers. Growing transit agency capacity will improve returns on FTA-funded transit construction projects by allowing more iterative learning between one project and the next.
Transit Projects Need a Single Decision-Maker.
A major driver of high transit costs is the power imbalance between the transit agency building the project and the third parties that have to give their approval for the project to advance. 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. In the US, negotiations with these third parties are handled on an individual, ad hoc basis. This leads to value extraction that can verge on extortion — the transit agency must negotiate with each third party for their approval, often by acquiescing to third-party demands to cover extraneous costs or expand project scope to address a pet issue.
Cost-effective global peers offer an alternative: a state-led conference of all parties that identifies conflicts during an early and time-limited comment period, mitigates issues, and empowers the state government to adjudicate tradeoffs without prolonged litigation. This creates transparency and coordination, ensuring all third parties have input but preventing any one actor from withholding approval and extorting the project behind closed doors. The time-bound process ensures delay cannot be used as a tactic to gain leverage over a project. This fair and transparent process rebalances the power dynamic between the infrastructure delivery agency and the affected third parties, addressing project impacts while removing opportunities for delay and extortion.
Let Agencies Do Their Own Environmental Review, by Jamey Tesler.
The comprehensive environmental review process required by the National Environmental Policy Act (NEPA) is a common pain point for transit agencies, contributing to project delays and cost escalations. Categorical Exclusions (CEs), which streamline environmental review for categories of activities based on demonstrated evidence that the type of project will not “significantly affect the quality of the human environment,” can reduce infrastructure project costs, shorten permitting timelines, minimize uncertainty, and help projects avoid litigation risk.
However, CEs are implemented inconsistently across transportation modes and federal agencies. The Federal Transit Administration (FTA) requires transit project proponents to submit burdensome documentation to obtain pre-approval for a CE. By contrast, the Federal Highway Administration (FHWA) has streamlined the CE process through the use of programmatic agreements (PAs) that delegate the authority to self-certify CEs to state departments of transportation (DOTs). 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 PAs with transit agencies.
Fast-Track Democratically Approved Transit Projects, by Hayden Clarkin.
When voters approve transit projects by ballot initiative, their vote is meant to be decisive: the public has decided a new transit project is worth building. But procedural requirements such as environmental review can add years of delay and massive additional costs after transit has been approved by voters.
Laws like the National Environmental Policy Act (NEPA) and its state-level equivalents were designed to protect the environment by mandating procedures that make potential environmental consequences known before the government acts. But procedural requirements are not always the best tool for that job. Democratically approved transit projects already fulfill NEPA’s core goals — environmental protection, public involvement, and agency evaluation — without the need for reviews that add risk and cost. Because ballot measures engage the public in considering trade-offs, and delaying pollution-reducing transit infrastructure is itself an environmental harm, further procedure is redundant. Congress should exempt democratically approved transit projects from NEPA, or limit NEPA alternatives analysis when voters have chosen a transit route. Doing so would accelerate transit project delivery so both citizens and the environment — can benefit from these projects in years rather than decades.
Let Transit Agencies Buy Land, by Aidan Mackenzie.
Under current federal regulations, transit agencies cannot buy land, prepare construction sites, move utility lines, enter into the engineering process, or conduct any other preliminary construction activities for transit projects until the Federal Transit Administration (FTA) completes a full review under the National Environmental Policy Act (NEPA). 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. This prohibition on “early works” also distorts transit planning by preventing early technical development and incentivizing planners to choose suboptimal project routes to avoid land acquisition and minimize utility relocation.
There are two ways to cut this red tape: either Congress should update the statute to allow early works before or during NEPA review, or FTA should take administrative action and update its NEPA regulations to allow the same.
Close America’s Transit Automation Gap, by Andrew Miller. In Metro Vancouver, we’ve had fully automated SkyTrain since 1986.
Section 13(c) of the Federal Transit Act conditions federal funding on a certification of labor protection from the Department of Labor. Originally enacted in 1964 to protect workers during the transition from private to public ownership of mass transit, the provision now blocks the modernization of transit operations: no legacy US heavy-rail system has automated its operations to permit trains to run without onboard crew. In contrast, countries like France and Canada, each with robust labor protections, automate without conflict.
Transit automation can drastically reduce operating costs and improve service, but the open-ended 13(c) certification process provides labor with an effective veto on such changes. Congress should reform this process and unlock automation by enumerating worker protections in statute, shifting the framework from preserving staffing models to protecting individual workers.
Put Transit Staff in Charge of Their Own Projects, by Paul Lewis. Sam Holland’s recent Better Columbia article suggests that TransLink continues to have the in-house capacity to build major projects.
Excessive use of consultants to manage large capital projects is a significant cost driver in transit project delivery. Over the past 40 years, public agencies have outsourced a large share of their core work to consultants. Design, engineering, project management, and oversight functions that were once handled in-house at transit agencies are now farmed out to private companies. These consultants don’t just assist with designing tunnels or engineering. Increasingly, they manage the entire project: scheduling, budgeting, risk analysis, and even day-to-day decision-making. The result is a system in which public agencies pay significant markups for private expertise while losing the capacity to oversee projects themselves. Costs grow, timelines expand, and every project becomes more dependent on consultants than the last.
Loans Can Stabilize Transit Funding, by Jackson Moore-Otto.
Most federal support for US transit and rail capital projects comes in the form of discretionary grants, which warp incentives and drive up project costs. By contrast, predictable multi-year funding is the norm in peer countries, and its reliability 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, streamline their application processes, and expand underwriting capacity. These improvements would create a stable and predictable source of support for transit project sponsors at minimal cost to the federal government. By initially targeting rail electrification and other underbuilt, positive-return investments, programmatic loan finance will help build institutional capacity that can sustain a pipeline for future projects.
Share the Truth about Transit Project Failures, by Philip Plotch.
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. This piece proposes a three-part solution: (1) the Federal Transit Administration (FTA) should create a confidential repository where anonymized lessons from agencies and contractors are collected and analyzed; (2) FTA regional offices should reinvigorate their work convening in-person exchanges so transit agency peers can candidly share their challenges; and (3) FTA should add peer review to its oversight program, turning the current compliance process into two-way learning that spreads best practices across the industry.
More
Gary Winslett, Veto Points Facilitate Hostage Taking.
When the LA Metro wanted to extend the D Line in 2024, they asked the City of Beverly Hills to allow them to do this construction at night from Thanksgiving to New Years; no local businesses objected to this. The city however refused to give the Metro the necessary work permits for them to be able to do that until they agreed to also build a police kiosk for the city. This was policy extortion, plain and simple, and it added millions to the Metro expansion’s costs both through delays and through forcing additional unnecessary spending on the kiosk.
The details change from one example to the next, but this is a recurring problem in American transit policy. We create too many veto points and then someone decides to use that veto point to effectively extort some sort of policy ransom that narrowly benefits them but makes building that transit slower and more costly than it needs to be.
The Institute for Progress never uses the word ‘hostage’ in their transit policy playbook, but there are SO MANY hostage situations in their playbook that I felt like I was watching The Negotiator while I was reading it.
At almost every stage of a transit project, someone has informal leverage to extract value by threatening delay, and they use it (!), and we have no mechanism for resolving that threat quickly and on a firm deadline.
Andrew Miller, The Wrong Kind of Careful.
I want to say what the Playbook is too polite to make plain, and name the root of the problem. What is holding back American transit? The Introduction states that “there is no single cause”. On the contrary, I think that there is, and that we can see that cause at work behind almost every individual contribution. Knowing the enemy is vital to fixing the problems holding back American transit: not only its construction, but its operation too.
That enemy’s name is defensive proceduralism.
The key word here is defensive. Let’s define proceduralism as the tendency to establish rules in advance for how to scope, design, and deliver a project, and for what kind of input the project will accept, from whom, and how. This is a good thing, allowing everyone involved to know the game being played and how to play it. Italy’s experience demonstrates the value of proceduralism. The country enjoys very low per-mile transit construction costs today because, to combat corruption, it relies heavily on open procedure: published price lists, an anti-corruption authority, bids scored on merit, and internal state capacity such that civil servants are able to run a project themselves. These measures aim to prevent corrupt practices, and have the helpful downstream effect of keeping costs low.
So Italy has proceduralism. What is the USA’s problem, then? Not the presence of rules, but their aim. In Italy, the rules aim to deliver projects on time and on budget. In the USA, the rules aim to stave off lawsuits or blame. That is the American disease, and once you look for it, you will find it behind nearly every contribution in the collection.