Owner of the Year

MTA Rolls Out Massive Construction Program

by Tom Stabile

A great way for an owner to get noticed is to build projects that many people talk about, some people complain over, and nearly everyone doubts can be done.

Photo Credit: Michael Falco

The New York state agency set the stage for a big stretch of new construction with its $21.2 billion 2005-09 capital program, which continues the “state of good repair” maintenance and upgrade initiative that is rehabilitating subway and rail stations, modernizing systems, and upgrading the agency’s overall capacity to handle a record flow of passengers and motorists.

But it is also adding some of the biggest infrastructure jobs the construction industry has seen in years. With the anticipated start of work on the $3.8 billion first leg of the Second Avenue Subway in Manhattan [see projects feature] the bill would seem full. Work is also continuing, however, on major elements of the $6.3 billion East Side Access plan to bring Long Island commuter trains to Grand Central Terminal and is poised to start on the $2 billion extension of the No. 7 subway line from Times Square to the Far West Side.

The work is spread throughout MTA’s Capital Construction Co., which oversees large-scale projects, New York City Transit’s subway and bus divisions, the Metro-North and Long Island Rail Road commuter rail units, and MTA Bridges and Tunnels, though most of the big jobs involve the city’s subway system.

The capital construction unit oversees the biggest jobs, such as Second Avenue, East Side Access, and the 7, but even its plate has more, such as the $880 million Fulton Street Transit Center and the $450 million effort to reconstruct and reconfigure the South Ferry Subway station, both in Lower Manhattan.

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“The MTA has done a good job defining the mission on these big projects and focusing their resources,” he says.

Even longtime skeptics of MTA capital efforts say the agency is hitting its stride.

“It definitely has been a good year for the MTA and the riding public,” says John Liu, a New York City Council member who chairs its transportation committee and closely monitors the MTA. “For the first time in decades, we’re seeing movement toward capacity expansions.”

Long in Planning, All at the Station 

The MTA has prepared for this push for decades, says Bill Wheeler, director of special project development and planning.

“We issued a 20-year needs document in the early 1980s that began to lay out the needs for all of these projects,” he says. “Then we began to articulate the arguments. It wasn’t enough to say we should finish a tunnel that we started. It took a decade of planning to get to the point where Mysore [Nagaraja] could begin defining East Side Access and Second Avenue.”

Photo Credit: Michael Falco

Wheeler says a long federal funding process also extended planning windows.

Nagaraja, who is president of the capital construction company, says the start of the repair program 24 years ago helped get the MTA into good habits and gave it lead time to prepare for the big projects that finally arrived in the last capital plan.

“The 2000-2004 program was the first time real money was put into Second Avenue and East Side Access,” he says.

Past starts and stops were frustrating to the agency and city residents, but also to contractors seeking opportunity, says Sal Mancini, president of Skanska USA Civil, based in Whitestone, N.Y.

“I worked on the Second Avenue Subway from 96th to 105th [streets], the part they abandoned in the 1970s,” he says. “They also dug a section at St. Mark’s Place in the East Village, but then they backfilled everything and closed it up.”

But Mancini says he senses change.

“Finally, we have the political climate that funds are being funneled into these massive projects, and the MTA has the ability and know-how to manage it,” he says. “Here we are 36 years later, and it’s truly happening.”

Excitement in the industry is also tinged with concern, says Christopher Ward, executive director of the General Contractors Association of New York.

“Clearly the MTA has its work cut out for it,” he says. “It’s never had this level of work out on the street and it will have to manage very carefully to keep it on track.”

Liu says such uncertainty limits him to “cautious optimism.”

“In recent years, the MTA generally has a good track record of coming in on time and on budget, with a few glaring exceptions,” he says. “On the other hand, it has never bitten off anything of this scope.”

The other concern is managing and securing project financing, Ward says.

“This is a very fragile framework that’s been built,” he says. “The congressional and state delegations have to work very hard to make sure the financial obligations are met. We can’t build half a project and run out of money on any of these.”

Agency watchdogs also cite money. The Straphangers’ Campaign sees need for a bigger pie, says Neysa Pranger, a coordinator for the rider advocacy group.

“Most of the funding is in place, but the plan is still underfunded,” she says.

Bill Henderson, executive director of the Permanent Citizens Advisory Committee to the MTA, says he is not even sure the money is in place.

“Technically, they can handle it,” he says. “Capital Construction has geared up and is in a position where they can manage the contracts and keep it moving. Finances are always the question.”     

In late January, the New York Times published an article about a memo from Lawrence Reuter, the soon-to-retire president of New York City Transit, that said the division’s construction program is $1.4 billion over budget. The memo cited construction cost increases and warned of the potential to lose “a full year or more” of the five-year capital plan. 

Delaying projects is a costly exercise, Henderson says.

“Slippage is money,” he says. “Construction costs only go one way over time.” 

 But while the MTA’s leaders would not comment directly on the current budget, they insist they have planned out the necessary steps. Peter Kalikow, chairman of the MTA until he leaves his post later this year, says the preparation is in place.

“The way we have set it up will work,” Kalikow says. “We have a full funding grant agreement [from the Federal Transit Administration] for East Side and we will be getting one for Second Avenue shortly. A piece of both of those will be in the 2010-14 capital plan. They will be so advanced, there will not be the same degree of difficulty to getting them done.”

Kalikow says the MTA is up to the task of managing the money. He says the funding crunch the agency experienced recently on Fulton Street and South Ferry Station both stem from unforeseen circumstances. At Fulton Street, the project team had to wait for the release of federal funding at a time when real estate prices were spiraling upward, causing the agency to lose valuable time and end up bidding far more than planned, or what he called a “nine-figure overrun.” And on South Ferry, he says the discovery of a 300-year-old wall during excavation led to an extensive preservation effort that required a redesign and change of schedule.

“You can’t bulldoze it,” he says. “But that’s not without cost.”

Contractors know the spigot is tight, Mancini says.

“They’re not there to solve problems with money,” he says of the agency.

Kalikow calls securing the full funding grant agreements one of the MTA’s most important achievements of the past year. He says clear demand for the services made getting federal funds easier, unlike transit systems in other cities that merely hope to attract new commuters.

“I look at ridership levels that have never been equaled before that require us to do these projects,” he says. “We’re not doing them for people who aren’t there yet.”

But questions linger nevertheless over whether the agency pays adequate attention to maintenance-related and modernization projects on its plate, which Liu says get short shrift whenever money runs out. He cites $833 million worth of such projects that were cut from early versions of the current five-year capital plan.

“I would like to see emphasis on these projects, which don’t seem to get full attention because they’re not sexy,” he says.

A report issued last month from the office of New York City Comptroller William Thompson appears to echo Liu’s point, sharply criticizing the MTA for deferring New York City Transit project needs, from “outmoded electrical equipment to faulty emergency signals to dilapidated stations.” Much of the report focuses on how the MTA distributes its capital monies, contending that it does not give the city subways a fair share compared to the suburban rail divisions.

As a result, the report contends major repair and upgrade projects are far off of their original programmed schedules. It compares the MTA’s own 1992 projections that it would achieve a “state of good repair” at 201 fan plant facilities this year to more recent estimates that it will finish them by 2028. It also criticizes the 55% progress so far on efforts to upgrade subway tunnel lighting, as well as the current 2022 completion date for that effort.

The MTA last month requested time to review Thompson’s report.

But the report also appears to dovetail with the marching orders from New York Gov. Eliot Spitzer, who took office in January and has directed the MTA to focus on the repair program, says Elliot “Lee” Sander, the new executive director of the agency. Sander replaced Katherine Lapp, who stepped aside to allow Spitzer to assign his own appointees, as Kalikow will also do in a few months.

“Our first priority is to maintain the state of good repair plan, so we’ll make sure that isn’t impacted by the financial needs of the megaprojects,” Sander says.

 Splitting up the Construction Duties 

The MTA has been preparing for years for the management task ahead, with the biggest step coming in the 2003 formation of the Capital Construction unit. While the individual transit and transportation units had overseen their own capital projects for years, Kalikow says it was clear that the megaprojects would greatly tax the smaller MTA agencies.

“It might have been fine for New York City Transit to do Second Avenue – they had the personnel and capacity to get it done,” Kalikow says. “But the largest project on the boards was East Side Access, and LIRR clearly did not have the bulked-up personnel and strategies and systems to get it done.”

Even with the new divisions, New York City Transit still manages to have a full workload, says Cosema Crawford, chief engineer of the division.

“We’re plenty busy,” she says. “I haven’t increased the staff, but I hire more or fewer consultants as needed. We also support Capital Construction with reviews of their designs, and I provide staff to them.”

The set-up works, Kalikow says.

“I think it’s been a great success,” he adds. “One of the things that everybody worried about was that a captive construction company would be a source of friction. None of that has occurred. Mysore and the railroad presidents have worked beautifully together. The proof is the kind of work they turn out there.”

Still, the MTA is taking another look at itself through the lens of a new governor in Albany, Sander says.

“We will be convening a blue ribbon panel to review very broadly our effort on the megaprojects because we feel it’s a good time with a new administration to check the tires and make sure we are following best practices to ensure quality, to ensure adequate competition, and to manage through increasing prices in construction costs and materials,” Sander says.

Consultant Community Has a Role 

Some contractors worry privately that the MTA will have trouble managing the projects and has been putting out too much work in a short timeframe.

Others  simply say the MTA is going to have to rely heavily on industry resources to make it all happen.

“We will need to work very closely on timing and project management in order to make sure that we don’t stretch the capacity,” the GCA’s Ward says. “We have to be very careful – we are nervous about it – and we must manage these jobs well.”

Nagaraja says the agency has adequate staff supported by outside consultants.

“We do rely on consultants for the expertise we don’t have,” he says. “But we constantly challenge our consultants. We don’t just accept what they bring us.”

The agency’s demands are clear, says Jeff Levy, president of RailWorks of New York.

“Contractually, it’s a tough agency,” he says. “They’re not terribly forgiving. There is tremendous burden put on the contractor. On the other hand, we know the client, and have had very successful dealings with them. Our focus is making sure we know as much as possible. Every meeting isn’t hearts and flowers, but at the end of the day you resolve the technical problems.”

Relying on the consultant community has been reassuring to the industry but also a good management strategy, Parsons Brinckerhoff’s Kelly says.

“Mysore and his team have done a good job using the industry to help them deliver the program – the contractors and the consulting engineers and the industry associations,” he says. “It’s very much ‘We’re in this together.’ He’s looking for partners to come in and help him build the project.”

The agency has also conducted extensive outreach to let the industry know about project opportunities, Kelly says.

“They’re out talking to the industry at large, telling contractors, ‘Here’s what’s coming,’ so they can be positioned to take the work,” he adds. “That dialogue has not always existed, though the sheer size and complexity of the projects is also new.”

Gary Segal, president of Five Star Electric of New York, which is handling jobs for several MTA divisions, says the agency has mapped out the jobs as much as possible.

“When you get down to reality, that preplan gets tweaked to the plan,” he says. “There are always unforeseen challenges.”

One challenge is raising the bar of creativity among contractors. Ward cites the partnership between Judlau Contracting, a New York company, and the Spanish firm Dragados that is taking on the East Side Access tunnel dig in Manhattan.

“When you move into the second phase, you’re going to see international partnerships and national partnerships showing up,” he says. “With the right partners it’s a good thing. But a simple low bid from someone outside the region who doesn’t understand the work could cause problems.”

Nagaraja says the agency is explicitly seeking best practices input.

“We’re interested in whatever designs that contractors may have built around the world that show how it can be done more effectively and economically,” he says. “We are spending a lot of time on that planning, and on risk assessment and procurement processes.”

In the end, the agency has been working toward this day for years, Levy says.

 “They’ve got the experience to handle the projects,” he says. “It will be challenging when they’re all running maybe at the end of ‘08.”

The bottom line is that if the MTA succeeds, it will have logged accomplishments of a lifetime in a very short time, says Don Phillips, principal in the New York office of Arup, a London-based civil, structural, and M-E-P design and engineering firm.