"Not-so-Light-Rail" Editorial in Railway Age

Mr. Alfred E. Fazio, a VP at MTA Capital Construction Corporation, who has also had experience working with a company that built and operated the Hudson-Bergen Light Rail owned by New Jersey Transit, has an interesting article in the July '05 Railway Age Magazine. His main point is that Light Rail construction costs now approach $50M per mile, a price which may jeopardize future projects.

I think he has a point. Often times, Project Managers, Engineers, and Transit Owners almost act like kids whose Father has given them an unlimited allowance! Those of us on the supply side have often commented and wondered who has their fingers on the cost control knob, or for that matter, who even wants the chance? Fazio argues that if Light Rail Projects become too costly, costs will be controlled by someone selecting something besides Light Rail, maybe something like Bus Rapid Transit for example.

I do take issue with where Mr. Fazio assigns these higher costs. If I read correctly, he says that Light Rail owners, engineers, and contractors are building costly designs that are not being driven by operational performance or requirements. That point is true, but I believe that higher project costs can be found elsewhere in more significant amounts.

A premium track component, no matter what it is specifically, will cost a transit agency MORE than the exact, same, identical product will cost a Class One Railroad. Why? Suppliers have learned that agencies require more tests, more documentation, more accounting staff, and more "contingencies". Not only that, the delay between invoicing for delivered material and actual payment seems to grow longer and longer, forcing contractors and suppliers to assume a greater cost of capital! Contractors and suppliers have to become bankers! I maintain that these added costs significantly outweigh the cost of any overdesigned or premium project components.

Where these extra costs come from is important, but regardless, there should be an alarm bell that goes off in many heads as a result of Mr. Fazio's article. He is right. Sooner or later Dad is going to cut that hefty allowance, or worse, give it to someone else. Light Rail is too good of a product to allow that to happen.