Photo Courtesy of Metropolitan Transit Authority
While projects face the perils of optimistic initial cost estimates, they can be "sold" to the public with honesty and outreach, says MTACC chief.
Photo Courtesy of Metropolitan Transit Authority

Megaprojects blow through initial budget estimates on a regular basis, contends Michael Horodniceanu, president of the New York Metropolitan Transportation Authority Capital Construction Co., . That certainly has been the case with MTACC's East Side Access (ESA) rail project: Its cost estimate began at $4.3 billion in 2006; now, in 2014, the cost is pegged at $10.8 billion. The original 2019 completion date has been extended to 2023.

But how are these original budget and schedule estimates calculated in the first place?

"When our leaders make decisions, they ask engineers, 'Can this be done for $3 billion and in six years?' " Horodniceanu says, using a hypothetical example in which the engineer must say yes. "We are always having to be aggressively optimistic, not realistic. Having said that, it's not so bad if you understand the potential risks and issues. You have to under- promise and over-deliver—but only after you get the project started."

Robert Brustlin, CEO of VHB Inc., agrees that optimistic estimates are used to get a project started. "Now, you're in a situation where agencies are asked to do the impossible: have a fixed price despite unknown conditions, regulations, etc. In this era, how do we manage this so that the public is willing to invest?"

Part of the answer is helping people to understand the realities of building in cities, says Skanska USA President and CEO Richard Cavallaro. "When you build in an urban environment, you're assailed with so many temporary costs," he says. "It's a matter of people understanding that those are the realities. As an industry, we need to do a better job of keeping the public informed about what's going on and why."

Doing that may be why MTACC's projects— comprising the $4.5-billion first phase of the Second Avenue Subway, the $2.1-billion No. 7 subway-line extension and the recently opened $1.4-billion Fulton Center, among others—have not been blasted nearly as much as they might have by the city's feisty tabloids.

The Second Avenue Subway (SAS)—so far, on time and on budget—is much more of a target for negative publicity than the East Side Access, which is underground and affects the Sunnyside Yards industrial site, rather than residential neighborhoods. "ESA is a stealth project," says Horodniceanu. "SAS is a better example of the need to 'sell' a project."

At the beginning of the job, a member of the local business association advised Horodniceanu to "be the point person for the project," Horodniceanu recalls. That job entailed personally walking into stores and trying to engage the proprietors, holding quarterly workshops and roundtable discussions between the public and the project team, doing regular site tours for both residents and the media, and even opening up a communications center with lectures, exhibits and interactive video about the project.

Speaking of the Boston project, William Goodrich, an MTACC executive and veteran of the Big Dig, notes, "We did community meetings, but we didn't do workshops or public tours." Media tours of the SAS have resulted in fairer reporting, he says, adding, "When we brief the board on progress, the press there has already seen it. Before they write something, they check with Mike. There's no BS and no assumptions."

Horodniceanu, who has criticized his own and the project team's handling of an excavation blast that shattered windows in 2012, adds, "If you tell the truth, you only have to do it once. They cannot kill you twice."