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Impacts of Deferred Investment on Capital and Operating Budgets

Project Overview

The research team worked with staff across all MTA operating agencies to analyze the impacts of deferring or canceling six projects in MTA’s propose 2005-09 core capital program. The objective was to come up with a clear methodology and means for communicating the fiscal prudence of these projects to policymakers and the public.

  • The projects we examined included:
  • LIRR Railcar Lifecycle Maintenance Investments
  • Jamaica Bus Depot Replacement
  • Cross Bay Bridge Deck Rehabilitation
  • Verrazano Bridge Deck Replacement
  • MNR Commuter Rail Power Distribution
  • LIRR Commuter Rail Concrete Tie Installation

The research team broke down the net budgetary impact of deferring these projects into five components, to the extent that supporting data was available:

  • A “reliability tax” – Routine and emergency repairs become increasingly frequent as capital reinvestment is deferred (e.g. bridge deck rehabilitation).
  • An “efficiency tax” – Work is needlessly complicated or resources wasted by obsolete facilities, equipment, and spatial constraints (e.g. bus and rail car maintenance facilities and substation replacement).
  • A “redundancy tax” – Extra requirements for reserve capacity (larger fleet spare ratios, additional crews) are needed to keep the system operating at a given performance level (e.g. rail car lifecycle maintenance).
  • A “capital tax” – The degree of disrepair accelerates over time, or repeated capital investments that otherwise might be avoided remain necessary (e.g. bridge deck rehabilitation and concrete tie replacement).
  • Cost escalation – Inflationary pressures that increase the cost of a project over time, even if there is no change in its scope.

Project Details

Project Dates: 
April 1, 2004 to December 31, 2004
Principal Investigators: 
Dr. Robert E. Paaswell
Dr. Todd M. Goldman
Dr. Jonathan R. Peters
Institution: 
City University of New York
Sponsor(s): 
Metropolitan Transportation Authority (MTA)
Publications: 
Final Report
Impacts of Deferred Investment on Capital and Operating Budgets(ExecutiveSummary)
Impacts of Deferred Investment on Capital and Operating Budgets(DiscussionDocument)
Project Status: 
Complete
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