There is more to do after Govs. Phil Murphy of New Jersey and Kathy Hochul of New York signed a Memorandum of Understanding for funding the local share of the $33 billion Gateway Project. This is before the Federal Transit Administration will enter into negotiations with the project sponsor to approve a $14 billion Capital Investment Grant Full Funding Grant Agreement for the first phase of work.
FTA might contribute up to 50%, or $7 billion. This would pay for two new tunnels across the Hudson River to Penn Station plus rehabilitation of the two existing tunnels damaged by 2012 Superstorm Sandy. Who will oversee engineering, contractors and procurement? Will it be the Gateway Development Corporation, NJ Transit, Amtrak or the Port Authority?
Are Govs. Murphy and Hochul, or GDC, Amtrak and NJ Transit prepared to pay for the unanticipated inevitable cost overruns? There is also contract change orders due to unforeseen site conditions and last-minute scope changes. How much money is budgeted under project contingency to pay for these costs?
Under any FTA FFGA, the recipient of funding is legally responsible for all cost overruns as the federal share is capped.
Have they updated the project budget to account for this years 8% inflation rate? What about ongoing supply chain issues, rising material costs and labor shortages, especially in special trades such as tunnel boring needed for this project. Has this been incorporated into the latest proposed budget and schedule?
Amtrak, Port Authority, NJ Transit and Gateway Development Corp. must make public the details which justify both the $14 and $33 billion budgets. Without this information, riders, taxpayers, transportation advocates and elected officials will remain skeptical.
Was Gateway Tunnel ridership modeling dealing with promised significant increases over coming decades re-evaluated in 2022?
In 2015, the estimated cost for the full scope Gateway grew by $3.9 billion to $23.9 billion, In 2017, the new cost estimate grew another $5.2 billion to $29.1 billion. The estimated cost today is now $33.4 billion. Will this cost continue to grow over time by billions more? Will Gateway be completed by 2040 rather than the promised 2033 date?
The FTA, prior to any approved FFGA, will ask its own Project Management Oversight engineering consulting firm to conduct an independent project risk assessment for budget, construction feasibility, schedule and technical capacity of the project. This report would make for very interesting reading if ever made public. It might reveal that either the no frills $14 billion or the full build $33 billion Gateway Tunnel project has potential risks to become the New York version of the infamous Boston “Big Dig.”
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Don’t be surprised if FTA doesn’t come to agreement with the project sponsors and offers a formal Full Funding Grant Agreement until 2023 or 2024. This FFGA if approved, would be the largest in FTA history.
It ain’t over until the fat lady sings.
Larry Penner
Retired
Former Director
Federal Transit Administration
NY Region
Office of Operations and Program Management
Larry Penner — transportation advocate, historian and writer who previously worked for the Federal Transit Administration Region 2 New York Office.
