The objective of the study was to estimate and explore the potential for reducing the costs of new urban mass transportation systems. The significance of major components of the capital investment cost was determined for guideway systems. Specific methods of reducing the cost of the most significant components were identified and examined in detail. These methods are (1) economies of scale in construction, (2) reductions in the requirement for guideways by utilizing a dual-mode vehicle, (3) eliminating tunnels by using super-elevated guideways, (4) new tunneling, (5) joint purchase of vehicles by several systems, and (6) reductions in initial vehicle purchases by reductions in the maintenance float.Three major conclusions were reached in this paper. First, there appears to be no opportunity to dramatically reduce the cost of urban transportation. All potential reductions are on the order of 5 to 10 percent. Second, the most promising areas for reducing costs are related to implementing institutional procedures to take advantage of economies of scale and the use of existing technology. New technological developments, with the exception of tunnel excavations, do not appear to offer much potential for cost reduction. Finally, this paper concludes that the dual-mode vehicle has a significant potential for reducing costs by eliminating much of the need for costly guideway construction.