The plan was expensive.  The railroad needed to invest in electrifying its rails, and carve deep into Manhattan's bedrock (workers would ultimately excavate 2.8 million cubic yards of earth and rock).   The solution to the projected $80 million project budget (roughly $2 billion in today?s terms) came from Wilgus as well.  Without steam engines, there was no longer a need for an open rail yard.  Wilgus proposed that the area from 45th to 49th Streets be paved over and that real estate developers be allowed to erect buildings over the concealed tracks.  In exchange for this privilege, developers would pay a premium to the New York Central Railroad for "air rights."  Construction in the years immediately after the completion of Grand Central Terminal would include apartment buildings like the Marguery, the Park Lane, and the Montana, and hotels including the Barclay, the Chatham, the Ambassador, the Roosevelt, and finally the Waldorf-Astoria, completed in 1931.   (For many years, hydraulic tanks in the basement of Grand Central Terminal supplied power to these buildings.)

In 1903, a select group of architects were invited to submit designs for the new Grand Central Terminal in a competition.  Among them were McKim, Mead and White -- architects of New York's Pennsylvania Station (1910) and the adjacent General Post Office (1914) -- and D.H. Burnham and Company -- chief planners of the 1893 Columbian Exposition in Chicago and architects of Washington D.C.'s Union Station (1907).  The winning submission, however, was from the St. Paul firm of Reed and Stem.  Reed and Stem had done other work for the New York Central, and Reed's sister was married to William Wilgus, who by that time was the New York Central's Vice President in charge of  construction.

In spite of these connections, Reed and Stem could not have been ready for the end run that was about to occur.  Subsequent to the competition, New York architects Warren and Wetmore presented the selection committee with their own proposal for the terminal.  Warren -- a cousin of New York Central Chairman William Vanderbilt -- succeeded in his "appeal."  In February 1904, Warren and Wetmore and Reed and Stem entered an agreement to act as The Associated Architects of Grand Central Terminal.  The next six years would be spent reconciling, amending, and revising the plans for the new Grand Central.

Construction would last ten years.  Excavation was an enormous undertaking as the grade of the rail yard was lowered to an average depth of 30 feet below street level.  Yet, in spite of the upheaval, rail service continued uninterrupted.  Initially, trains continued to use the old Grand Central, which was eventually razed in 1910.  A temporary station in the Grand Central Palace at Lexington Avenue and 43rd Street was used until 1912.