The Globe and Mail is reporting that SNC-Lavalin Group Inc. and its three partners building Toronto’s new Eglinton Crosstown light-rapid transit line have won a big case against Metrolinx that could have impacts on future transit projects.
A court has ruled that the construction consortium can ask for more time to finish the project without incurring penalties as a result of the pandemic and they can be compensated for any extra costs they’ve assumed. SNC Lavalin is part of a consortium called Crosslinx Transit Solutions that is building the Eglinton Crosstown LRT with partners Aecon Group Inc., EllisDon, and Dragados. Each company has a 25-per-cent stake.
The consortium in October sued Metrolinx and Infrastructure Ontario over escalating costs and delays on the $5.5-billion project caused by the COVID-19 crisis. Metrolinx and Infrastructure Ontario tried to play hardball refusing to declare the pandemic an emergency and trying to offload the extra costs onto the contractors as well as late penalties. The contractor group had argued that COVID restrictions had reduced the number of workers they could employ and thus resulted in delays on the project. The courts ruled that the Metrolinx approach was “neither fair nor reasonable, and “would reduce its (Metrolinx’s) ostensible concern about worker safety to nothing but window dressing.”
The consortium says the delays have cost it $134 Million. The ruling appears to pose a threat to the Design-Build-Finance model that governments have adopted in recent years to guard the public purse against cost overruns on public infrastructure projects. For its part, SNC-Lavalin says it will no longer bid on any more lump sum turnkey construction projects like the Eglinton Crosstown LRT, which make builders responsible for any cost overruns.