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No clue as to Calgary LRT costs as memorandum of understanding signed and team in place

No clue as to Calgary LRT costs as memorandum of understanding signed and team in place

It’s a seller’s market when it comes to the costs of delivering LRT in Canada, That was the sobering news for Calgary council Tuesday as they received an update on the progress of one of  the new LRT lines that is coming up for tender. The Calgary LRT team told councillors that there are so many LRT projects underway in Canada right now that contractors are able to dictate terms—one of the key ones being the sharing of risk on cost overruns. Council was told that the days of a contractor submitting a firm price on LRT projects and being held to it are over, at least in the current climate.

A staff report says, “Competitive pressure in the marketplace in Canada may create limited capacity and interest in  (bidding on) the Phase 1 procurement. Market soundings have been undertaken to mitigate this risk.”

The report says the project is also running into resistance on property acquisition. “Current economic and real estate market pressures are influencing negotiations for station integration. Discussions with property owners and investigation of alternate plans are ongoing to address this risk.”

Don Fairbairn Chair, Green Line Board told the councillors that he has a low level of confidence that the project will come in at the original cost.

Darshpreet Bhatti, Green Line, CEO explained how the competitive market has changed, putting contractors in the driver’s seat and creating a situation where municipalities who are building LRT’s almost have to compete with each other for bidders. He mentioned the Ontario LRT’s including Hamilton’s are part of that competitive climate.

Chairman Fairbairn tried to reassure councillors that the project was well in hand, but admitted they have no real handle on costs, even though they have already signed a memorandum of understanding with the province and he also indicated that depending on cost factors everything was still up in the air, including the possibility that it might be necessary to scale back the project.

As Hamilton Council considers the next steps in its pursuit of LRT some of the Calgary risks and challenges appear to have equal application here. The full report and video of the Calgary LRT update are here.

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