Now Reading
Spiraling construction costs, contractor pushback threaten LRT projects

Spiraling construction costs, contractor pushback threaten LRT projects

Jaws dropped at Burlington City Council last week when it was learned that Instead of $15 Million, Burlington’s share of a Metrolinx-commissioned grade separation project at Burloak and the CNR could skyrocket to more than $44 Million—a near tripling of the original estimate. The overall cost of the project had ballooned to $177 million from an original estimate of $60 million. The news of the cost overrun prompted Oakville Mayor Rob Burton to tweet “I said to @Metrolinx  “Your track record in Oakville is unbroken. You’ve never delivered anything you’ve promised on time or on budget.”

Metrolinx is also building the Eglinton Crosstown LRT in Toronto and internal documents obtained by the Toronto Star suggest that project could run $330 million over budget.

Recently the team building a new LRT line in Calgary told that city’s councillors that it’s a seller’s market when it comes to the costs of delivering LRT in Canada. They admitted they had a “low level of confidence” the project would come in on budget. 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.

The staff report went on to say that some of the key consortia who typically bid on LRT projects will not even bid on projects if there is any uncertainty about who will shoulder the burden of cost overruns.

One of these LRT consortia, RTG, is a partnership of ACS Infrastructure, EllisDon and SNC-Lavalin. They are being sued by the city of Ottawa over that city’s problem-plagued LRT and Ottawa has already held back $55 Million in payments to the contractor group as part of a 30-year maintenance agreement.

All of this uncertainty prompted the Bay Observer to ask the Premier’s office, Infrastructure Ontario, the Ministry of Transportation and Metrolinx what is their level of confidence that Hamilton’s LRT will come in within its budget of $3.4 billion. Only Metrolinx responded, addressing both the Burloak cost overrun as well as the Hamilton situation: In the last several years, the world and the labour market have changed. Since the beginning of COVID the price of bridge building materials such as concrete and steel have increased significantly. The cost of fuel is also on the rise – and the competition in the labour market has resulted in a significant increase to project risks and costs of this grade separation. Metrolinx closely monitors trends related to increased costs and actively looks for innovative ways to deliver projects on-time and on-budget. At this time, our focus is on advancing our market strategy and the procurement of the Hamilton LRT, so we can begin construction on this critically important project as soon as possible.

The memorandum of understanding on the Hamilton LRT makes the province responsible for any costs above the budget.

View Comments (0)

Leave a Reply

Your email address will not be published.

© 2022 The Bay Observer. All Rights Reserved.

Scroll To Top