Concerns around rising costs are escalating for project officials behind Calgary’s Green Line LRT, but exact numbers won’t be determined for another few months.
According to a quarterly report presented to city councillors Tuesday, higher-than-anticipated estimates from subcontractors have elevated concern from “amber” to “red” in the project’s risk status.
“The budget for this project was pre-COVID, and the market is very different,” Green Line CEO Darshpreet Bhatti told reporters. “We’re not the only project that is facing these challenges, they’re on every mega-project, even small projects are facing it.”
Bhatti said there are several options under consideration to mitigate escalating costs, including a review of the project’s contracting strategy and revising the scope of the project.
However, how much the project could be over-budget is not yet publicly known because design work is complete on just 30 per cent of the project.
Bhatti said costs will become clearer when project design reaches 60 per cent, which is expected this summer.
“The more they can say is set from a design perspective, the more they can confirm with their sub-suppliers and subcontractors how they plan to deliver that piece of scope,” Bhatti said. “You make one thing more defined, everything else becomes much more detailed and firmer.”
However, if the costs remain high by the time project officials return to city council with a more detailed design, it may require a request for more funding.
Bhatti said the project team has already found $400 million in savings through preliminary engineering work; including $70 million by using different materials for overpasses along the line.
“Our job is to make sure that before we come with any recommendation, that we genuinely can show to our partners that we have explored everything and that this isn’t just an ask because the market has changed,” he said.
The project’s budget is $5.5 billion to build the first phase of the Green Line, which is 18 kilometres from Shepard in the city’s southeast to a tunnel under the downtown core to Eau Claire.
David Cooper, a principal at Leading Mobility Consulting, said he doesn’t believe there’s an appetite to make any major changes to the project’s scope.
“The project, at the end of the day, is Eau Claire down to Shepard. I don’t think there’s a lot of interest for many to question that,” Cooper told Global News. “What could be looked at are changes in scope of how you build the project and specific components.”
Calgary mayor Jyoti Gondek said she feels it’s “incredibly important” to deliver a Green Line with a scope that is “kept as close to what we agreed to as possible.”
“If there is an additional ask that’s needed, this is something we’re obviously going to discuss with provincial and federal partners as well,” Gondek said. “These projects are very big, and there are sometimes tweaks that need to be done.”
Some councillors, like Ward 1 Coun. Sonya Sharp, expressed a desire for more transparency around what potential impacts could be on Calgarians.
“You need to make sure you’re articulating what your next move is when it comes to the Green Line and how there’s still a return on investment for Calgarians on a project of this magnitude,” Sharp said. “We’d need to see some more numbers, we need to be able to communicate that to Calgarians on the risk analysis and what this project will look like.”
However, given more than $1.2 billion has been spent on the project so far, Sharp said she wouldn’t agree with pulling out of the project due to a significantly detrimental effect on the city’s reputation.
According to officials, several aspects of the project already underway are coming in on time and on budget, including utility relocation underneath several streets in the downtown core, a diversion track for Canadian Pacific rail traffic at 78 Avenue S.E., as well as completion of the demolition of the former Lilydale chicken processing plant in Ramsay.
“Once you build the heart of the system, which we’re doing right now, then we can actually build upon that with a lot more cost certainty,” Cooper said. “It’s also going to be less costly to build those extensions. We’re doing the hard part first, as you should.”