Calgary councillors question Green Line project officials over cost concerns

Calgary’s Green Line LRT project is “on track” as inflationary pressures continue to create uncertainty on costs, project officials told a city committee on Wednesday.

“I know there is a significant interest and a high level of concern regarding cost. We’re all feeling it in our own lives,” Green Line board chair Don Fairbairn told the city’s executive committee.

According to Fairbairn, Green Line project officials regularly develop cost, contingency and risk estimates, which are all reviewed by third-party agencies.

A report to committee showed costs are forecasted to be over budget by less than 35 per cent of its contingency, but Fairbairn said none of that contingency has been used.

He said an update on those cost estimates is expected in September.

The $5.5 billion project has been divided into stages, with the first stage set to run from Shepard in the city’s southeast, under the downtown core and bridge over the river to 16 Ave N.

Fairbairn told committee that the Request for Qualifications phase has closed, and a Request for Proposals phase to find a builder for the LRT mega-project is on track to begin in the fall.

Although project officials hope to select a builder by early next year, Fairbairn added that there won’t be any commitments on the Green Line regarding costs until the project agreement is signed with the builder — which won’t happen until 2024.

He said a lot of uncertainty can be resolved by then.

“That development phase is a really strong risk mitigation tool because we will be working openly on an open-book basis and collaboratively with our development partner for a year prior to entering into a project agreement,” Fairbairn told committee. “By the time we’re prepared to commit to a project agreement in 2024, we will have then a much clearer understanding than we do today of what to expect with respect to escalation.”

However, some councillors expressed their concern that costs would continue to balloon on the project.

“It’s a concern we’ve seen recently with Stoney Trail, the (Deerfoot Trail improvement project), the Event Centre, have either been derailed or paused for reconsideration because of current conditions in our economy,” Ward 13 Coun. Dan McLean said in committee.

Fairburn assured committee that current economic indications show cost escalations will subside in the long term, but Ward 1 Coun. Sonya Sharp asked about the potential for councillors to reconsider the original decision on the project.

“We can’t control inflation, none of us can, we all wish we could,” Sharp said in committee. “At what point do we say, ‘we’re going to have to have a reconsideration here of what we’re doing?'”

In response, Fairbairn said project officials are reviewing ongoing and future work to ensure they’re “not going to build anything that doesn’t have value.”

“As we work through our own process, we’re doing our best to drive costs down without impacting the overall value of the system,” Fairbairn said.

Fairbairn added project officials would also be working with the future development partner to determine if “major changes” to the scope of the project are required.

“I think that’s the time where some of us need to re-evaluate what track this Green Line is going on, no pun intended,” Sharp told reporters following the meeting.

Sharp added that she remains concerned about inflationary cost pressures, and hopes councillors will be able to review some of the stage-gate decisions ahead of the next update from project officials.

“I’m concerned of the inflationary costs that we see in general and want to make sure that this is the best project for Calgary,” Sharp said.

More than $744 million has been spent on the project so far, including more than $37 million this year alone.

Committee heard that 98 per cent of the land required for the southeast leg of the project has been acquired, with most current discussions focused on the downtown section.

Work is still ongoing to relocate underground utilities in the Beltline and Victoria Park to make way for a future tunnel for the Green Line.

The intersection of 12 Avenue S.E. and Olympic Way S.E. is expected to be shut down for around four months to continue the utility relocation work.