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City of Edmonton blames P3 model for Valley Line LRT delays

Click to play video: 'Valley Line LRT issues raise concerns over P3 projects'
Valley Line LRT issues raise concerns over P3 projects
The city is now reviewing all major projects and how they're funded in light of another round of delays for the Valley Line, which is being built as a public-private partnership with a consortium TransEd. Breanna Karstens-Smith takes a look back at how the project started a decade ago and the issues along the way. – Aug 11, 2022

The foundations of the deal for Edmonton’s LRT construction are being looked at again, following a recent announcement the already-behind-schedule Valley Line LRT ‘s east leg would be delayed for a fourth time.

A city inspection found 18 concrete pillars have cracked and need to be repaired.

The city was quick to blame public-private partnership contractor TransEd for the issues, along with the contract itself.

“These projects lack transparency, reducing city administration oversight and accountability,” Mayor Amarjeet Sohi told media Wednesday.

In 2014 the Harper federal government only agreed to chip in on the project if a public-private partnership, or P3, model was used.

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It means TransEd is responsible for designing, constructing, operating and maintaining the line for the next 30 years but the consortium has to do it all within a strict $1.8 billion budget.

The TransEd consortium is made up of four companies: engineering firm Bechtel, construction company EllisDon, train builder Alstom (which acquired former builder Bombardier in 2021) and Fengate Asset Management.

The Parkland Institute has always been against the P3 model, saying that when issues come up, corners are cut.

Click to play video: 'Edmonton mayor says TransEd will be held accountable for Valley Line safety, delays'
Edmonton mayor says TransEd will be held accountable for Valley Line safety, delays

“This is a company that’s fundamentally in it to make money,” Parkland Institute executive director Ricardo Acuña said Thursday.

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“So where are they going to make those costs back?”

At the time the project was starting, the P3 model was expected to save the city half a billion dollars, but Acuña argues there hasn’t been much of a saving after all.

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“There is also a cost in these delays. It’s not a money cost to the people of Edmonton who have been dealing with this construction all this time and who, in many cases, have chosen schools for their kids or places to live based on an expected delivery date for this infrastructure,” he said.

In July, the provincial government cancelled its plans to use a P3 model for Deerfoot Trail renovations, citing inflation.

With wages and prices on construction material seeing sharp increases, costs are climbing, making the model less appealing to contractors.

“You would certainly think that there would be some financial pinch, as you see costs increase,” Fitch Ratings’ global head of infrastructure Scott Zuchorski said from New York.

“And it can certainly cause the private sector entities to be more hesitant to enter into new contracts, new projects.”

Click to play video: 'Valley Line LRT southeast extension delayed again because of concrete cracks'
Valley Line LRT southeast extension delayed again because of concrete cracks

The City of Edmonton is promising a thorough review of the Valley Line southeast project before signing any additional big contracts, specifically P3 ones.

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City Manager Andre Corbould admits similar reviews have been done following other infrastructure issues.

“Those reviews have improved performance over the last several years,” Corbould insisted.

The west leg of the Valley Line is already committed to a P3 model, but not with TransEd as contractor.

Instead, it’s being built by Marigold Infrastructure Partners: a design-build joint venture between French civil engineering firm Colas, which specializes in road construction and rail track, and American technology-focused engineering company Parsons Corporation.

The west leg construction began in 2021 and is expected to take five to six years to complete.

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