The Province of Ontario is not exactly transparent when it comes to reconciliation of announced project costs and actual spending, let along the changes that might occur along the way. A project, or group of projects, might be announced with a value in then-current dollars, and without necessarily including all future contract costs. There are various reasons behind this approach including:
- The government does not want to tip its hand on the amount of money “on the table” to prospective bidders who might tailor their bid to the perceived level of funding.
- Some contracts include future operating and maintenance costs as well as capital costs. In some case the announced cost does not include the O&M component, only the estimated capital portion.
- Provincial projects are typically quoted in then-current dollars with future inflation to be added as it occurs, at least to the point where there is a contract in place which includes that provision.
This approach hides the likely as-spent costs and makes provincially run projects appear cheaper, at least in the short run.
This is fundamentally different from the way the City of Toronto tracks projects and how TTC requirements are reported. Specifically:
- City project cost estimates include inflation to completion because this is factored into future funding requirements.
- City projects do not bundle future operating costs with capital, but report them separately.
Note that cost estimates shown in the Infrastructure Ontario market reports do not necessarily match values shown by Metrolinx because IO shows these values on a different basis. Future operating and financing costs are no longer included in IO estimates so that a project’s value reflects only design and construction costs, a value that gives potential construction bidders a general size of the project’s scope.
Infrastructure Ontario notes on the November 2022 Market Update that we have modified the methodology used to calculate the estimated costs as presented on the chart. In May 2022, and for Market Updates prior to that, we used the Estimated Total Capital Costs. For the latest update, and going forward, the costs listed only include Design and Construction costs.
These changes were adopted after feedback from our construction industry partners found that including only design and construction costs provided them with a better sense of the scope of the project and would assist in determining if they wished to participate in the bidding process.Email from Ian McConachie, Infrastructure Ontario, Manager, Media Relations & Communications, November 24, 2022.
This can be confusing with “bundled” projects such as the Ontario Line RSSOM contract which includes both provision/construction of vehicles and infrastructure, as well as future O&M costs. This is probably the reason, or a good chunk of it, for the very large increase in the RSSOM contract value between the initial estimate cited by IO and the contract award. However, the way these contracts are handled generally makes it impossible to know how much of the change is simply due to inflation in materials and labour costs, and how much is due to underestimates or scope changes.
Metrolinx reports the status of capital estimates and incurred costs every quarter. The table linked below tracks these numbers from 2019 to present.
In this table, cells are highlighted in pink where the cost estimate changed. Some of these changes are quite large, but they correspond to a point where Metrolinx has included an awarded contract price. However, until all the contracts within a project are awarded, we will have no idea of the estimated final cost. Moreover, with a change in contract format to a “Progressive Design-Build Model” as opposed to one in which a bidder quotes an all-in price up front, it is hard to know when we will see definitive numbers for some contracts.
A few cells in the most recent report (part of the December 1, 2022 Board Agenda) are highlighted in yellow. These values appear to be an error where information from the previous quarter’s report was carried forward rather than being updated. I await a clarification from Metrolinx on this.
Values at June 30, 2019
The table begins with two sets of values for June 2019. The first set was reported at the Metrolinx Board Meeting of June 27, and includes only the approved capital construction costs for various projects based on estimates from 2010 through 2016.
At the Board Meeting of September 12, the format of capital project spending reports changed to show the “current baseline” as well as incurred costs to date. The reported figures were also for June 30.
There are major changes in some of the “baseline” numbers reflecting inflation, but also reflecting the omission of some costs because procurement was in progress (the GO expansion projects).
The baseline estimate in 2019 was $12.245 billion. For a time, this number dropped slightly, but now sits at $12.571 billion.
The baseline estimate in 2019 was $3.433 billion and this has not changed.
The baseline estimate in 2019 was $1.4 billion 2014$ in June 2019, but this rose to $5.632 billion in September 2019.
The baseline estimate in 2019 was $1 billion 2014$, but this estimate disappeared from the reports in the December 2019 version. The incurred cost had built to $185 million by March 2020, but this value too disappeared from the reports until the most recent version for September 2022.
The baseline is now shown as $178 million with only $11 million spent to date. Costs related to contracts now in procurement are not included in the 2022 figures.
This project’s baseline was $1.755 billion in June 2019, and rose to $1.882 in September 2019. It has continued at that level with total incurred spending of $1.828 billion by June 2022. The project was dropped from the September 2022 report.
GO Bus Infrastructure
The baseline for this project was $648 million in June 2019, but it has gradually dropped and now sits at $485 million of which $414 million has been spent.
The “big four” subway projects were announced by Premier Ford as part of the 2019 budget. They include the Ontario Line, the Scarborough and Yonge North subway extensions, and the Eglinton West Crosstown extension. The total value was carried in the Metrolinx reports at $28.5 billion (the budget figure) until the most recent report in which values for individual projects have been broken out.
Note that the baseline values are as of September 30, 2022, and so do not include some of the large recent contract awards.
Eglinton West Extension
The contracts for the elevated and tunnel structures between Jane Street and Mount Dennis have not yet been let, and so their value is not included in the $1.907 billion baseline cost.
As of September 30, the contracts for the South Civils and RSSOM (Rolling Stock, Systems, Operations & Maintenance) had not been awarded. The then-reported baseline was $4.732 billion.
November 09, 2022
TORONTO – Infrastructure Ontario and Metrolinx have awarded a fixed-price contract to Ontario Transit Group for $6B ($5.5B for capital costs and $0.5B for financing and transaction costs) to design, build and finance the Ontario Line Southern Civil, Stations and Tunnel (South Civil) package.
November 17, 2022
TORONTO – Infrastructure Ontario and Metrolinx have awarded a contract to Connect 6ix valued at $9B ($2.3B for capital costs and $6.7B for short-term construction financing and transaction costs, train costs and 30-year operations and maintenance, lifecycle, and long-term financing).
Between them, these contracts will push the Ontario Line total into striking distance of $20 billion. Still to come are the North Civils contracts for the tunnels and the elevated structure between Gerrard and Eglinton. The segment from the Don River to Gerrard is bundled into three other projects:
- Early Works
- GO Joint corridor
- SmartTrack stations
This has the effect of hiding part of the Ontario Line’s total cost in other project budgets.
The current baseline for this project is $3.134 billion, but this does not include all of the costs related to or triggered by this project such as additional trains for the TTC fleet, nor for the Stations, Rail and Systems contract now in procurement.
The Stations, Rail and Systems contract was awarded on November 30, but no price was mentioned in the announcement. It will be interesting to see how the baseline value changes in the quarterly report for the period ending December 2022 when this shows up at the March 2023 Board Meeting.
November 30, 2022
TORONTO – Metrolinx and Infrastructure Ontario (IO) have selected Scarborough Transit Connect as the development partner ((known as the “Dev Co”) to enter the development phase of the Stations, Rail and Systems (SRS) contract for the Scarborough Subway Extension project. The SRS package for the Scarborough Subway Extension is being delivered using a Progressive Design-Build (PDB) model.
Yonge North Extension
The current baseline for this project is $1.456 billion, but this does not include any construction or systems costs because these contracts have not yet been awarded.
As with the Scarborough project, this does not include any provision for subway trains as these will be procured by the TTC as part of a larger contract.
In the original June 2019 figures, the component projects were reported separately albeit with costs in 2014 dollars that were already out of date. From that point onward, the projects were consolidated into three groups: early works, off corridor and on corridor. The baseline values for these have not changed from March 2020 until the recent September 2022 report.
The GO OnCorr project was awarded in April 2022, but there was no change to the baseline until September 2022 when it went down from from $15.705 to $11.306 billion. The report indicates that negotiations on this contract continue and the final value has not yet been included.
The expansion project includes other contracts in various stages:
- Early Works, with a baseline value of $10.789 billion.
- Off Corridor, with a baseline value of $619 million of which only $53 million has been incurred.
- GO Extensions (presumably a consolidation of Bowmanville, Kitchener and Niagara extensions), with a baseline value of $1.705 billion.
- SmartTrack Stations (a project that will be funded by the City of Toronto), with a baseline value of $1.463 billion.