Tracking Metrolinx Project Costs

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.

Metrolinx Capital Project Cost Tracking June 2019 to Sept 2022

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).

Eglinton Crosstown

The baseline estimate in 2019 was $12.245 billion. For a time, this number dropped slightly, but now sits at $12.571 billion.

Finch West

The baseline estimate in 2019 was $3.433 billion and this has not changed.

Hurontario

The baseline estimate in 2019 was $1.4 billion 2014$ in June 2019, but this rose to $5.632 billion in September 2019.

Hamilton

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.

VIVA BRT

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.

Subway Projects

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.

Ontario Line

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.

Scarborough Extension

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.

GO Expansion

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.

19 thoughts on “Tracking Metrolinx Project Costs

  1. Please pardon my veering off of the string premise, I’m sure Steve will have detailed comment on this in a post of its own, but the “P3” factor is writ large in today’s Ottawa LRT report findings:

    Ottawa CTVNews

    The report states the P3 model, “resulted in the city avoiding significant financial liability during the construction phase, but it also led to a situation where the parties’ attention was diverted to protecting their legal rights instead of opening a reliable LRT.”
    […]
    Hourigan notes the city had no experience with an LRT project of “this complexity, or with using a P3 model to deliver a project like this, Alstom had never worked with the Canadian content requirement, and OC Transpo had never previously operated a complex LRT system.

    I was searching for Metrolinx mention amidst what’s been quoted by the press from the report. Reference is still scant, and I’m posting prematurely, I’m still searching for the actual report, but some reflection on the matter:

    Toronto Star, Oct 12, 2019

    Metrolinx not concerned about Ottawa LRT issues, despite having order in for the same vehicles
    The GTA transit agency is buying 46 of the Alstom cars, which it plans to run on Mississauga’s Hurontario LRT and Toronto’s Finch West LRT.

    Metrolinx says it’s monitoring problems that have affected Ottawa’s new LRT in recent days but isn’t concerned the glitches will spell trouble for future transit projects in the GTA, despite the fact the agency plans to use the same vehicles here.

    There’s gonna be a ‘lot of splaining to do’…

    For the record, with caveats, the P3 model has worked well in other jurisdictions in other nations. It’s not the model per-se that’s at fault, it is what it is (albeit each instance is unique). The problem comes in the implementation, and *enforcement*.

    This story is about to explode specific to IO and Metrolinx.

    Steve: The full report is available on the inquiry’s website.

    Liked by 1 person

  2. Steve, good analysis as always.

    Do you know if there has been any preliminary costing work done on the 407 Transit way?

    Lee Parsons

    Steve: No, I don’t. Possibly other readers here might.

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  3. Steve:

    Further to my earlier post on the Ottawa LRT Inquiry:

    I did trip across the link after for both the summary and full report, still haven’t had time to delve, I’m sure others will, and are.

    My main interest remains on how much of this splashes onto Metrolinx, which *apparently* isn’t in the line of fire. Infrastructure Ontario is. Doing a search on the full report for IO, there’s over a hundred references. Metrolinx? None.

    At first glance, this would get Metrolinx ‘off the hook’. Many of us know otherwise. Different patient, same disease.

    The Toronto Star piece I linked above is damning.

    Another point shared by both Ottawa and Toronto, via Queen’s Park: ‘Strong Mayor’ legislation. (Better Municipal Governance Act, 2022)

    If ever there was an instance in recent times of the danger of a mayor going rogue, it’s Watson with this fiasco. ‘Strong Mayor’ legislation?

    The TTC and Metrolinx (albeit the latter provincial) need more light shone on them, not less. It’s going to be an interesting few weeks.

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  4. The Ottawa LRT report points out two key factors: improper maintenance, and not buying off-the-shelf. I told anyone who would listen that maintenance was key even with brand new equipment. As for the Alstom cars, Ottawa ordered new, unproven in our weather technology. New is one thing; there are always growing pains. Loading that new technology with “must haves” that overtax a technology not yet in use is another. But Ottawa thought it was being magnanimous for the Province by “taking one for the team” with this new technology and its overloaded “must-have” requirements. Yay us! Meanwhile, our safety was at stake. Minor details I guess.

    Boy, can’t WAIT to see how these vehicles do in Toronto and Mississauga/Brampton….

    Liked by 1 person

  5. David:

    It really does lead to begging questions for the Metrolinx sphere. The obvious reaction to the very valid points you raise is for Alstom to learn and upgrade/improve the design. Ironically, Helsinki is colder than Ottawa, but:

    The Alstom site in Helsinki hosts an engineering team which is developing centralised train control systems for mainline and urban eco-systems.

    Alstom’s situation is one thing. The political…’quagmire’…is quite another. IO is directly complicit.

    I don’t see how Metrolinx isn’t directly impinged by this.

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  6. With regards to the question about the 407 Transitway. If I remember correctly, this project is not under Metrolinx but under MTO (at the time). With Metronlix now under MTO I’m not entirely sure who is overseeing it.

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  7. @Stephen Staines.

    It is my understanding that Alstom warned RTG, Ottawa, etc., that they were asking for too much too soon and made recommendations that were ignored. There is a history of that in Ottawa. Back in the early 2000’s New Flyer told city council that using four cylinder engines instead of six to power articulated buses was not better for the environment; it would just mean straining the motor. They were right. A number of buses caught fire, including one that pulled up to my stop! Shades of IBM warning the federal government that they were asking too much from the Phoenix Pay system without extra support.

    Steve: I am currently working my way through the Inquiry’s report and will write about it soon. Some issues are Ottawa-specific, but there is a larger context of transit procurement, secrecy, mismanagement and political interference with lessons and warnings for other cities and especially for Metrolinx.

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  8. @Stephen Saines.

    You say Helsinki is colder than Ottawa but the climate data for the two cities says otherwise. Canada has the coldest capital city in the world according to many sources.

    Helsinki Climate

    Ottawa Climate

    Also, MetroStinks seems to do construction work at a very slow pace. I check the Bramalea station periodically and the most I have seen is 6 workers. Every time they work on a railway they have to pay for a CN foreman to protect the site. It would seem to be more cost effective to have more people on a site to finish it sooner and reduce the costs for a foreman, but CN, and to a lesser extent CP, look on MetroStinks as good source of money.

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  9. “Steve: I am currently working my way through the Inquiry’s report and will write about it soon. Some issues are Ottawa-specific, but there is a larger context of transit procurement, secrecy, mismanagement and political interference with lessons and warnings for other cities and especially for Metrolinx.”

    Jim Watson was rightly accused of wielding the Mayoral Power stick that Ford granted, only before it was granted. Yet, Watson railed against such powers. Some are also connecting how city governance has failed on so many levels, including not only the LRT fiasco, but the Convoy disaster as well. The report highlights Ottawans deserve better service and respect from the city, and that trust has been severely damaged.

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  10. Thanks Steve and commenters.

    With the multi-billions in the TO transit schemes, and the escalations in the costs to huge sums, (and some things not included), why no real interest from say, the provincial Auditor (though maybe I’ve missed it), and also from the opposition parties and fiscal conservatives? A few billion are readily squeezed from different ideas, including a triage Relief, if combined with a reform to how the main transit agency reported ie. to the Legislature not the Cabinet. We might be a few billion better off to cancel contracts, $$igh, as it won’t be the politicians nor bureaucrats who pay anything.

    False conservatism ie. con-self-servatism mis-rules it seems, though we need to spend large on good transit, and the cars are subsidized far more than the transit.

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  11. Stephen wrote: “…the P3 model has worked well in other juristictions in other nations.”

    I am highly skeptical of that claim. The private sector is in business to make a profit, so a P3 contract will automatically cost more in accordance with the private partner’s profit margin.

    Advocates of P3 schemes claim that a private partner will apply some sort of magical private sector fairy dust to reduce costs. But in reality, that fairy dust either does not exist or it consists of union-busting and other anti-social and unethical behaviour. Behaviour that dumps costs upon other parts of society.

    In its worst form, as in refurbishment of the Pickering nuclear power plant, the private partner takes a high-risk gamble. If the gamble does not pay off, the private entity just declares bankruptcy and walks away, leaving the government to clean up the mess.

    The profits, however, very much do exist and drive up the overall cost of the project. So I am not a fan of P3 projects.

    Liked by 1 person

  12. The only way P3 can work is if the Construction consortium can find efficiencies in the design to suit their expertise. They must have the ability to alter the entire design to find these efficiencies.

    It requires 3 things:
    a) the the Terms of the agreement are very clear on what needs to be delivered,
    b) that the entire contract be awarded as one Mega project,
    c) allow pre-bid time for consortium to find these efficiencies.

    What Metrolinx seems to do is divide the projects into a few large projects. Too large that you preclude most/all construction companies (and require consortia to form) – which means less competitive bidding. Also, with multiple contracts there is no ability to optimate [optimize?] since often marginal extra costs in one area are what lead to the savings in the other. A change in one contract also means the owner has to revamp the designs of all subsequent contracts.

    The largest example of P3 in Canada where a single transportation contract was used may be the Canada Line, where they did find saving and created the most cost-effective transit line in the past several decades.

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  13. I would be interested in seeing on the screwups on the Crosstown line. It would seem the sections that would be the most difficult would be the station at Yonge, then Spadina-Eglinton, then Kennedy. It would seem wise to start these as soon as possible. When I was at Yonge and Eglinton a couple of weeks ago it seems to be a long way from completed. Exactly when did they start working at this station compared to the start of construction initially?

    Steve: As I recall this was started fairly early, but the progress was slow, done in segments, and complicated by Covid work restrictions. Anyone who used the intersection regularly had to dodge through a maze of excavation and decking that changed regularly as work shifted from one place to another.

    What has been most galling, though, is that delays are put down to structural issues with the existing subway when there is construction and material deliveries that do not appear to have anything to do with that part of the station. Also, Metrolinx trumpeted the underground bridge that they built to support the Yonge line, complete with photos, but never have explained how this area is still a problem.

    As for timing, headwall construction started in June 2014. You can trace the work by looking at the construction notices and scrolling back through them from past to present.

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  14. $20 billion is too much for the Ontario Line. We need a cost-benefit analysis for the Ontario Line, the kind that Josh Matlow repeatedly demanded for the Scarborough subway. Furthermore, the ridership numbers used to justify the Ontario Line are pre-pandemic numbers that no longer apply. We need new ridership numbers and a cost-benefit analysis before proceeding with the $20 billion Ontario Line.

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  15. Montréal’s REM is building almost 100 km of new public rail transit. I’m guessing because I haven’t checked their math but it’s about 1/2 to 1/3rd the costs of Metrolinx:

    Steve: The REM had a huge advantage. They repurposed the existing commuter rail tunnel rather than building a new one, and also used an existing commuter rail right-of-way for some of the route. This made for substantial savings that the Metrolinx projects could not achieve.

    The Metrolinx projects are expensive no doubt, but comparisons need to adjust for differences between projects.

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  16. Kevin Love writes:

    “In its worst form, as in refurbishment of the Pickering nuclear power plant, the private partner takes a high-risk gamble. If the gamble does not pay off, the private entity just declares bankruptcy and walks away, leaving the government to clean up the mess.”

    I ask: in what parallel universe did anything remotely resembling that statement ever occur?

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  17. The REM in Montréal is supposed to be 67km. I would not call that “almost 100 km”.

    And how much of it is basically similar to what GO trains do in Toronto: limited number of stops, in corridors that aren’t exactly high-density residential/commercial?

    I don’t see the REM being anything like the Ontario line, that’s supposed to serve local riders with much more fine-grained stations.

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  18. Let’s explore the possibility of completing the entire northern phase of the Ontario line first (Pape to Science Ctr. It’s not beyond the realm of possibility it could be finished by 2026. It would (a) give added impetus to use of the Ontario Line as there would an additional transfer point (b) it would help with the unused capacity of the subway system in wake of the Covid pandemic and (c) it would open up visits to the Science Ctr. that would help tourism. The southern and downtown phases would come on line circa 2031. I see no downside to this idea.

    Steve: There is a teensy problem: the contract for this has not been let yet, and Metrolinx does not plan to do so until 2024. There is also a lot of design work yet to be done. I would not hold my breath for a 2026 opening.

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