Calgary’s Green Line LRT project is “on track” as inflationary pressures continue to create cost uncertainty, project officials told a city committee on Wednesday.
“I know there is significant interest and a high level of concern about cost. We all feel it in our own lives,” Green Line board chairman Don Fairbairn told the city’s executive committee.
According to Fairbairn, Green Line project officials regularly develop cost, contingency and risk estimates, all of which are reviewed by third-party agencies.
A report to the committee showed costs were expected to exceed budget by less than 35% of its contingency, but Fairbairn said none of that contingency was used.
He said an update to those cost estimates is expected in September.
Work begins to make way for the Green Line LRT tunnel under downtown Calgary
The $5.5 billion project has been divided into stages, with the first stage to start from Shepard in the southeast of the city, under downtown and the bridge over the river to 16 Ave N.
Fairbairn told the committee that the request for qualifications phase has ended and a request for proposals phase to find a builder for the LRT megaproject is set to begin in the fall.
Although project officials hope to select a builder early next year, Fairbairn added that there will be no commitments on the Green Line regarding costs until the project agreement is signed with the manufacturer – which will not happen until 2024.
He said a lot of uncertainties can be resolved by then.
“This development phase is a very powerful risk mitigation tool, as we will be working openly and collaboratively with our development partner for a year before entering into a project agreement,” Fairbairn told the committee. “By the time we are ready to commit to a project agreement in 2024, then we will have a much clearer understanding than today of what to expect in terms of escalation.”
However, some councilors have expressed concern that the project’s costs will continue to rise.
“It’s a concern that we’ve seen recently with Stoney Trail, the (Deerfoot Trail Improvement Project), event center, either derailed or put on hold for reconsideration due to the current conditions in our economy,” Ward 13 Coun. said Dan McLean in committee.
Fairburn assured the committee that current economic indications show escalating costs will subside over the long term, but Ward 1 Coun. Sonya Sharp asked about the possibility of advisers reconsidering the initial decision on the project.
“We can’t control inflation, none of us can, we all wish we could,” Sharp told the committee. “At what point do we say, ‘We’re going to have to reconsider here what we’re doing?'”
Costs rise for Calgary’s Green Line LRT project, city committee says
In response, Fairbairn said project officials were reviewing ongoing and future work to ensure they “won’t build anything that doesn’t have value.”
“As we work through our own process, we do our best to reduce costs without affecting the overall value of the system,” Fairbairn said.
Fairbairn added that project officials would also work with the future development partner to determine if “major modifications” to the scope of the project are required.
“I think this is a time for some of us to re-evaluate the path this green line has taken, no pun intended,” Sharp told reporters after the meeting.
Sharp added that it remains concerned about inflationary pressures on costs and hopes advisers can revisit some of the milestone decisions before the next update from project officials.
“I’m concerned about the inflationary costs we’re seeing in general and want to make sure this is the best project for Calgary,” Sharp said.
Over $744 million has been spent on the project so far, including over $37 million this year alone.
The Committee heard that 98% of the land required for the southeast portion of the project has been acquired, with most of the ongoing discussions focused on the downtown section.
Work is still ongoing to relocate underground utilities in the Safety Belt and Victoria Park to make way for a future tunnel for the Green Line.
The intersection of 12 Avenue SE and Olympic Way SE is expected to be closed for approximately four months to continue utility relocation work.
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