Downtown BRT route over-budget as remaining routes face double-digit inflation
Inflation has driven the cost to build London’s first rapid transit route over budget and threatens to increase the price tag for the two remaining routes.
A new report to the Civic Works Committee (CWC) reveals building the $23.3 million Downtown Loop cost 1.7 per cent ($331,000) more than budgeted.
Cost overruns must be covered by the city.
“So far we’ve been really successful in limiting our budget exceedance to a small amount,” explains director of construction and infrastructure Jennie Dann. “But we know that the factors that are impacting the cost of these projects are not going away anytime soon.”
The report warns inflationary pressures are also anticipated to impact the more expensive East London Link and Wellington Gateway routes.
The budget approved five years ago did not anticipate construction costs to rise so quickly.
“Recent construction price escalations have been observed following approval of the EA (Shift BRT Environmental Assessment) cost estimates from 2018,” reads the CWC report.
Specifically, the 2018 Environmental Assessment estimated annual inflation at 2 per cent to 3 per cent, but Statistics Canada’s Construction Price Index is currently at 12.5 per cent.
In 2018, Dann responded to concerns raised by former mayoral candidate Paul Paolatto that the construction budget was overly optimistic:
At the time she wrote to CTV News, “to guard against cost overruns on this project, we have factored in a significant 50 per cent contingency fund— meaning we have done our financial planning in a way that ensures there are no surprises for Londoners.”
Dann now says a surge in construction costs of more than 30 per cent since 2018 couldn’t be anticipated.
“We made reasonable assumptions at the time, and so now we’re at a point where we’re trying to look at whatever options we can to refine our design and work with those pressures to find savings,” she says.
Cost pressures are impacting infrastructure projects across the city.
The cost to build the Adelaide Rail Underpass recently grew from $58 million to $88 million.
Earlier this week, city council supported a $10.2 million dollar adjustment to the city’s Capital Budget related to 18 smaller road projects.
Dann says the city continues to seek cost efficiencies as designs are finalized on the East London Link and Wellington Gateway.
The report also advises that additional funding might be sought in the 2024-27 multi-year budget this December.
“It’s really too early to tell,” adds Dann. “The team is using all of those same really great practices around value engineering and trying to find ways to tighten up the design for the cost savings.”
CTVNews.ca Top Stories
Why drivers in Ontario, Quebec and Atlantic Canada will see a gas price spike, and other Canadians won't
Drivers in Eastern Canada face a big increase in gas prices because of various factors, especially the higher cost of the summer blend, industry analysts say.
How to avoid the trap of becoming 'house poor'
The journey to home ownership can be exciting, but personal finance columnist Christopher Liew warns about the trappings of becoming 'house poor' -- where an overwhelming portion of your income is devoured by housing costs. Liew offers some practical strategies to maintain better financial health while owning a home.
Toxic forever chemicals in drinking water: Is Canada doing enough?
As the United States sets its first national limits on toxic forever chemicals in drinking water, researchers say Canada is lagging when it comes to regulations.
'A living nightmare': Winnipeg woman sentenced following campaign of harassment against man after online date
A Winnipeg woman was sentenced to house arrest after a single date with a man she met online culminated in her harassing him for years, and spurred false allegations which resulted in the innocent man being arrested three times.
McDonald's customers left with 'zero value' collection of free hot drink stickers after company ends program
It took years for Vinnie Deluca to collect more than 400 cards worth of free McDonald's McCafe coffee, a collection that now has "zero value" after the company discontinued the program.
Biden scores endorsements from Kennedy family, looking to shore up support against Trump and RFK Jr.
U.S. President Joe Biden will accept endorsements from at least 15 members of the Kennedy political family during a campaign stop in Philadelphia on Thursday as he aims to undermine Donald Trump and marginalize the candidacy of Robert F. Kennedy Jr.
Where did the gold go? Crime expert weighs in on unfolding Pearson airport heist investigation
Almost 7,000 bars of pure gold were stolen from Pearson International Airport exactly one year ago during an elaborate heist, but so far only a tiny fraction of that stolen loot has been found.
When new leaders took over in ancient Maya, they didn't just bury the former royals. They burned their bodies in public
New archeological investigations in Guatemala reveal that the ancient Maya people had a ritual of burning royal human remains as a public display of political regime change.
Party's over: Coyotes play final game as Arizona franchise before move to Salt Lake City
Mullett Arena buzzed like few times in the two years since the Arizona Coyotes moved in, the fans amped for one last desert hurrah.