Toronto Ontario Line 3 | ?m | ?s | Metrolinx
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alexb
Active Member
The capital costs are noted in the first sentence of the press release:
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).
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).
innsertnamehere
Superstar
yup.
The main capital packages are the $6 billion contract, which is $5.5 billion of actual construction to build the downtown portion of the line, several advance prep work contracts which include the Lakeshore Corridor joint works and Don River Bridge, and the two yet-to-be-issued northern packages.
So right now, of the $10.9 billion initial budget, about $7.8 billion has been signed in contracts. I still suspect it'll go over that initial budget, as there are a fair bit of contracts still to be issued (almost certainly more than $3.1 billion worth), but it's not going to be a $20+ billion line. Probably more like $11-$12 billion at the rate things are going.
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smallspy
Senior Member
The problem with that idea is that it negates one of the reasons why the line has been designed the way it has.
As much as it is a means to get some (lots?) of ridership away from the Yonge-Bloor interchange, it is also meant as a means of offloading some of GO's impending capacity crunch coming into Union.
Remove the section of the line to Exhibition, and the line is no longer capable of that to the west.
Dan
Allandale25
Senior Member
This Global News article seems to be mixing up the capital cost types. So that's why I think the better contextual view is $10B initial going to what @innsertnamehere thinks of $11-12B. But given who one of the reporters is, I'm not totally surprised. @ShonTron
Estimated cost for Ford government’s signature Ontario Line balloons toward $20B - Toronto | Globalnews.ca
The estimated cost of the Ontario Line in Toronto is now as high as $19 billion, an increase of roughly 70 per cent over its originally announced budget.
globalnews.ca
denfromoakvillemilton
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Let's just get on with it. I wish Metrolinx wasn't building local metro and would just focus on rail but it is what it is now.
AlvinofDiaspar
Moderator
Yeah, don't let perfect be the enemy of the good - the line will never get any cheaper than it is now.
AoD
AoD
Streety McCarface
Senior Member
9B - 2 B for the trains and systems so 7B for ops; 230M per year. By way of comparison, the crosstown is supposed to cost 30M a year and its similar in terms of surface/underground length. On top of that, they actually have to staff the trains.
100%, they're making all their money on operations, and probably an a** load too.
innsertnamehere
Superstar
It's Ops and maintenance. Most of that cost is likely maitenence.
Streety McCarface
Senior Member
True enough, but the crosstown's maintenance bill was something like 2.5 billion dollars for 30 years. Tunneled length is similar but there are guideways, so assuming everything (including infltation) is 1.5* that (3.75 B), and assuming 60M a year in ops factoring in inflation (30 years that's 1.8 billion), you're still looking at around 1.5 billion dollars more on Ops and Maintenance than Eglinton, which should be about as expensive given the TYSSE was 30 mill a year to operate for the next 30 years.
Given inflation and the fact that this thing is supposed to run every 90 seconds within 25 years, however, I guess I shouldn't be surprised.
Given inflation and the fact that this thing is supposed to run every 90 seconds within 25 years, however, I guess I shouldn't be surprised.
ShonTron
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This Global News article seems to be mixing up the capital cost types. So that's why I think the better contextual view is $10B initial going to what @innsertnamehere thinks of $11-12B. But given who one of the reporters is, I'm not totally surprised. @ShonTron
Estimated cost for Ford government’s signature Ontario Line balloons toward $20B - Toronto | Globalnews.ca
The estimated cost of the Ontario Line in Toronto is now as high as $19 billion, an increase of roughly 70 per cent over its originally announced budget.
Pointed in the wrong direction.
ShonTron
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That’s the P3 way. Yeah, the Sheppard Line was built for $1 Billion in 1999-2002 dollars, and it included a complex interchange at Yonge Street and very lengthy tail tracks, but that was only the cost of construction. The TTC includes operations and maintenance in its operating budget every year.
syn
Senior Member
That's fair.
For me, Yonge Line Relief (which was the original goal of the line) is paramount, making a northern terminus at Don Mills a priority.
Northern Light
Superstar
I think the value is raising the issue is four key aspects of P3s that are, in fact, inflating cost vs traditional procurement and operations.
1) By the far the biggest underlying issue is financing. Aside from the total absence of any capital from current spending (its all debt based); any P3 consortium is financing the cost at commercial market rates, which are at least a 300 basis point spread (3%) over what the government would borrow at using bonds. That literally doubles the interest bill and adds billions with a B to the project cost.
2) On the capital project itself, everything that's contracted out has a mark-up (for profit) associated with it vs traditional procurement. To be clear, even in the former system the vast majority of architecture and engineering is contracted out. But in the older system, of decades past, you contracted out the engineering of the tunnels as a single package (with a certain amount of the work having been done in-house), and its the standard mark-up for an engineering firm. Generally in the P3 model, the engineering firm has a mark-up billed to the consortium, who then apply an additional mark-up before it gets to the government. That's a lot of marking up!
3) The nature of these consortium contracts is that they are so large, there are literally no more than 3 potential bidders for any job and sometimes only one. That's not competitive capitalism. That's oligopolistic, crony capitalism.
The result is certainly inflated prices; beyond any gouging involved, a key factor is risk-management; for private enterprise, exposing itself to bankruptcy-level risks is dangerous, and this requires padding bids with liberal contingencies that will, if the project is well run, simply be banked by the consortia. This doesn't occur at the nearly the same level with much smaller contracts in traditional procurement.
4) We're throwing in operations/maintenance. Sure, a worker for the consortium may ultimately be paid less, though that isn't a given and may be reflected in work quality; but there really isn't any savings for the government vs doing these
in-house, and in fact, there may be considerable added cost in light of the mark-ups involved. Let me give a simple example on lawn mowing. The City may have once paid someone a decent wage to do this in-house (I'm making a up a number here), lets say $28 per hour + benefits. A contractor comes in and pays minimum or just above with less/no benefits. So they are paying $17 per hour. But that's not what the City gets charged. The City pays $36 per hour or more.
For clarity, I'm making up the numbers for this precise example, but I do have real information, but can't name the companies and positions involved. The City may argue it doesn't have to insure said contractors, or handle their training, but in reality, its getting less well paid, less well trained, less motivated staff at a greater hourly cost.
****
None of the above is to suggest walking away at this juncture.
But rather that we need to revisit how we do these in the future.
Flushing Billions of dollars down the toilet, which is what P3s do, is antithetical to both traditional, small-c conservatives and to small p progressives.
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smably
Senior Member
Even worse, as we saw with Eglinton, if costs exceed the contingencies baked into the "fixed-price" bid, the consortia will try to recover them by any means possible, usually from the public purse. In theory, P3s shift risk to the private sector, but in practice, these companies have armies of lawyers dedicated to ensuring that they won't have to eat any losses even in the worst case scenario. So really with P3s we're privatizing the profits, socializing the risks, and paying way more for the privilege. I've become convinced that they're a scam designed to line the pockets of private enterprise while letting the small-government types starve the public sector of the expertise they need to manage their own projects.