Toronto Ontario Line 3 | ?m | ?s

[innsertnamehere]

Just feels like the reporter is mixing up and conflating construction cost and construction cost plus 30-year lifecycle cost. I still don't get a sense from this article what the construction cost only increase has been. Maybe it's the writing style. A chart would have helped.

I've pointed this out multiple times and yet Global, and Global alone, keeps running these stories. There is a reason the other media outlets aren't making the same claims and reporting on it like they are.

Actual construction costs remain relatively on budget, especially considering construction cost escalations which have occurred since 2019 when the line was announced.

This article does a better job of clarifying it than past articles they have run which did not make the distinction at all, but still implies that the budget has almost tripled from $10.9 to $27 billion, which is just not true at all. Probably over half of those costs are not actual "construction" but rather land costs, much of which will be recovered through redevelopment post-completion, operations, etc.

It should also be the surprise of nobody that it exceeds the original budget as excessive inflation of the last 4 years could not have been fairly predicted in 2019.

I suspect actual construction costs are closer to $13-15 billion, which is understandable given recent inflation.

 

[turini2]

It's the same with Gordie Howe International Bridge. Construction cost is $3.8 billion, but the contract includes construction, operation and maintenance over a 30 year period - and is therefore $5.7 billion.

Is it wrong to say that the bridge will cost $5.7bn to build? Yes.

 

[jordanmkasla2009]

It should also be considered that they've adjusted the budget for the project to include a very large contingency fund that may not be used in its entirety but is there because of lessons learned from when they did the underpinning on Line 1 for the Crosstown. I'm this case it may prove especially prudent since this project has to go under three existing subway stations one of which is as old as Eglinton Station which needed encasement fixes because the existing structure was deteriorated beyond what was anticipated. Pape and Osgoode are about a decade or so newer than Queen but could also have some issues that would need to be corrected before underpinning and building out of the new station portions. That's even without mentioning the heritage preservation work being done at King-Bathurst, Queen-Spadina and Osgoode.

 

[Allandale25]

It's the same with Gordie Howe International Bridge. Construction cost is $3.8 billion, but the contract includes construction, operation and maintenance over a 30 year period - and is therefore $5.7 billion.

Is it wrong to say that the bridge will cost $5.7bn to build? Yes.

I seem to recall the same discussion about the Hurontario LRT where certain media outlets jumped on the $4.7 billion announcement which included the 30-year cost when the construction cost was lower than that and closer to the original approx. $1.4-$1.6 billion.

 

[Northern Light]

I've pointed this out multiple times and yet Global, and Global alone, keeps running these stories. There is a reason the other media outlets aren't making the same claims and reporting on it like they are.

Actual construction costs remain relatively on budget, especially considering construction cost escalations which have occurred since 2019 when the line was announced.

This article does a better job of clarifying it than past articles they have run which did not make the distinction at all, but still implies that the budget has almost tripled from $10.9 to $27 billion, which is just not true at all. Probably over half of those costs are not actual "construction" but rather land costs, much of which will be recovered through redevelopment post-completion, operations, etc.

I agree conflation of construction and operation is a problem. However, the article asserts that these combined figures were represented at 17-19B in 2022.

And are now 27B

IF that is the case.

Then there is indeed a 42% increase in the build and operate cost from 2022.

We'd have to go back to the 2022 Mx Reports for Q2 to see the numbers and wording.

****

Here's the fine print on the numbers in the Mx Report:

A and D apply to the Ontario Line.

*****

I suspect there is an inordinate increase in cost here.........and I think its driven by interest rates. I suspect this project was budgeted at based on 2022 Commercial Lending rates, not 2023/2024. But I'd need more details to confirm that.

A shift of just 200 basis points (2% in interest) would represent a ~50% increase in financing costs

 

[generalcanada]

Were the early works costs included in the original 17-19 bil figure? things like the lakeshore east corridor?

 

[dowlingm]

Here's the fine print on the numbers in the Mx Report:

View attachment 574335

A and D apply to the Ontario Line.

*****

I suspect there is an inordinate increase in cost here.........and I think its driven by interest rates. I suspect this project was budgeted at based on 2022 Commercial Lending rates, not 2023/2024. But I'd need more details to confirm that.

A shift of just 200 basis points (2% in interest) would represent a ~50% increase in financing costs

Doesn't footnote d imply that there may be more added to that 27bn number?

 

[evandyk]

I've pointed this out multiple times and yet Global, and Global alone, keeps running these stories. There is a reason the other media outlets aren't making the same claims and reporting on it like they are.

Colin D'Mello has a thing for Doug Ford ever since Ford poked fun of him for living in the suburbs while challenging Ford about sprawl-enabling policies. So he's constantly looking for something negative to write about the provincial government/mismanagement, etc.

 

[Northern Light]

Doesn't footnote d imply that there may be more added to that 27bn number?

I'm inclined to read it that way; but Mx is so opaque....

 

[nfitz]

If Metrolinx was less opaque about construction versus operation costs they'd have less media attention about cost overruns.

 

[ARG1]

It should also be considered that they've adjusted the budget for the project to include a very large contingency fund that may not be used in its entirety but is there because of lessons learned from when they did the underpinning on Line 1 for the Crosstown. I'm this case it may prove especially prudent since this project has to go under three existing subway stations one of which is as old as Eglinton Station which needed encasement fixes because the existing structure was deteriorated beyond what was anticipated. Pape and Osgoode are about a decade or so newer than Queen but could also have some issues that would need to be corrected before underpinning and building out of the new station portions. That's even without mentioning the heritage preservation work being done at King-Bathurst, Queen-Spadina and Osgoode.

If the US is anything to go buy, contractors and partners are really good at using up contingency funds. Adding them at this stage is basically a self-fulfilling prophecy.

 

[nfitz]

If the US is anything to go buy, contractors and partners are really good at using up contingency funds. Adding them at this stage is basically a self-fulfilling prophecy.

These are unassigned contingency funds aren't they? Of course if it's in the partner's budget, then it's already accounted for.

 

[ARG1]

These are unassigned contingency funds aren't they? Of course if it's in the partner's budget, then it's already accounted for.

I mean if they're boosting the Ontario Line's budget number, then its pretty assigned if its not? Sure it might not be directed to a specific p3 partner, but if they know that contingency is available, they will absolutely try to use it. Its money being left on the table if they don't.

 

[nfitz]

I mean if they're boosting the Ontario Line's budget number, then its pretty assigned if its not? Sure it might not be directed to a specific p3 partner, but if they know that contingency is available, they will absolutely try to use it. Its money being left on the table if they don't.

Surely in a P3 there's less chance it would get assigned. It would have to be something out-of-scope, or unanticipated. It's not like they are charging for extras every week.

 

[Aplus23]

It's the same with Gordie Howe International Bridge. Construction cost is $3.8 billion, but the contract includes construction, operation and maintenance over a 30 year period - and is therefore $5.7 billion.

Is it wrong to say that the bridge will cost $5.7bn to build? Yes.

Yes, without the word maintain as well, you're being disingenuous to the reader.