The projected cost of extending Winnipeg's southwest rapid transit corridor has shrunk by $120 million.

The savings were realized through some changes to the final design and a competitive bidding process, city officials said, adding the project was also advertised during "very favourable market conditions" that included lower interest rates and a lower volume of work in the national marketplace.

Construction of the extension will begin this summer, with Plenary Roads Winnipeg heading up the $467.3-million project.

The existing southwest rapid transit corridor runs from downtown to Jubilee Avenue and Pembina Highway. The extension will add 7.6 kilometres, from Jubilee to the University of Manitoba.

The project is expected to be completed in late 2019 and will then go through a period of testing as well as training of drivers.

Transit operations on the new corridor are expected to begin in April 2020.