1st stage of Green Line LRT likely to exceed $5.5B budget, board chair tells city

Concerns about the City of Calgary's ability to build the Green Line LRT within its $5.5-billion budget arose Tuesday, when a city council committee heard from the project's team that factors such as cost escalation could put it at serious risk.

The city had spent $706 million on the project's development as of Dec. 31, according to a recent financial summary.

But Don Fairbairn, the chair of the Green Line board, told the city's executive committee in an update Tuesday morning that there are still many unknown elements to the overall cost.

Contracts put out so far have come back higher than expected, Fairbairn said, and he has doubts about staying within the project's budget during its first stage.

The LRT project is composed of two phases that would see the Green Line built from Shepard in the city's southeast to Eau Claire in the downtown area, and then on to 16th Avenue North.

"We have a low level of confidence in our ability to deliver all of Stage 1 within available funding," Fairbairn said.

Market volatile, Green Line CEO warns

The report says the project's budget is under pressure because of factors that include cost escalation, design development and schedule updates.

While some major contracts have yet to be awarded, Fairbairn said that if the current cost environment continues for the months and years ahead, it could be a concern.

If that happens, he said, it could affect how much of the Green Line can be built.

Green Line CEO Darshpreet Bhatti said the budget carries conservative estimations on cost escalation but warned the market is volatile — and that will put the project as planned at risk if that volatility continues.

"It's hard to project how long this situation will last," Bhatti said.

"However, if it does continue, it does pose a serious risk — not just for our project, but as you can appreciate, on every other project that's being planned right now."

Future costs could be mitigated by suggesting different construction methods, allowing contractors to assume more risk or changing designs, the project's team said.

Supply chains and logistics under strain, Gondek says

Calgary Mayor Jyoti Gondek said Tuesday that with supply chains compromised and logistics under strain during the COVID-19 pandemic, the pressures on the Green Line LRT don't come as a surprise.

But Gondek said the city is in constant contact with its provincial and federal partners on the project and does not expect the scope of the project to change.

"It is always a little bit troubling when you hear that market conditions may create some cost overruns, but I'm very confident we have the right people in place to bring this project about," Gondek said.

"We have no reason to believe that anything will be sacrificed."

Last November, the city awarded a contract to a Spanish firm to supply it with 28 light railcars for the Green Line.

Details on major construction contracts are supposed to come out later this year.

While preparation work for the Green Line continues, the main construction of the line is now projected to get underway in 2024.