How the Rideau Street sinkhole opened up critical rifts in LRT deal between city, RTG

The Rideau Street sinkhole in 2016 not only delayed construction on Ottawa's troubled Confederation Line, it damaged the relationship between the city and the light rail line's builder so severely that it could haunt passengers for decades to come.

That worrying appraisal is among the revelations contained in the Ottawa Light Rail Transit Public Inquiry's final report, released Wednesday morning by the commissioner, Justice William Hourigan.

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The sinkhole left an enormous water-filled pit across the width of one of Ottawa's busiest downtown streets on June 8, 2016, during construction of the Rideau LRT station and adjoining tunnel.

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According to the commission's final report, the sinkhole "profoundly disrupted the construction timeline" set out by OLRT-C, the construction arm of Rideau Transit Group (RTG), affecting subsequent stages of the project.

There were other unrelated disruptions, including slow delivery of the vehicles by train maker Alstom and "systems engineering and assurance failures" by OLRT-C, but the sinkhole, which came at a critical stage of construction, represented "the most significant delay" of several facing the project.

"This delay had knock-on effects throughout the project, most significantly in OLRT-C's ability to deliver the necessary track and other infrastructure to test the vehicles and the train control system. This resulted in a shortened testing schedule and a resequencing of this work to use the available infrastructure," according to the report.

'Adversarial' relationship 

The event also soured the working relationship between the city and RTG, which disagreed over who was responsible for the sinkhole. The city blamed RTG's tunnelling work under Rideau Street, while RTG blamed a faulty joint on a fire hydrant that had been relocated by the city.

This set the stage for an "adversarial" relationship between the two, according to the report. RTG sued the city for damages to recover the significant costs it incurred to address the consequences of the sinkhole, and both RTG and the city filed competing insurance claims.

According to the report, OLRT-C knew by mid-2017 that because of the sinkhole, it would be unlikely to meet the May 2018 handover date set out in the project agreement. However, RTG kept that information to itself because it wanted the city to accept other concessions first, Hourigan found. 

"For its part, the City was understandably frustrated by the project delays," and adopted "the default position" that it was entitled to enforce its rights under the original project agreement, according to the report.

Pitfalls of P3s

The rift also revealed an underlying risk of public-private partnerships, or P3s, according to the report.

The arrangement allowed the city to offload the geotechnical risk associated with the project to RTG, ultimately saving taxpayers $100 million.

The people of Ottawa face the spectre of a largely dysfunctional partnership operating and maintaining the [Confederation Line] for decades.- Ottawa LRT Public Inquiry

"The risk transfer was a significant benefit to the City because that risk materialized with the Rideau Street sinkhole," according to the report. "The people of Ottawa were the beneficiaries of this good planning."

However, the P3 model also "caused or contributed to several of the ongoing difficulties on the project." For example, while the city would traditionally play a more direct role in such a major construction project, it had "limited insight or control" over this one.

Future projects could cost more

When problems did arise, "the City's insistence on enforcing its contractual rights was a significant contributor to the breakdown in the relationship between the parties," according to the report.

"This adversarial relationship hurt the parties' ability to respond to problems. The ultimate result is that, despite some recent improvements in the relationship, the people of Ottawa face the spectre of a largely dysfunctional partnership operating and maintaining the [Confederation Line] for decades."

During this summer's hearings, the commission heard that major construction companies have been declining P3 projects precisely because they're unwilling to assume the significant financial risk associated with them.

"This reluctance is understandable because, in the context of significant infrastructure projects, the potential financial risk can be almost unlimited. Thus, while the City was able to transfer risk in this case, it may not be able to do so in the future or the cost to do so may be significantly higher," the report concluded.