Calgary's BMO Centre proves big budget projects don't always mean big overruns

With a $500-million budget, the Calgary Municipal Land Corporation (CMLC) managed to deliver the BMO Centre expansion this year on time and on-budget.

It seems like an anomaly, given the project was built during a time of inflation, supply chain issues and general cost overruns.

So how did CMLC do it across several years of construction and through a pandemic?

To hear CEO Kate Thompson tell it, teamwork, hands-on management and being realistic.

With funding coming in equal parts from the federal and provincial governments, as well as the City of Calgary, she said the budget set in 2018 was firm.

The question became, what can be built for half-a-billion dollars?

Team commitment

Back in those pre-pandemic times, she said what was known was that the former Stampede Corral arena had to come down to make way for the BMO expansion. 

There was a need for an additional 500,000 square feet of exhibition space, including a couple of massive ballrooms which could help accommodate large or Tier 1 conventions.

That was their goal and all of the partners were committed to that project — and to keeping it within the hard budget assembled.

"I think where projects can get tripped up is when you start getting married to something before you understand it. So if you have a design that is a jewel box that you're fascinated with and you'll build at any cost regardless of any decisions, that can be a tricky slope," said Thompson.

As the funding partners and the design team dug into the project, she said they were surprised that they could seemingly get all the key elements of the project within budget and that it wouldn't have to be a very basic kind of building.

Thompson also chalks it up to a bit of alchemy, that the team gelled and was committed to the vision.

Like any construction project, there was the standard 10 per cent budget contingency. That's money available to handle any unforeseen issues.

Pandemic curve ball

Then the COVID-19 pandemic hit in 2020. Thompson recalls the decision to proceed was a big gamble and it was scary. 

Their bet was that people would gather again, that there would still be a need for such a massive convention centre to hold events.

Still, she recalls a lot of sleepless nights.

"We all were nervous. Everyone. But the alternative wasn't an option for us either. To commit to stop and reconsider what it was going to be was also equally scary."

It was during the pandemic that they locked in contracts with builders and suppliers.

Thompson said the project was attractive to bidders because there weren't doubts about it proceeding and the funding from governments was in place.

But because of global uncertainties, those bidding for work were nervous about making the usual offers with everything around them changing so fast.

"Tenders at that time, they were holding them for one week. We'll hold the price for one week, maybe 30 days," said Thompson. "Typically you have three months."

But because they could see the economic situation was so uncertain, she said the team knew there was no time for hesitation.

"Collectively, we were able to say we need to sign off on this. When we get an offer that we can review and it makes sense for everyone, we're going to do it."

That allowed CMLC to lock in early on steel contracts at favourable prices — steel is a key component of the building's structure — before prices took off.

Being realistic helps

It raises the question of why so many other projects — especially larger ones — can't stay on-budget.

The president and CEO of the Calgary Construction Association said CMLC's experiences on the BMO Centre expansion project ring true for him in terms of meeting budgets for large projects.

Bill Black said being realistic about what you want to build for the money that's been assembled is a good starting point.

Between change orders, management issues, and rising costs of materials and labour, he said staying on-budget isn't as easy as you might think.

"Unfortunately, it sounds very simple, but one of the main reasons projects come in over-budget is the budget wasn't right in the first place," said Black.

In North America, he said 30 to 40 per cent of construction projects come in over-budget and aren't completed on schedule.

To him, it's important for project managers to put in the due diligence, do a proper and realistic design, and build a strong team committed to the vision behind the project.

Part of building a good team includes the contractors, said Black.

"The people who could really help you understand what things are going to really cost are [often] the last ones involved. You've already made a design decision, you've already committed yourself to a certain path, and then you invite the contractors and the trade experts into the room to look at all the decisions you've made," said Black.  

"Nine times out of ten, they're going to very quickly see decisions that could have been made better," said Black.

Staying on time and on-budget is actually getting harder. He said buildings today are definitely more complex than structures in the past and that magnifies the possibilities for things to go off track.

Earning kudos

CMLC's experience in delivering projects without delays and cost overruns is being noticed outside of Calgary.

Kate Thompson said municipalities big and small as well as private sector companies are calling, wanting to learn about CMLC's work and what's happening in Calgary. 

She said CMLC is fielding questions and taking visitors from cities like Portland, Ore., Denver, Toronto and Montreal on tours.

"They're coming more often and more frequently and from a wider variety of locations. And I think that's something that Calgary should be really proud of," said Thompson.