Cost estimate for light rail doubled over five years – WATERLOO REGION- Ontario

by
MP03CM02-07-06
It is very hard to make comments on this bit of news because ‘we’ are not there, but it does seem that either local planners have been negligent in their cost estimates or, as I suspect, city engineers have downloaded unneeded infrastructure charges onto the proposed LRT scheme. Certainly inflation has not been 100%  in five years, which leads one to suspect that officials have added expensive ‘extras’ driving up the costs for right rail. What is illustrated is the danger having local bureaucrats, with minimal knowledge planning for and building with light rail involved with the planning process.
 
The proposed $710-million cost to put electric trains Kitchener and Waterloo has doubled in five years. Building rail transit on the spine of the cities was estimated at $21 million per kilometre in 2004. Today it will cost $40 million per kilometre.
 
  In explaining the increase, regional planners point to:
 • Annual construction inflation reaching 10 per cent.

• The addition of three kilometres in tracks.

• New structures, higher costs for a maintenance facility and new parking, property and utility costs.

Regional Chair Ken Seiling isn’t surprised by the increase, saying other construction projects have seen similar jumps.

He was asked: Is it too much to pay?

“I’ll tell you that at the end of the day, when we find out what the federal and provincial contributions will be,” Seiling said. “I think that question’s premature.”

Senior governments have said they are interested in paying most rapid transit costs but have not pledged a dollar amount. Regional council has been warned local taxpayers might be on the hook for $150 million.

Critic John Shortreed, a retired transportation professor, contends the cities are too small to justify rail transit costs.

“You can build buses for a lot less,” he said. “Buses can do practically everything rail can do, and will do some things a little bit better.”

Rapid buses are less than half the cost of trains, according to regional estimates. Few local commuters ride transit but proponents say trains will draw homes and jobs to neighbourhoods around stations. Council plans to vote on trains June 24.

Fast buses are proposed in Cambridge for an extra $80 million.

SOARING COSTS FOR ELECTRIC RAIL TRANSIT 

 2004 cost = $306 million Source: Region of Waterloo

Add: + $188M Construction inflation

+ $ 64M Three extra kilometres

+ $ 50M Extra utility relocation costs

+ $ 46M Extra for maintenance facility

+ $ 46M New structures and property costs

+ $ 10M Two parking facilities

2009 cost = $710 million

 

Zweisystem comments (in italics) on the following:

In North America, planners with little experience in ‘rail’ tend to add-on costs for non essential items, thus driving up overall costs of the project. The base cost for on-street track construction is about $6 million/km. (not including vehicles) and has not greatly changed in the past few years and when a  proposed LRT project jumps almost 100% in five years, one must ask very serious questions on why.

One question not answered is: “Is the project ‘greenfields’ construction?” If it is, then another question must be asked, “Who profits from land acquisitions?”

The retired professor (a critic) commenting that; “You can build buses for a lot less,” he said. “Buses can do practically everything rail can do, and will do some things a little bit better.”, is rather biased and dated. Certainly you can buy a lot more buses than light rail, but will people use them? Experiences in other cities that opted for buses and bus only transit solutions (including Ottawa which saw an over 15% drop of ridership in its first decade of operation) have found that buses are singularly poor in attracting new ridership, especially the motorist from the car. Retired professors should sometimes remain retired.
 
Some comments on the cost escalations:
 
2004 cost = $306 million Source: Region of Waterloo

Add:

+ $188M Construction inflation

This added inflation cost is outrageous and shows the incompetence of the original planners. Such a huge cost increase makes one wonder if that a major design change has been camouflaged by the claim of inflation. With annual Canadian  inflation rates at about 2% to 3% per annum, the claim that the project’s cost has increased by $188 million is utter nonsense.

+ $ 64M Three extra kilometres

Three km. @ $64 million = just over $21 million/km., which is on par with the original cost estimates of about $21 million/km., which then begs the question on why an added $188 million in costs due to inflation?

+ $ 50M Extra utility relocation costs

Utility relocation is a favorite of city engineers to download utility renewals costs onto new LRT construction. That modern track laying technique negates the need for utility relocation is ignored – by all it seems.

+ $ 46M Extra for maintenance facility

Modern LRT has modular construction which means a less intensive (cheaper) maintenance facilities, because vehicle modules can be easily outsourced for repair. The modern tram is far cheaper to maintain that its older cousins, thus it needs a cheaper facility. This added $46 million charge is very questionable and it may be camouflage for questionable add-ons.

+ $ 46M New structures and property costs

$46 million seems a lot for new structures and property costs and again one wonders if ‘friends’ of the government are getting rich at the taxpayers expense?

+ $ 10M Two parking facilities

These costs should not be included with the light rail costs and it confirms one’s suspicions that a lot of politically prestigious add-ons have been down loaded on to the proposed new LRT.

2009 cost = $710 million

 

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5 Responses to “Cost estimate for light rail doubled over five years – WATERLOO REGION- Ontario”

  1. David Says:

    All government funded Canadian construction projects rapidly rise in cost from original estimate to completion. One really has to question the accuracy of any of the estimates when they change so much so quickly.

    It’s also interesting how radically different numbers appear when one digs deeply into projects that are supposedly “on budget”. The recent court case against Canada Line construction uncovered expenses in the $1.8-2.0 billion range despite InTransit BC insisting that they are staying within the $1.35 billion project budget.

    Someone is getting rich and tax payers, as usual, are getting screwed.

    Zweisystem replies: Unofficial sources now put the direct cost of RAV/Canada Line at $2.8 billion and at least $1 billion more to bring RAV up to LRT standards!! Of course this doesn’t include debt servicing charges, which TransLink refuses to acknowledge.

  2. slmykf Says:

    The people planning this system seem to be doing a careful and thorough job, and I think you’d do well to learn a bit more about the local situation before accusing local bureaucrats of meddling. As far as I know, no such thing has happened.

    Those original cost estimates came from 2004, when we hadn’t even decided on a route, much less done any sort of detailed planning. That estimate was ridiculously low, whereas the latest number are much more credible. I don’t know who to blame for that 2004 figure, but I can tell you that we wouldn’t have been able to build light rail for $300 million; not then and certainly not now.

    This system is likely to be funded by upper levels of government, and not by local taxpayers, so it is prudent to err on the high side for construction costs, since the federal and provincial funding wouldn’t necessarily cover cost overruns.

    You should direct your scorn at people like Jeff Outhit, who wrote the piece you quoted, and who has been trying to turn public opinion against light rail ever since the study started. The Region of Waterloo has done a great job of planning this system so far and I think it’s disingenuous to spread these unfounded claims about politicians somehow lining their pockets by using inflated construction costs. It will only serve to turn public opinion against important transit projects like this.

    And, in this case, it’s just plain ridiculous.

    Zweisystem replies: This posting illustrates the dangers of escalating LRT construction costs and an almost 100% increase in construction costs is unacceptable. The danger is, as the dreaded Mr. Outhit has so well has shown, is how easy it is to garner negative public opinion on a light rail project. In Europe, transit planners are striving to reduce light rail’s costs, yet on this side of the pond, planners don’t seem to bat an eye at 100% cost increases! This is very bad for all LRT projects in North America.

    Read my post again, I didn’t say politicians were lining their pockets, but questionable and costly politically prestigious add-ons almost always get added on to any sizable transit project. In the USA, they are called ‘ear-marks’. If there is property to secure, a land titles check on whose property is being bought and their political affiliations is a must.

    Your quote; “Those original cost estimates came from 2004, when we hadn’t even decided on a route, much less done any sort of detailed planning. That estimate was ridiculously low, whereas the latest number are much more credible.”, demonstrates less than professional planning. No credible planner would ever state a cost estimate on a project that had no route or any detailed planning. $40 million/km. is rather high for LRT and again I wonder why the reasons for such a high price?

    In North America, we over build LRT projects because we treat them as ‘light-railways’ and not light-rail (there is a difference) and I believe we could trim at least $10 million/km off the price quoted, to lessen the sticker shock to taxpayers. Having a LRT project double in price in just five years is a very poor way to sell LRT to the public!

  3. slmykf Says:

    I agree that the optics are bad, and I don’t think that number ($306 million) should have been released so early on. However, the most recent figures make sense for a project of this nature. You can judge for yourself — see page 41 of this document:
    http://rapidtransit.region.waterloo.on.ca/pdfs/DRAFT_FINAL_MAE_REPORT_June_3,_2009.pdf

    The cost (from the report I linked) to build LRT for the entire route is $36 million per kilometre, which is by no means unreasonable. Phoenix built their system for $44 million USD per kilometre, Charlotte for $30 million USD per kilometre, to name some recent examples.

    You said: “No credible planner would ever state a cost estimate on a project that had no route or any detailed planning.” And I agree — I’m as surprised as you that they released that number so early. They were really asking for this kind of trouble. The cost estimate may have been a requirement for provincial funding, which excuses them somewhat.

    With this kind of system, you get what you pay for, and I’d hate to see us cripple our system in the name of cost-cutting. Our expenditures on roads will be many times the cost of this this project if it is not built. They’ve already scaled back the original plan by building half of it as “adapted BRT” (which I think is a mistake, but that’s a topic for somewhere else), so it’s not as if they’re ignoring costs. If anything, they’re being overly cautious.

    If you have some credible suggestion about how to lower the capital cost without crippling the system, I’d be happy to hear it, and I’m sure the Region of Waterloo would be happy to hear it too. It’s not as if they *want* it to be expensive.

    Zweisystem replies: Let us not forget that the cost of an American LRT system maybe the total cost, including debt servicing as it is American practice for voters to approve long term bonds to pay for transit. In Helsinki, a new tram line cost $6 million/km. to build (not including cars) and in Spain LRT is being built for $8 million/km, complete.

    What I wanted to comment on was, as you put it “bad optics” of a 100% cost increase in 5 years. The problem, as I have commented on in previous posts, is the North American penchant for building LRT as a light railway and the European transit specialists have all commented on the fact of over spending on new American (Canada too) light rail lines and I again pose the question: “are we morphing LRT into light-metro?”

    I sincerely wish your efforts in Waterloo are successful, but I do recommend keeping a close eye on developments. I also do recommend that you should look seriously at the Karlsruhe (Germany) tram system and tramtrains, as I think that they are going to be the way of the future.

  4. zweisystem Says:

    Costs for LRT

    https://railforthevalley.wordpress.com/2009/04/19/getting-a-handle-on-the-cost-of-light-rail-how-much-does-modern-lrt-cost/

  5. slmykf Says:

    I think it’s important to point out that what we are building in the Waterloo Region is, essentially, a light metro. It is consistently referred to as “rapid transit”. That makes sense for our region — it doesn’t necessarily make sense in the Fraser Valley, and I think your suggestion that light rail could be built for less in your region is a good one.

    In our situation, this is not over-spending. It’s the cost of building a good system for our specific requirements. Could we build a system for $20 million per kilometre? Probably. But we are looking to build the backbone of our entire regional transportation system; essentially, an at-grade metro that serves the cores of three growing cities.

    I also wish you the best in your efforts to bring light rail to your region. I’m originally from BC, so I follow transportation developments there with interest.

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