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skytrain to langley: ottawa capped its contribution so the huge overrun is on b.c. taxpayers
vaughn palmer: assuming ottawa refuses a top up, b.c. will have to cover the added $2 billion along with its earlier pledge of $2.4 billion
aug 23 2024
4 minute read
the proposed willowbrook skytrain station.
ministry of transportation
/
government of b.c.
victoria — the province took a major hit on its capital budget recently when the new democrats disclosed that the estimated cost of building the surrey-langley skytrain extension had jumped, from $4 billion in 2022 to $6 billion today.
a 50 per cent overrun in just two years? that looked bad enough.
but actually, it was worse.
the line is being funded on a cost-shared basis by the provincial and federal governments. as of 2022, ottawa was committed to a third of the cost while the province agreed to cover most of the rest alongside a minor contribution from local government.
however, the federal government has capped its contribution at $1.3 billion, effectively leaving the province stuck with its agreed-upon share plus any overrun.
b.c. transportation minister rob fleming says the province will be lobbying the federal government for a top up.
not likely will one be forthcoming, for reasons that will be evident from a review of b.c.’s handling of the cost-estimating process.
two summers ago, the b.c. government put out what it described as a business case for the project, including a cost estimate of just under $4 billion.
the figure was already a third higher than the $3 billion estimate in a business case the new democrats generated in 2020.
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the second version was more definitive, including a lengthy analysis, a survey of industry experts and several appendices intended to lend more credibility to the final number.
the key element was a 36-page risk management report prepared for the treasury board branch of the ministry of finance.
“risk management takes a systematic approach to risk, estimating the range of potential impacts on a risk-by-risk-basis through the project’s planning, procurement, design and construction and operating process,” the report read in part.
to that end, the dozen or so members of the assessment team, public and private, identified and weighed 32 separate factors in reaching their conclusions about the potential risks.
all details regarding the 32 factors were blanked out in the report before it was made public, leaving no way to assess how each played out over the ensuing two years.
still, “a failure to fully take account of risk is one of the key factors when public projects are not delivered on time, on budget or to specification,” said the report in a passage freighted with irony in light of the latest development.
the new democrats framed the business case as a take-it-to-the-bank costing for the project at the time of its release on july 14, 2022.
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“the capital cost estimate is $3.94 billion, which includes $2.4 billion for the provincial share of the project, $1.3 billion from the federal government and the remainder coming from local government,” read the news release.
“the business case has also confirmed that the project will be done two years earlier than previously planned, and going all the way to langley … entering service in the summer of 2028.”
jump forward to this year and an aug. 15 news release that announced communities south of the fraser were “one step closer to low-cost transportation.”
buried was the actual news:
“the cost of the project, now $5.996 billion, has been updated in response to market conditions, including rising inflation costs and key commodity escalation, supply-chain pressures and labour-market challenges. this has resulted in higher price proposals from contractors.
“following extensive planning work and impacts of the current market climate, the anticipated in-service date is late 2029.”
far from being “one step closer” and “low cost,” the surrey langley skytrain was a year and a half behind schedule and projected to cost a further $2 billion.
this at a time when full blown construction is not scheduled to get underway until the fall.
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no wonder the federal government makes a practice of capping its contributions to cost-shared projects.
the province draws up the business case, assesses the risks, estimates the cost, oversees the bidding and contracting process, and manages the project itself. it also chooses the timing to announce any revisions in the budget or construction schedule.
ottawa has little or no say in any of that.
both levels of government have so far adopted a similar approach in response to pleas from metro vancouver for a financial helping hand with the overrun on the north shore waste management project.
once budgeted at $700 million, with federal and provincial contributions each in the $200 million range, the plant is now costed at $3.8 billion. the two senior governments have balked at increasing their contributions, instead urging metro to audit what went wrong.
ottawa would be justified in adopting the same stance regarding the surrey langley skytrain in the absence of any plausible explanation for why it should cover the failings of the provincial business plan.
assuming ottawa does refuse a top up, b.c. will have to cover the added $2 billion along with its earlier commitment of $2.4 billion.
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it would make for an 83 per cent overrun on the provincial share of the capital cost. nor is that necessarily the end of the story because construction of the line is just getting underway.
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