Ion construction costs run $50 million over budget

Already not on-time, Ion no longer on-budget From CTV Kitchener’s Natalie van Rooy: The cost of creating the Ion LRT system is now $50 million higher than initially expected.

Getting a light rail system constructed and ready for service hasn’t gone exactly as expected.

There were numerous construction delays as workers discovered that what they were finding beneath existing roadways wasn’t quite what they’d been told to expect.

Most of the time, it was utility lines that weren’t in the places they were on file as being. In another memorable case, a log road dating back nearly 200 years was found under King Street in uptown Waterloo – putting construction on hold for more than a month for archeological work.

Delays with production of the light rail vehicles at Bombardier have also been an issue, pushing the start date for the service’s launch from fall 2017 to spring 2018.

So what do all of those issues and delays mean for the project’s overall cost?

According to the people with the most knowledge of the numbers, it means that the original estimated cost of $818 million is no longer realistic.

The best estimate is now $868 million. Given the construction work – one of the largest and most difficult to estimate pieces of the pie – is wrapped up, officials say the new figure should stand up as the final total.

“(It’s) more or less the final budget,” Coun. Tom Galloway said Monday.

In fact, the total overruns add up to more than $50 million, but because other parts of the project came in under-budget, those savings could be used to offset the remainder of the costs.

Galloway says the difference wouldn’t have been noticeable if the region hadn’t cut back on the contingency fund for the LRT project.

The project was given a contingency fund of 1.5 per cent of its total budget. Normally, Galloway says, the amount budgeted to handle overruns and unexpected costs falls between five per cent and 10 per cent. A 7.5 per cent contingency would have brought the total cost to more than the new budgeted cost of $868 million.

“We wanted to hold staff and contractors’ feet to the fire and not have a cushy contingency,” Galloway said.

The region says the additional cost won’t be paid for through property taxes. Half will come from the development charges the region levies on new buildings, and the other half from the province.

“We made the case to them that they are giving free LRTs to Hamilton and Mississauga and other communities … so we thought it was only right that they help us out,” Galloway said.

The King Street grade separation project, which saw a new rail bridge built and King reconstructed below it, took place at the same time but was accounted for separately.

Initially planned as an 85-15 split between the region and Metrolinx, all parties have agreed to instead have Metrolinx pick up a much larger share.

Regional officials say the total cost of the grade separation came in at slightly less than $45 million, with the region on the hook for about $7.7 million of that.

With reporting by Natalie van Rooy