Phased procurement, underestimated costs and political scheduling have the Province of Alberta gravely concerned about Calgary’s Green Line project, government documents show.
The concerns about Alberta’s largest-ever infrastructure project were voiced by Minister of Transportation Ric McIver in a letter to Don Fairbairn, the Calgary Green Line board chair.
“The Green Line project is at high risk of running severely over budget,” wrote McIver, outlining three main issues.
First, McIver explained the province believes the city has underestimated the cost of the project due to its phased approach. He noted that because some segments of the first phase haven’t been fully designed yet, the full cost won’t be known until contracts have already being awarded. He said compared to other similar LRT projects, it is clear to the province that the Green Line is likely going to cost more than is being said.
The province requested that the city give a full accounting of all money already spent on the project and submit a more realistic cost estimate.
Second, McIver said launching procurement before the full costs of the project are known creates major risks.
“The city’s phased approach to procurement means the affordability challenges will not be known until some contracts have already been awarded,” wrote McIver. “Put simply, a third of the LRT could be under construction before it becomes apparent that Calgary cannot afford to build the rest.”
McIver stressed the province’s concern with the procurement strategy is so great that it will not approve funding for the line unless it changes.
“The province does not approve of the existing procurement strategy and will not approve funding for a line to nowhere,” wrote McIver.
Finally, McIver objects to the project timelines, which he believes are being driven by politics rather than commercial or financial concerns.
He concluded his letter by addressing Mayor Naheed Nenshi who has called the province’s review of the project “red tape” to the media and ministers. McIver said he believes there is the attitude at the city that the review is a formality delaying the start of work.
“Not only does the province reject this characterization outright, but it is fundamentally discrediting to the legitimacy of the review,” wrote McIver. “It is plainly evident that the city does not currently understand the depth of our concerns and the seriousness with which we take them, so let me be clear: the Green Line is not a functional transit project in its current form, the province will not approve it as currently designed.”
So far the province has committed to spending $1.53 billion on the estimated $5 billion project. It is estimated that around $100 million has already been spent.
This month a joint working group was established between the city and the Government of Alberta to resolve questions identified in the review. The city announced that it has decided to slow down the process.
“After significant engagement with the provincial government, the city has made the decision to pause the segment one procurement schedule to provide time to conclude the work with the province,” said city officials on the project website. “We do not believe it is responsible to continue with the current procurement while discussions with the province are evolving.”
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