The spiraling costs of the Laval Metro are attributed to inadequate projections and poor financial planning. This picture dates back to April of 2005, when it was feared that costs would rise even higher than the $800 million projected. Since then, it appears that the costs were brought under control and the time-frame for completion was advanced to the end of April from the earlier July projection.
(Photo: Martin Alarie)
The spiraling costs of the Laval subway extension
Projected costs of $179 million will have risen to $804 million by opening day
Editor’s note: To mark the much-anticipated arrival of the first metro train to Ile Jésus, Courrier Laval will be publishing a special edition just prior to opening day, now anticipated for the end of April 2007. In the meantime, we will be publishing weekly reports on various issues and developments related to the extension of the metro into Laval. Here is the first of these reports.
With the opening of the Laval Metro just a few weeks away, the time has come to assess the impact of this project, launched in 1998 with the announcement that the extension of the Montreal line would cost Quebec taxpayers no more than $179 million.
But it wasn’t to be so. Six years later, the National Assembly had to authorize additional funding which raised the modest projection of $179 million to $803.6 million.
Ironically, the costs of the Laval Metro are in line with similar projects. In fact the Metropolitan Transport Agency (AMT), the body responsible for overseeing the building of the system, states that the extension of the subway across the Rivière des Prairies into Laval was cheaper than similar projects implemented in Baltimore, Hong Kong, and Los Angeles.
Miscalculations
Nonetheless, the project which employed 700 people, eventually will come to cost in excess of 350% more than originally planned, with cost overruns across the board. Quebec taxpayers might recall that when announced as an election promise in October of 1998 by then Premier Lucien Bouchard at a modest $179 million, there were only two stations in the construction plans.
In 1999 came the first of several cost adjustments, upping the new figures to $250 million, the added costs coming from a miscalculation of the distance that would have to be covered. Engineers, it was then said, had forgotten to factor in the cost of a kilometer of work out of a total distance of 5.2 kilometers.
The spiral continued in the following year, with the government approving a proposal in June of 2000 to fund the project at a new cost of $378.8 million, tax included. But there was more to come. Just sixteen months after Premier Bernard Landry had stuck the first symbolic shovel into the ground to launch construction, a second government decree upped the approved costs to $547.7 million, this coming in July of 2003. Taxpayers were not out of the woods yet, because in the fall of 2004 the group of experts appointed by Liberal Premier Jean Charest to clean-up the management of the project recommended a budget of $803.6 million, $785.3 million coming from public funds and $18.3 million charged to the AMT for minor installations such as parking lots.
It is on the government’s $785 million that the cost of the Laval metro has been calculated at $154 million per kilometer, compared with Baltimore at $207 million, Hong Kong at $183 million and Los Angeles at $166 million.
A $50 million buffer
Although within weeks of the traditional cutting of the ribbon that will soon see the first trains rolling into Laval, the metro’s final bottom line cost, according to the latest government decree, is $803.6 million, this is by no means a done deal. It is suspected that when the time is right, Premier Charest will announce that the project will have come to cost more.
In all likelihood, the final bill will include another $50 million which had been already been set aside in a 2004 contingency plan to cover a number of possible or probable expenses such as market fluctuations, unforeseen occurrences on worksites, and lawsuits to resolve once the system is up and running, an amount that the AMT had neglected to include in its cost projections. It was only after a study of the metro finances in 2004 that $50 million was set aside for both foreseen and unforeseen additional costs, beyond the authorized $803.6 million.
(Photo: Martin Alarie)
(Photo: Martin Alarie)