$1 billion spike in subway cost may not be the end of it

The Scarborough one-stop line is now estimated at $3.2 billion, with most of the design work - and potential surprises - still to come.

Thestar.com
June 23, 2016
By Ben Spurr

After a $1-billion spike in cost of the Scarborough subway extension, Mayor John Tory is defending the latest estimate for the transit project as reliable. But experts warn the subway hasn’t been studied enough to know what the final price tag will be.

The updated cost estimate for the 6 km subway tunnel from Kennedy station to Scarborough Town Centre is $3.2 billion. The number was revealed in a city report published Tuesday, and is roughly $300 million higher than the $2.9-billion figure the mayor defended last week, which in turn was $900 million more than the $2-billion estimate presented to councillors in 2013 when they voted to extend the Bloor-Danforth line farther into Scarborough.

The most recent number accounts for the $289-million cost of extending the life of the Scarborough RT during the construction of the subway tunnel and then decommissioning the aging line, an expense that wasn’t included in last week’s $2.9-billion estimate.

Asked Wednesday whether he could guarantee the cost won’t jump again, Tory said, “I can’t guarantee the sun will come up tomorrow.” But he stressed that the latest figure is “is a more reliable number than we had before.”

He said that at the time of the 2013 council vote, the cost estimate “was basically drawn out of a hat” because city and TTC staff had done no detailed design work. Tory said staff have now undertaken more of that work and produced a more accurate figure.

Although the cost of the extension is higher than previously thought, Tory declared: “It doesn’t change my determination to build it because I think it is something that is going to connect up a part of the city that is not properly connected to higher-order transit, and that has suffered as a result in terms of job and investment, in places where we need those jobs and we need that investment.”

But experts caution that the subway extension must undergo further study to produce a more accurate estimate. According to the city report, the $3.2-billion estimate is based on a subway design that is only 5 per cent complete.

The report notes that according to industry guidelines, at that stage cost estimates can be off by 35 per cent.

“You still have quite a wide variance at that point on cost, because you haven’t found a lot of the problems,” said Lee Sims, director of transportation for IBI Group, a consulting firm.

Issues that could escalate costs include the discovery of difficult soil conditions and buried utilities, Sims said, which is why planners usually add a sizable contingency to cost estimates at the 5 per cent design level. He added that while it’s possible costs could decrease as design work proceeds, it’s not common.

Councillor Jon Burnside (Ward 26, Don Valley West) said the ballooning subway cost has left him questioning whether it would be wise to go back to the $1.48-billion, seven-stop LRT plan council scrapped in 2013. The surface line would have run from Kennedy station to Sheppard Ave. and been fully funded by the province.

Burnside, a rookie councillor who frequently votes with the mayor, said he was concerned the subway costs could increase again “because that seems to be the way that everything’s going.”

“The fundamental question for me is, is the subway the way to go?” he said. “Can we afford it, given that we have a lot of other transit priorities?”

The inflated subway cost threatens to derail the “optimized” Scarborough transit plan the mayor is backing, which includes the subway extension as well as an 18-stop LRT that would run from Kennedy to the University of Toronto Scarborough campus.

Early estimates put the price of the LRT at up to $1.7 billion, which brings the total cost of the Scarborough network to roughly $1.3 billion more than the $3.56 billion three levels of government had previously committed to build Scarborough transit.

Tory has said he is determined to build both lines and is supporting a plan to have a third-party rail expert review the subway extension in an effort to reduce costs.

The cost of the one-stop subway is more than just construction costs.

When council scrapped plans for the seven-stop LRT, they also saddled the city with the responsibility to pay for all operating and regular maintenance costs for the subway, as well as capital maintenance costs - for example, replacement of tracks and vehicles as the system ages.

According to the new report from city staff, those additional costs would total $17.9 billion over the course of the assumed 60-year life of the subway.

Tory’s executive committee will consider the subway plan at its meeting next week, and council is expected to vote on it in July.

The report notes that the current subway cost estimates are contingent on council choosing an alignment for the subway next month. Any delay could result in higher costs and would also jeopardize the extension’s projected opening date of 2025.

Correction - June 23, 2016: This article was edited from a previous version that misstated the cost of the seven-stop LRT plan scrapped by council as $1.48-million.