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A recent study by the University of Toronto’s School of Cities says the cost of building new transit infrastructure in Canada has increased at a rate far beyond inflation.

For example, cost estimates by southern Ontario’s Metrolinx for its latest subway projects are seven times per kilometre greater, adjusting for inflation, than Toronto’s first subway, built in 1954.

The story is the same in the rest of Canada, where the cost per kilometre of building rapid transit is among the highest in the world.

Governments and transit authorities have responded by reducing the scope of projects by, for example, removing stations, shortening lines or even canceling projects altogether.

The study analyzed Metrolinx transit projects in various stages — in procurement, under construction and completed — and identified four main reasons for higher costs: Overbuilding and overdesign; a lack of knowledge retention in the public sector; risk management; and external constraints.

Overbuilding and overdesign

Canadian transit agencies are very risk-averse, building for the worst possible outcome.

“Canadian transit agencies tend to use stricter interpretations of global safety standards than other, more cost-effective jurisdictions.”

And external stakeholders often drive design.

“To build political support and avoid the risk of litigation, many Canadian transit agencies allow external stakeholders (e.g., community groups, municipal governments and businesses) to extract concessions from transit projects.

“In contrast, through clever alignment selection, minimized station size and widespread standardization, low- and medium-cost jurisdictions build (only) what is strictly necessary.”

Lack of knowledge retention

Like many North American transit agencies, Metrolinx relies on external consultants for project delivery, not just for professional services, but also for management-level positions.

Relying on external consultants makes it harder to retain knowledge and expertise in an organization, hindering the retention and transition of important how-to knowledge.

Risk management

How Canadian agencies perceive and manage risk is at odds with the concept of contingency itself.

Ideally, contingency funds should never be entirely spent and should shrink as project risks are managed through the design and engineering process.

But escalating costs indicate a trend of budget-padding.

Low-cost jurisdictions, on the other hand, manage to deliver more complex and higher-risk projects with lower contingency budgets.

External constraints

Third-party agreements, political micromanagement, high labour costs and a lack of construction industry competition have resulted in higher materials and labour costs.

Toronto transit projects have experienced bouts of political micromanagement, such as the cancellation of the Eglinton West subway and the Transit City initiative.

If construction costs can be reduced, bigger and more ambitious projects can be built at lower costs.

“Our study contends that high transit construction costs are not an inevitability; rather, they are the result of a project delivery regime antithetical to global best practices.

“Developed countries like Spain, Turkey, South Korea and Italy show that with comprehensive procurement reforms, the nurturing of in-house capabilities, and an embrace of global best practices, high construction costs can be driven down.”

Jack Mintz, president’s fellow of the University of Calgary’s School of Public Policy, is a frequent user of Toronto public transit.

“The U of T study is an accurate description of the challenges that building transit in Canada faces,” says Mintz. “The study has no surprises. For example, overly generous contingency budgets allow project builders to be less than careful with costs.”

Mintz says design and operations should be done by the same organization, to keep costs from going overboard.

“The private sector is better at that,” he says. “The public sector has too many people involved, especially politicians with agendas, and that adds to costs and takes more time.”

Calgary Construction Association president Bill Black says it now takes four times as many people twice as long to construct a building than it used to.

“That’s not because of poor productivity in the field,” says Black. “It’s because of everything that is done before the builders arrive, from the owner on down.”

Black has two suggestions for getting transit projects – such as Calgary’s LRT Green Line – built on time and as inexpensively as possible, 

“Procurement for complex projects like the Green Line should be about getting the most qualified, capable and experienced team, rather than the lowest price,” says Black. “And keep politics out of it.”

Federation of Canadian Municipalities VP Tim Tierney says the FCM wants “stable, long-term federal investments — like the  — that give local governments the tools and flexibility to plan ahead and deliver transit projects efficiently and cost-effectively.”

To read the U of T study,