B.C. Liberals say a $2-billion project is "on-budget"; it was $1.5 to $1.7 billion

For years, I would have to write that a transit project linking downtown Vancouver, Richmond and the airport would cost $1.5 billion to $1.7 billion.

I knew that the figure had been lowballed. But I didn't have a choice because TransLink repeatedly used this $1.5-billion to $1.7-billion figure in news releases concerning what was then known as the Richmond-Airport-Vancouver line. It's now called the Canada Line.

Five years ago, the credit-rating agency Standard  & Poor's also  suggested there was "cost overrun potential"  on the  the $1.5-billion to $1.7-billion  RAV line.

“The RAV project is a large, lengthy, and ambitious undertaking with cost overrun potential given the long-term and technologically complex nature of the construction project,” Standard & Poor’s stated.

Of course, the costs did go up. Now, the public is being quoted a $2-billion figure for a project that was expected to be built  with a bored tunnel that would result in minimal intrusion on local merchants.  

The $2-billion line includes 16 stations. The original $1.5-billion to $1.7-billion line was going to include 17 stations.

Of course, higher costs contributed to a decision to go instead with a cut-and-cover tunnel,  which obstructed traffic and  contributed to the bankruptcies of several businesses on Cambie Street.

So what does the B.C. Liberal platform say about the Canada Line?

It's "on-budget".

Gimme a break.

Comments

6 Comments

D. M. Johnston

Apr 17, 2009 at 5:40pm

Actually Charlie, RAV was first budgeted to cost about $1.3 billion, but the cost escalated to such a degree that the scope of the project was reduced.

1) Cut and cover subway construction was substituted for bored tunnel. Cut and cover subway construction is a lot cheaper if the contractors can get away with not paying compensation to adjacent merchants and property owners.

2) A conventional metro was substituted instead of the proprietary SkyTrain metro system. This was because SkyTrain's Linear Induction Motor needs a steel reaction rail to operate and there was considerable savings (about $50 million) from omitting 40 km. of steel reaction rail.

3) The station platforms in the subway section can only accommodate 3 car trains. This means RAV's practical maximum capacity is around 10,000 persons per hour per direction. To increase capacity by enlarging stations will cost about $1 billion more and the cut and cover thing all over again!

As a side note, if LRT were to have been built on the Arbutus corridor, or any other corridor for that matter, maximum capacity would be about 20,000 pphpd! We have spent $2.5 billion (oops, thats #5) on a metro that has about one half the capacity of a $1 billion or less LRT line down the Arbutus)

4) There is single track operation along #3 road in Richmond, not only does this constrain capacity, it also means that the line will not be extended in our lifetime!

5) Several years ago, a forensic audit of RAV's costs by DoRAVright group, found that the cost of SkyTrain was almost $2.5 billion and there are some reports that the the actual cost has now exceeded $2.8 billion.

6) RAV is not a P-3 at all, because the province (taxpayer) has assumed risk. Already the Liberals have loaned the RAV consortium money so it can pay the government!

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pwlg

Apr 19, 2009 at 9:49am

I believe the 2nd Avenue Station or what is now being called the Olympic Village Station (olympic in more ways than one) was not on the books and was an additional cost paid for by the City of Vancouver and Translink, separate from the overall RAV or Canada Line costs. So two stations were removed. Also the original at ground level Richmond section is now an elevated monstrosity that one would see only in industrial areas and not along a city's main corridor.

Not only did the government accept all risk but the majority of the so-called private money came from two sources of public sector pension money, Caisse de depot (Quebec government pubic pension funds) and the BC Investment Management Corporation (BC government public pension funds). The Caisse de depot owns Ivanhoe Cambridge which owns two of the major shopping centres along the Canada Line route, Oakridge and Richmond Centre. Both shopping malls stand to gain from upzoning and redevelopment. Not only will Caisse de depot gain in increased property value but it will also gain from its 'private' investment in the RAV or Canada Line in both profit during construction and in interest payments paid by all of us living in the region.

I am not sure about the reasons the government paid over $50 million to SNC Lavalin or whatever name it has chosen to cloak its involvement in the RAV line but I do know that SNC Lavalin was involved in Asset Backed Commercial Paper investments that were frozen back in 2007. Most large investors may never seen a full return of those monies.

On another point, the cost of this line had gone from less than $1 billion in 1998 to over $2 billion in 2008. This is not unusual for urban rail projects to have their costs underestimated as well as their boardings.

One would have to wonder who paid for all the utility relocations while the open pit mining was taking place along Cambie and some sections of the downtown and Yaletown areas. Usually these costs are part of the project but no one appears willing to state that. If these costs were not part of the project costs, that is, part of the SNC Lavalin bid, then who bore these costs? It probably doesn't matter in terms of who is going to pay for all of this, but it does matter when one tallies up the true costs.

But, perhaps it will be like the Olympic Games being hosted here in 2010. The full costs will only be speculated on but never really known. Is this anyway to be accountable for public funds?

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Alex Barker

Apr 19, 2009 at 10:08am

The Vancouver Sun will be interviewing both Carol James and Gordon Campbell sometime next week. They have asked the public to suggest 5 questions which they will put to them both.

My question was successfully selected by the Editor as one of those 5 questions. My question follows. Keep your eyes on the Vancouver Sun for the answers they both give.

What will your Government do to prevent this ever happening again in B.C. and will you provide compensation to those who have lost so much because of this P3 project?

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Randy Chatterjee

Apr 19, 2009 at 11:29am

The published facts speak for themselves.

The RAV delivery contract between the 35-year Concessionaire for the RAV Line, InTransitBC LLP, and the project's prime contractor, SNC-Lavalin--no arms length transaction here--was announced in the summer of 2005 at $1.64 billion, the true and fixed cost of construction.

The difference between this figure and the BC Auditor General's findings of at least $2.5 billion in total project construction liability to the taxpayer, plus significant risk transfer to the government of any ridership shortfalls (90% of the shortfall below 100,000 pd) and geotechnical risks (flooding or earthquakes), is one billion dollars of pure graft.

Even RAVCo admits publicly to a 25%, or $410 million, cost overrun to their current $2.05 billion figure. "On budget"?

How many Senate seats does one billion dollars buy? How quickly can a government bankrupt a once-solvent and once-public transportation authority by "privatizing" its services using public pension funds as financial leverage?

The facts and hard links to all government reports and independent financial data have been laid out in public view for the past 4 years at www.doravright.ca, a product of the research of dozens of industry professionals from across Canada. Although invited to do so, RAVCo, now cynically renamed Canada Line Co (CLCo), has never disputed the facts as presented currently on this site.

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gary

Apr 19, 2009 at 4:20pm

I no some workers who have been assembling the electrical components in the stations.It seems as the government wanted to keep the costs as low as possible they decided to go with the lowest grade electrical system available which has been described to me as complete junk and will need constant matinence and repair except it has already been discontinued and the only people who understand it are from the Ohio company which supplied it.
The Cars should be fine but the track is junk too there is no way the above ground section will operate in snow and ice this has the potential to be a disaster hopefully it will derail (no pun intended ) future P3 because this is going to end up costing alot in maitenence that taxpayers will end up covering not to mention the guaranteed ridership that we already have to cover plus travellers from the airport are still probably going to prefer cabs as there get you to the front door of your hotel not 100ft underground in a unfamiler city

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Evil Eye

Apr 19, 2009 at 5:43pm

"This is not unusual for urban rail projects to have their costs underestimated as well as their boardings."

This true for heavy rail metro type rapid transit systems not light rail transit systems, which generally attracts more riders than forecasted.

To be anywhere cost effective, heavy rail metros are only build when ridership exceeds about 500,000 a day! (London Transport) RAV, our puny subway is only supposed to carry 100,000 a day. The Evil Eye is waiting for local property taxes to increase substantially.

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