VANCOUVER — The revelation this week that the cost of the Surrey-to-Langley SkyTrain extension has ballooned by 50 per cent reflects a trend, some experts say, that’s been happening across governments: the hollowing out of expertise they need to manage such big projects.
“It’s the same in every other province,” said transportation academic Marco Chitti. “It’s a season of the year where everybody’s redoing estimates and this kind of news drops, but it’s particularly bad in Canada.”
Projects face unavoidable inflation, but experts say Canadian governments over several decades have lost the staff expertise they need to manage such large projects and so “overpay” for projects, said Chitti, a fellow in McGill University’s geography department and the Marron institute of Urban Management at New York University.
B.C. Transportation Minister Rob Fleming argued that inflation pressure is particularly high for rail-based infrastructure, including the 16-kilometre Surrey to Langley SkyTrain extension, which is due to start construction this fall.
After the award of contracts, the SkyTrain extension is budgeted to cost $5.996 billion, up from the $3.94 billion estimate in December.
Since 2021, labour costs have risen 20 per cent, material costs are up 58 per cent and international freight costs rose 115 per cent, Fleming said.
“These contracts were awarded three days ago [and] the market was reflected in a competitive bidding process,” Fleming said. He added that bidders included firms experienced with construction of SkyTrain’s Millennium line.
“Unfortunately we’re seeing this across Canada.”
Calgary recently announced the budget for its Green Line extension of the city’s LRT system had exploded from $5 billion to $6.2 billion. And it only hit that number by cutting the six stations from its plans.
And the cost of the Ontario government’s Ontario Line subway in Toronto skyrocketed 43 per cent to $27.2 billion. The project was first unveiled in 2019 as a $10.9 billion project billed as a relief valve for other congested transit lines.
“It doesn’t matter what political stripe the government is, we’re seeing Conservative governments in Ontario and Alberta facing the same kinds of pressure to build infrastructure,” Fleming said. “The cost has gone up period.”
Chitti, however, said other countries, such as France, Germany and South Korea, seem to have done better at controlling inflation, but “in Canada (control) has been worse than elsewhere because of other problems that were already existing.”
The explanation is “long and complex,” but can be summarized as an overreliance on the private sector for expertise in project design and procurement methods after having “emptied out the public sector” of engineers, Chitti said.
In B.C., the province built the Millennium Line and Evergreen Line extensions of SkyTrain and the Canada Line to Richmond through the late 1990s and 2000s, but elsewhere in North America governments didn’t build a lot of rail infrastructure.
“So even the capacity of the private sector shrank for this kind of big transit infrastructure,” he said.
Now, Chitti contends, a lot of governments are trying to build big projects at the same time in an overheated market, with governments that lack the expertise to manage projects.
That works against governments when writing the tender documents, the sets of specifications that contractors bid on, said Troy Vassos, an adjunct professor in the University of B.C.’s engineering department.
Without experience, departments can wind up writing tender documents that don’t have enough information and are open for contractors to find deficiencies that need to be fixed — at added cost.
“It’s (the) intelligence that you’ve got prior to starting the contract, or tendering the contract, that ends up controlling what your costs are going to be,” said Vassos, who has 40 years experience in civil engineering.
Chitti said governments tend to cover risks associated with big projects by padding budget contingencies.
“That is like a way of saying to the market, we are willing to spend (that contingency), and the market is really reactive to this,” Chitti said. “And what the politicians are doing, of course, [is saying] we’re going to foot the bill to every single penny.”
For the SkyTrain extension, Fleming said for now the province is backstopping the increased cost, but will be asking Ottawa to raise its contribution to the project, which sits at the $1.3 billion established in a 2021 agreement.
Other watchdog organizations argue federal and provincial governments should be compelled to put in place stricter, and independent, cost controls for big projects. “B.C. and every other province and territory must establish an independent financial accountability officer who is empowered and has the staff and resources needed to review government spending projections and issue public reports about whether the projections are accurate,” said Duff Conacher, co-founder of the group Democracy Watch.
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