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The cost status for the project recently shifted from amber to red, based on estimates submitted in January by the Green Line’s development partners
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Costs for the future Green Line are expected to escalate, but exactly how much won’t be known until a revised business case is made public this June, according to project officials.
Green Line board chair Don Fairborn and project CEO Darshpreet Bhatti presented the multi-billion-dollar LRT project’s first quarterly update of 2024 to the City of Calgary’s executive committee on Tuesday, highlighting that construction of the south alignment of the future CTrain line is expected to begin in the fall.
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But due to higher-than-anticipated estimates from some of the project’s subcontractors, Bhatti warned the Green Line board may have to consider options to address cost pressures in the lead-up to construction getting underway.
Those could include re-evaluating the procurement strategy, amending risk-sharing allocations between the project team and contractors, or possibly revising the scope of the project.
“We constantly look at all these options while keeping one thing in mind — that the benefits cannot be compromised by what we’re doing,” Bhatti said when presenting to the committee.
“There has to be a nice balance between benefits and risks.”
The current budget is $5.5 billion to construct the Green Line’s first phase, which will include 18 kilometres of light-rail track extending from Shepard in the southeast to Eau Claire in the downtown. The funding is being split between the city, provincial and federal governments.
Bhatti’s presentation Tuesday showed the Green Line’s cost status has shifted from “amber” to “red.” He said this occurred after the project team received their development partner’s most recent cost estimates in January, based on 30 per cent of the project’s design.
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“We always anticipated the market is tough,” he told the committee. “We’re not the only project experiencing it, so we were always cautious about where this may go.”
After the meeting, Bhatti told reporters it’s still too soon to report an updated cost, as estimates from contractors only relate to a portion of the project’s design.
But he acknowledged the Green Line’s budget was determined before the COVID-19 pandemic, and that inflationary pressures have impacted the market for infrastructure projects since then.
“We’re not the only project facing these challenges,” he said. “They are on every megaproject and even small projects are facing it.”
About $400 million has already been spent on the new CTrain line that Calgary city council approved a revised version of in 2020.
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Bhatti claimed the work delivered thus far has been on schedule and that the team has been able to find hundreds of millions of dollars in engineering efficiencies.
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As an example, he cited a decision to use a less expensive form of material for bridge decking on underpasses and overpasses than was originally planned — a decision he said trimmed $70 million from the budget.
“It’s not wrong, it meets all the standards and specs at the provincial level and the city level,” he said. “It’s just a different way of doing it.”
Summarizing the work completed to date in 2024, Bhatti said a diversion track was laid in January on a temporary embankment at 78th Avenue S.E., and that Canadian Pacific Kansas City rail traffic has been diverted to allow for construction to begin on a vehicle and pedestrian tunnel.
Demolition of the former Lilydale chicken processing plant in Ramsay, which began in November, is complete, and Bhatti noted crews will start demolishing the Eau Claire Mall this summer.
Other work underway this year includes relocating utilities in the Beltline and downtown, including transmission line cable pulling and a major relocation of infrastructure along Fifth Avenue, Sixth Avenue and Third Street S.W.
All land acquisitions required prior to starting construction should be completed by the end of this month.
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Public support for the project remains high, according to Bhatti. He noted that almost 90 per cent of 2,245 Calgarians surveyed last fall said they agree the Green Line is a necessary project.
Ward 1 Coun. Sonya Sharp asked Bhatti if the project team would conduct another survey after the revised business case is brought forward in June. He responded that public engagement will continue throughout the project.
Talking to reporters after the presentation, Sharp said she supports the implementation of the Green Line, as it will improve Calgary’s public transportation network, but that it’s important for the project to have transparency.
“You need to make sure you’re articulating what your next move is when it comes to the Green Line and how there’s still a return on investment for Calgarians for a project of this magnitude,” she said. “We need to see more numbers and need to be able to communicate that to Calgarians on the risk analysis and what this project will look like moving forward.”
Mayor Jyoti Gondek said the project’s transparency is highlighted in the quarterly reports the Green Line board presents to council, and that the next update in June should reveal more clarity on whether the Green Line needs a revised scope or budget.
“If there’s an additional ask that is needed, this is something that we’re obviously going to discuss with provincial and federal partners as well,” she said.
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