Shock sticker: Adelaide Street Underpass balloons cost 50% off

There are no shovels in the ground yet, but the budget is already exceeded.

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There are no shovels in the ground yet, but the budget is already exceeded.

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Bids to build London’s long-awaited Adelaide Street underpass, a key upgrade to bypass rail bottlenecks, are millions over budget, a new report from City Hall reveals. Making up the difference could mean putting off two more road projects and taking on more debt.

Politicians will be asked to approve a staff recommendation to award a $60.2 million contract to McLean Taylor Construction Ltd., the lowest of three bidders. The others reached $68.5 million and $91.6 million.

“The Adelaide Underpass is a significant, one-of-a-kind project. It’s unique and complex,” said Doug MacRae, roads manager at City Hall.

“While we see pressures, cost volatility across the economy, particularly in the construction sector, the unique nature of this project makes it particularly vulnerable to supply chain disruptions and labor shortages.”

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Even the trio of bids is a testament to rising costs and ‘strained market capacity’, city staff wrote in a report to politicians, as many other bidders were ‘pre-qualified’ as part of the process of town hall.

Still, all three bids were deemed competitive, according to city officials. It appears to be the cost of delivering such a massive project as inflation is high, supply chains face challenges and other construction projects in the London area are contend with contractors, according to staff.

With $22 million spent on the underpass so far, including detailed design and other consultancy work, City Hall will face a nearly $30 million budget hole if the contract McLean Taylor is approved.

The total cost of the project would be $87.6 million, a 50% increase from the original project budget of $58.3 million set in 2018.

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Staff suggest stopping two other transportation projects for several years: the repaving of the Wenige Freeway on Highbury Avenue between Hamilton Road and Highway 401; and the realignment, resurfacing and addition of bike lanes and sidewalks on Southdale Road and the addition of sidewalks on Wickerson Road.

“It’s important to work within our means,” MacRae said. “We have reviewed our program for projects whose deadlines can absorb a delay.

Even with these delays, it will take $8.4 million in additional debt financing and $9.5 million in new development charges to cover the cost.

The Canadian Pacific Railway is injecting about $9 million.

The underpass is a long-awaited antidote to around 100 minutes a day of traffic jams on the railway, which runs through Adelaide North near Central Avenue. The council voted to speed up construction by a decade last quarter.

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“This is an important project to solve the rail bottleneck and help people move along Adelaide Street,” the Ward 4 Coun said. Jesse Helmer, who represents the region.

“We have made progress over the past few years despite the challenges posed by the pandemic. Now that we are coming to the construction stage, the cost increases are very significant and a clear reminder can lead to significant cost to delay and postpone projects. »

Construction is expected to begin this spring and take approximately two years.

On whether rising costs, labor and parts shortages could push the project even further than budget, MacRae said the contract essentially “locks in” the price.

“The cost provided by the contractor is fixed,” he said, and includes an emergency cushion of $5.5 million. “We are absolutely certain that this contract can be realized on the basis of a competitive price.”

mstacey@postmedia.com

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ABOUT THE UNDERGROUND PASSAGE

  • Will run approximately from Central Avenue to McMahen Street
  • Start of work initially planned for 2031
  • Indirect benefits include new sewers, streetlights and trees
  • A temporary two-lane road will be constructed east of Adelaide Street to manage traffic while the underpass is under construction
  • Canadian Pacific Railway is contributing $9 million to the project, while Ottawa has committed more than $6 million and Queen’s Park $5 million.
  • 23 properties purchased (some expropriated), in whole or in part, to prepare for the major construction site

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