By: Anna Hardie
Today, if you go to the intersection of Toronto’s Eglinton Ave and Avenue Road, you will notice two things: terrible traffic and a nearly completed train station. The station is part of the Eglinton Crosstown Light Rail Transit (ECLRT) project which began construction in 2011. The project was procured by Infrastructure Ontario and awarded to Crosslinx to deliver the public-private partnership under the Design-Build-Finance-Maintain contract. Additionally, Metrolinx is the owner of the line and responsible for delivering the project with the TTC taking over operations once completed.
The timeline of this project has not fallen short of issues. The project, initially projected to cost $4.6 billion and be complete by 2020, is still under construction as of January 2023 with an increased budget of $5.6 billion and no set date of completion. The expensive and disruptive issues that have plagued this project have called into question the efficacy of the Public-Private Partnership (P3) model that was used for construction, as city councillors, residents and business owners begin to lose patience with the delays.
In December 2022, leaked internal records from Metrolinx, a crown corporation involved in the project, revealed they have no set timeline and “lack [a] credible plan” for completion. Delays in construction have been caused by several factors, ranging from the need to test trains along curvy tracks, concerns around seepage from leaks and mold, and pandemic related labour and supply chain issues. Further, Crosslinx took legal action against Metrolinx and Infrastructure Ontario for having to bear the burden of additional $134 million in costs related to the pandemic, which exacerbated delays. The seemingly endless construction has had a significant impact on the neighbourhood, which led to calls from City Councillors for a public inquiry led by the Ontario Government.
While it can be argued that the P3 delivery model led to these delays and cost overruns, it is challenging to argue this case without more publicly available information. P3s can bring in numerous benefits. In comparison to direct government procurement, P3s benefit from specialized expertise, decreased costs through competition in awarding contracts, and better infrastructure maintenance in the long-run. Moreover, the Government of Ontario reviews its P3 initiatives with an extensive Value for Money (VFM) process, which involves multiple government departments reviewing and analyzing these projects, typically in collaboration with Infrastructure Ontario and private-sector consulting firms such as Altus Group and MMM Group. Notwithstanding the many challenges in building the Eglinton Crosstown, studies show that the majority of P3 projects in Ontario are under budget compared to the traditional delivery method (see Figure 1). Moreover, of the 51 Public-Private Partnership projects reviewed by the Ontario Auditor General in 2014, 86% of the infrastructure projects were under budget, saving taxpayers $12.25 billion (see Figure 1). These factors show that P3s have been a generally successful method of financing public infrastructure in Ontario.
With that said, there is lots of room for improvement in Canada to build public transit more cost efficiently. Regardless of whether the project is financed through a traditional, single entity procurement process or a Public-Private Partnership, public transit is extremely expensive to build in Canada. Indeed, Toronto’s proposed Yonge-University subway line extension to Richmond Hill is expected to cost $636 million/km. In Vancouver and Montreal, rail projects can cost above $400million/km. In contrast, subway systems in Madrid and Seoul cost between $80 and $120 million per kilometer. According to a report from the Niskanen Center, an American think tank, jurisdiction plays a key part in determining a project’s cost since “the biggest factor behind a project’s cost is what country it is in.” The report explains that rigorous environmental regulations and the public’s right to litigate are among the main drivers of high building costs in the U.S. In countries like Italy, which has many laws surrounding the protection of historical buildings, most architecture assessments are done in-house, instead of through a judicial process. In the future, similar research needs to be done in Canada on whether environmental and litigation costs play a role in driving up infrastructure costs. On the other hand, what has been confirmed by multiple researchers is the impact of politics to prevent cost-effective construction. According to the transit researcher Alon Levy, Canadian politicians can get locked into election promises or prioritize local interest groups instead of basing building plans off of technical advice. Thus, rather than focusing on whether it is more efficient to finance public infrastructure through a P3 or a traditional project delivery, it is equally, if not more, important to understand how Ontario’s institutions and political factors can step in the way of large-scale projects from staying on budget and building efficiently.
All in all, it is hard to conclude that the many failures of the ECLRT project are due directly to its P3 delivery method. Because of the many benefits P3s bring, especially in Canadian markets, the effectiveness of P3s should not be confused with institutional or political barriers to completing large public works. Likewise, unexpected hurdles in the construction process can happen in any funding arrangement. While P3 should be continuously analyzed to prevent the kinds of delays and cost overruns seen in the Eglinton Crosstown, they are an important tool in building Canada’s future infrastructure.
Anna Hardie is a second-year student in the Master of Public Policy program. Her policy interests include economic, environmental, and social policy. Anna is working towards pursuing a career in consulting for the public sector and is currently a Design Researcher at the Innovation Hub.