City infrastructure projects, including the $5.5 billion Green Line, could be hit by budget escalation due to the rising cost of materials, the mayor said Thursday.
Mayor Naheed Nenshi’s comments came a day after the Calgary Event Centre project was put on hold. It was paused due to differences in the project cost estimate and the facility requirements.
It’s believed between construction inflationary pressure and potential changes requested by the Calgary Sports and Entertainment Corporation (CSEC), that the increase in cost is at least $70 million.
Those same construction cost hikes could hit other major Calgary projects.
“This is something that we’re investigating right now,” the mayor said.
“It’s one of the unexpected things about the COVID pandemic is that the prices of basic materials have gone through the roof. Lumber is more expensive now than ever. And we anticipate that steel and concrete may follow.”
The mayor said he wasn’t as concerned about the arena project as he was projects like the Green Line delay. Though he would rather take a bit of extra time with the arena, he said.
“I’d rather spend a little more time upfront, making sure we get it right. If that means our construction and timetable slips a little bit, that’s fine. It’ll still be shorter timeline fixing it as you go.”
The mayor said they’re looking at strategies to hedge against future prices by locking them in now. Especially with the US government’s expected multi-trillion-dollar pandemic infrastructure package kicking in soon.
Billion in transit projects in Canada
Green Line committee chair Coun. Shane Keating also acknowledged a potential cost increase due to rising building material prices.
He said the situation could be made even worse by an estimated $60 billion in transit-related projects expected in Canada alone.
He had no qualms about laying blame for the delay that’s put them in this position. Keating said had there not been prolonged interference from the province, Calgary would have had the project already rolling along.
The Green Line project is paused as the city and province iron out details on design, procurement and management of Calgary’s largest ever infrastructure project.
“At one time we were front and center for all of this. And you know we should have been,” Keating told LiveWire Calgary.
“We should have been roaring ahead. And we’ve kind of delayed and dickered around and then had the GOA (Government of Alberta) come in and do their little macho stuff.”
Keating said without the worry over demand for supplies or services, the city would have ensured costs were controlled.
“We probably would have beat the demand. We would have been front and center and had everything tied up and actually going and not have these possible increases,” he said.
An email request was delivered to the Alberta government Thursday morning asking how they would handle cost escalation due to the Green Line project delay.
They have not responded to that request.
- With files from Jayson Black Kettle