WestLRTupdate

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Transportation Department Report toThe SPC on Land Use, Planning and Transportation2011 November 16

WEST LRT - PROJECT UPDATE AND COMPLETION PLAN

Approval(s): GM (Mac Logan), Dir. G. Stewart, concurs with this report. Author (D. Norton)

ISC: UNRESTRICTEDLPT2011-99Page 1 of 6

EXECUTIVE SUMMARYAt the 2011 July 16 meeting of the Standing Policy Committee of Land Use, Planning andTransportation, Committee requested an update on the schedule and budget of the West LRTproject.

The overall project is progressing steadily being approximately 80% complete in terms of valueof the work completed. At this stage, the Design-Build consortium is focused on completion ofroad works, construction of track bed, rails and the six stations. Many sections of finished roadwork are now in use by the traveling public. Additional infrastructure, such as the 24th StreetSW pedestrian bridge, will soon be available.

The Design-Build consortium is scheduled to turn the track and stations over to Calgary Transit

on 2012 October 30. The turn over date has moved by 60 days from what was originally agreedto, in response to third party utility installation delays. The design-build contractor recommendedthis extension to the contract completion. Administration agreed as meeting the originalcompletion date would have required accelerating construction work in the winter months andby doing so, increasing costs to The City and risking lower quality.

Calgary Transit is planning a testing and commissioning program that will result in a projectedrevenue service date in 2013 March.

The financial forecast for the total project is projecting a slight increase in the expenditures tocover costs associated with the scope and construction changes ($35M), and the potential forhigher than expected claims related to the acquisition of land. No funding for public art was set

aside for this project. Administration will seek a potential budget and appropriation increase in2012 when the costs are better defined.

ADMINISTRATION RECOMMENDATION(S)

That the SPC on Land Use, Planning and Transportation recommends that Council:

1. Receive this project update report for information, and;2. Direct Administration to bring forward a revised budget for Council approval for Capital

Program 738 West LRT which reflects an increase for construction, public art, and landcosts in 2012.

PREVIOUS COUNCIL DIRECTION / POLICYAt the 2011 July 16 meeting of the Standing Policy Committee of Land Use, Planning andTransportation, Committee requested an update on the schedule and budget of the West LRTproject.

The West LRT project was initiated by Council on 2007 November 06, when the followingmotions were approved:


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3a. Council approve the West LRT as the new LRT line to be constructed, and approvean initial appropriation of $84 Million (21 LRVs) in Program 664;

3b. Council approve the West LRT as the new LRT line to be constructed, and $50Million in Program 738 West LRT for design and strategic land purchase; and

4. Direct the Administration to prepare a report to 2007 November 21 ProposedStrategic Planning meeting of Council for approval of the functional design, budget anddesign/build implementation strategy for the West LRT.

At the 2007 November 20 Special Meeting, Council approved C2007-78 West LRT Alignment,Budget and Project Delivery which included the approval of expenditures for Capital Program738 West LRT and that the project be delivered in a design build procurement methodology.

BACKGROUND

Design-Build ProcurementDesign-Build (DB) procurement was selected to deliver this project because it offers a higherdegree of schedule and cost certainty for the risks that are transferred to the DB Contractor fromthe Owner (Calgary Transit). It is not economical to transfer 100% of the project risks to thecontractor. If the DB Contractor is forced to price every eventuality, their price becomesexcessive. The best value proposition for an Owner in Design Build procurement is to allocatethe risks to the party best positioned to control and mitigate them, and then to provide anappropriate change allowance and administer a principled change management process.

The change management process is different within a DB methodology than in The Citys more

common Design-Bid-Build format. In the DB methodology, the Owner must fix the specifications,design and delivery date for the DB Contractor to deliver. Changes after contract initiating arepossible but erode the costs and schedule expectations that the Owner has assumed.

The West LRT program does include a construction change allowance as unforeseen itemsshould be prudently anticipated. Major construction projects normally maintain a changeallowance in the order of 10%. West LRT started with a change allowance of approximately$92M or 6.9% of the project budget. A Council decision at the project outset allocated $61M ofthat change allowance to the 45 Street station grade separation resulting in an effective changeallowance of $31M or 2.2% at project commencement, well below the level of typical largeconstruction projects.

Project Progress to DateLandAccess to all land parcels required for construction have been obtained. The land strategyfocused on a process that would secure all necessary parcels by a specific date. The City hasacquired 27 residential and 18 commercial properties within a compressed timeframe.Negotiations were successfully completed on 25 of the 27 residential properties and 3 of the 18commercial properties to acquire the properties without expropriation. The remaining parcelacquisition included the expropriation of 20 leasehold interests (i.e. tenants of the commercialproperties we have purchased). Negotiated agreements or settlements with releases havebeen completed for the majority of the project. Only 14 Applications for Determination of


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The primary project change was a decision of Council at the outset of the project to build the45th Street West station below grade to improve access and egress from the adjacentcommunities, the Calgary Police Service District 2 station and Fire Hall #8. This change wasstrongly supported by the adjacent communities. The resulting $61 million increase in thecontract cost allocated nearly two-thirds of the project change allowance prior to constructioncommencing.

The new high school and parkade was constructed well under the allocated budget. The costsavings were reinvested into the project to expand and enhance the new school at a point intime when the maximum cost savings could be realized towards a planned future expansion. Itwas the right decision to make at the time; however, it has the consequence of absorbingsavings that would typically be applied to offset other unforeseen project costs.

A significant unknown element of the budget is the final land negotiations. Administration iscontinuing to make every effort to negotiate settlements on the remaining claims; however, atthis point in time, the potential exposure to The City within these claims exceed currentallocations.

When the West LRT budget was established, Transportation advocated for a fixed annualcontribution by Transportation to public art funding, supplemented by a fixed contribution to thePublic Art Reserve Fund. This contribution was separate from the capital spending for WestLRT. The draft program was never adopted, however, and City Council Policy on public artfunding is currently understood to govern. No funding for public art was set aside specifically forthis project. The proposal is to add installations to the sites provided in the plan, when funds

become available.

INVESTIGATION: ALTERNATIVES AND ANALYSIS

Scope ReductionIn an effort to meet the current budget allocation, the project team has investigated ways toreduce the project scope. West LRT extension from 11 Street W to 73 Street W was developedas an operational whole, with storage tracks at the terminal station 69 Street, crossovers topermit operational flexibility and reliability, and integrated systems for traction power,supervisory control and data acquisition, security, feeder bus loops, and Park and Ride. Nostaged implementation can be achieved without expenses greater than the value of the savings,and the interim implementation would not meet Calgary Transits basic mandate for safety and

reliability. Reductions to scope of the project are not readily available and undesirable from anend product perspective.

Stakeholder Engagement, Research and CommunicationThe project was substantially developed through over 160 public meetings. Ongoing communityconsultation is taking place to finalize design work such as landscaping. The constructionactivity has triggered numerous homeowner and community inquiries and requests for additionsor modifications. Given the current project budget status, scope changes and enhancementscannot be readily accommodated.


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The project team continues to engage at the inform level using the project website,www.westlrt.ca, project update mail outs, and an opt-in email list for regular traffic updates. Thebrand of West LRT is very well defined, and regularly receives praise for the level of informationprovided to the affected communities, businesses, and to the city as a whole.

Strategic AlignmentWest LRT is in alignment with Council strategic priorities.

CTrain system is wind powered (Ride the Wind), contributing significantly to the long termsustainability of The City. Ridership and green house gas (GHG) reduction estimates have beenproduced under separate cover and are not included in this report.Roadway improvements in the west end of downtown Calgary to accommodate population and

employment growth are mitigated by the construction of the West LRT, saving the capital andoperational investment in roadway widening as well as associated traffic impacts that wouldhave occurred to the adjacent communities.

The redevelopment of Transit Oriented Development (TOD) sites will contribute to Councilsgoal of a sustainable compact urban form that reduces urban sprawl. Much of the investmentinto the Westbrook site will be realized in the decade after the LRT extension is in operation.

Social, Environmental, Economic (External)West LRT route selection embodied environmental leadership by The City. The route passedthrough or near brownfield sites with high potential for immediate redevelopment. Discoveredcontaminates have been dealt with to the strictest of Alberta Environment (AENV) and federal

standards, with the full participation of Water Resources Water Quality Services division (WRWQS) and Environment and Safety Management (ESM), among other City stakeholderdepartments.

The results of these efforts are a corridor extending 8 km along which vibrant, walkablecommunities are expected to flourish (social), with substantially abated contamination fromhistorical uses and a greener foot print from Riding the Wind (environmental), and improvedland uses with significant opportunities for existing and new small businesses to provide goodsand personal services at a community scale (economic).

Financial CapacityCurrent and Future Operating Budget:

Calgary Transit is preparing its 2012 to 2014 business plan and budget based on a Q1 2013revenue service date for West LRT.

Current and Future Capital Budget:The original project construction budget was $1.03 billion (excluding land and bridge financingcosts) including associated light rail vehicles, the new Ernest Manning High School and 69Street SW shared parkade. Funding for West LRT is mainly from the Municipal SustainabilityInitiative (MSI).
http://www.westlrt.ca/http://www.westlrt.ca/http://www.westlrt.ca/


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The project cost was has increased largely due to the expansion and improvement of the projectdeliverables in response to public requests. The major changes include building the 45th StreetWest station below grade.

A budget shortfall of $35 million (2.2%) is currently projected for construction change allowance.Future anticipated land settlements and potential compensation awards are not included in thisincrease. Allowances for the provision of public art, as per current Council policy, have notbeen budgeted for in this project.

Risk AssessmentThe challenge of risk allocation in Design Build is to get the best price up front in exchange for areasonable value of changes through detailed design and construction. Too little change means

The City has paid inflated prices up front because of excessive risk transference. Too muchchange means The City retained too much of the risk and is paying Design Build overheads forwhat is closer to a conventional (low risk) construction contract. The percentage of constructionvalue recommended for change allowance in this Report strikes a balance that is reasonable.

The risk associated with undertaking a land acquisition strategy within a compressed timeframeis increased costs. When land must be secured ahead of a deadline to guarantee constructionaccess, then expropriation of property is virtually inevitable. Expropriation brings unpredictablecosts to be determined at a later date, if a negotiated settlement cannot be achieved.Administration has executed the West LRT Acquisition Strategy to minimize The Citys exposureand ensure that all required property was secured in time.

REASON(S) FOR RECOMMENDATION(S):Administration recommends that additional funds be allocated to the program when morecertainty of costs are known in 2012, in order that West LRT project may be successfullycompleted. Funding is anticipated to come from the Provincial GreenTRIP program.

ATTACHMENT(S)None.

Documents

WestLRTupdate