Saturday, October 24, 2009

Ottawa Light Rail Now Estimated at $6.6 Billion

The Ottawa Citizen reported yesterday that the cost of the new light rail train system in the Nation's Capitol will reach a staggering cost of $6.6 billion dollars. The original estimate of $5 billion has been eclipsed in part thanks to a decision to include a tunnel through downtown, and part due to a 50% increase in the estimated cost of one particular line. The city is counting on $3.2 billion dollars of Federal and Provincial money for this project, and plan to incur a billion dollar debt. The project is slated to take two decades to complete.

While the $6.6 billion dollar estimate is troubling, it will only get worse. According to an exhaustive report from Bent Flyvbjerg at the Department of Development and Planning at Aalborg University in Denmark, the average LRT project in North America incurs a cost overrun of 35.8%. Note that this figure refers to the cost from the moment that the project breaks ground. In other words, the city should expect the project to run closer to $9 billion dollars. That is, unless it is one of the 25% of projects with a cost overrun of 60% or more.

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