吃瓜爆料

The report cites cost overruns for major projects such as the overhaul of Union Station in Toronto and the construction of Lansdowne Park Stadium in Ottawa (photo by Neil Howard via flickr)

Five ways cities can avoid cost overruns on infrastructure: Matti Siemiatycki

Institute on Municipal Finance & Governance report provides roadmap for better planning

Toronto is heading into a massive period of investment in infrastructure, and a new 吃瓜爆料 report suggests ways it can be done without equally massive cost overruns.

The report was prepared for the and released at an event at the university鈥檚 Munk School of Global affairs on Jan. 21. It was written by Matti Siemiatycki, an associate professor in the department of geography and planning and an expert in municipal infrastructure. 

The report says 鈥渃ost overruns and schedule delays on infrastructure megaprojects are a common news story in the media, in Canada and around the world. Millions of dollars here, months of delays there. International evidence suggests that the bigger the project the more likely it will go over budget and miss its deadlines.鈥

In an interview with 吃瓜爆料, Siemiatycki said concerns about cost overruns 鈥渁re important and timely because we are entering a period where infrastructure has become this key buzzword, everyone is recognizing  across the political spectrum that now is a good time to build it and infrastructure is the bedrock for  prosperity, both here in the city and more broadly across Canada.鈥

The report lists some very public examples of cost overruns: the construction of the Spadina subway extension; the redevelopment of Union Station; the purchase of new TTC streetcars; the revitalization of Nathan Phillips Square; the upgrading of Queen鈥檚 Quay Boulevard; the building of new city halls in Vaughan and Guelph and the construction of Lansdowne Park Stadium in Ottawa.

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photo of new streetcars

鈥淧oorly executed public works can burden governments with hundreds of millions of dollars in unexpected expenses, put the financial viability of projects at risk and exacerbate construction related disruptions for residents and businesses,鈥 the report states.

Siemiatycki suggested five remedies for city officials to consider:  

  • Improved performance monitoring, reporting and information sharing.
  • Government tracking of the best-performing companies and contractors to ensure more predictable outcomes.
  • Better training of staff overseeing projects in management skills such as enforcing contracts and resolving disputes.
  • Drawing on more precise forecasting techniques based on data about previous projects. 
  • Explore public-private partnerships to make it easier to control costs and enforce deadlines.

Siemiatycki noted that cost overruns 鈥渞eally have the potential to undermine the level of support from the public for these big, critically important projects. If people can鈥檛 believe that governments can deliver these projects effectively, then they won鈥檛 support them.鈥 

If governments keep their promises to fund infrastructure projects, 鈥渨e will be heading into the greatest period of spending in Canadian history,鈥 Siemiatycki said. The federal government is promising major funding which could come in the spring budget or even sooner. Toronto Mayor John Tory is proposing a special property tax levy to help fund infrastructure projects. 

Public/private partnerships (P3s) are 鈥渆ssentially a model to transfer risk from the public sector to the private sector, especially around construction. The government  buys insurance against the cost of the project escalating and that can be a real benefit for major projects. But the government pays a significant premium on the front end to ensure cost certainty.鈥 

Siemiatycki stressed that cost overruns 鈥渄on鈥檛 just only plague public sector projects.  Look at the oil sands, energy projects in the private sector. They demonstrate many of the same phenomena as government. This is a much broader challenge.鈥

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