City changes west LRT contract parameters after potential builders back out

The City of Edmonton is switching gears on the Valley Line West LRT and breaking up the project contract into two parts: one to design and build the infrastructure and another to supply the light rail vehicles.

Earlier this year, the city was on a questto secure one contract forboth jobs.

The new strategy, under adesign-build-finance model, comes after two of the three shortlisted teams withdrew from the previous procurement process.

Bruce Ferguson, the city's branch manager of LRT expansion, said they consulted 24 contractors who were concerned about taking on the responsibility of supplying the vehicles.

"It's difficult for them to take that risk, it's difficult for them to build that risk into their price and still be competitive," Fegusonsaid.

• Valley Line West LRT loses two of three prospective construction teams
• City moves forward with design for Valley Line West LRT

The city will launch the new procurement process in early 2020, with the goal of choosing a contractorfor the design, build and finance portion of the project bythe end of next year.

Under the design, build and finance model, the contractor finances the job for the construction period only.

"This is what would be called, in the marketplace, sort of a P3 light because we have a design and construction component but we also still have that third party financing component," Ferguson explained.

Traditional P3salso typically include an operations and maintenance component.

The Valley Line Southeast LRT, from Mill Woods to downtown, is a full public-private partnershipwith almost full responsibility on the TransEd consortium to build and maintain the line in a 30-year contract.

Coun. Andrew Knack, a long-time LRT proponent, isn't dismayed by the city's decision to removesome risk from the potentialbuilder.

"The city will take on a bit of risk now that's not uncommon if you think about the vast majority of projects that we've done. The city always has some risk built into the contract."

Knack is also confident his fellow councillors will continue to support the line, despite provincialfunding cutsfor infrastructure and upcoming tough budget talks at city hall.

• Alberta budget throws Edmonton's Valley Line West LRT into doubt
• Budget 2019: Province 'ripped up' deal with city, Edmonton mayor says

Knack refers to the Valley Line and LRT in general as critical components ofbuilding urban centres.

"This council, previous councils have been very committed to building our LRT network," Knack said. "You need efficient ways to move people across the city and LRT is one of the most efficient ways to do that."

The 14-kilometre Valley Line West from downtown to Lewis Farms is estimated to cost $2.7 billion, including land costs. The province has committed $1.04 billion.

Council's executive committee is scheduled to review the new contract approachat a meeting Nov. 18.