Infrastructure Build:Risks in Construction Contracts

January 2017 | Paul Jachymek – Senior Legal Counsel

Road Map - Presentation

Who is Metrolinx?

What we are Building

How we Procure

What Keeps us up at Night – Risks on these Projects

2

Who is Metrolinx?

Plan Build Operate

Metrolinx was created in 2006 by the Province of Ontario as the first

Regional Transportation Agency for the Greater Toronto and Hamilton Area.

Metrolinx Planning is guided by a Regional Transportation Plan – “the Big

Move”.

3

We Plan: From 2008…

4

We Plan: To A Network Vision

5

Building the Regional Rapid Transit

Network

Two bus rapid transit projects

Partially in-service,with remainder under construction:

Viva in York Region

Mississauga Transitway

New light rail transit lines (LRT)

Under construction: Eglinton

Crosstown

In design/planning: Finch West Hurontario Hamilton

TransformingGO train service – Regional Express Rail (RER)

More service on all lines

Electric trains, every 15 minutes or better in both directions, for most GO customers

Connecting it all together

Expanding and revitalizing Union Station, the heart of the regional network

One payment system across the 905 region and now deploying on TTC, on UP and on OC Transpo

6

UP Express

Express air

rail link from

Union Station

to Pearson

airport

Delivered on

time and on

budget

Started

service June

6, 2015

GO Transit and Regional Express Rail

(RER)

7

Procurement RER Procurement Strategy

In June 2016, the Metrolinx Board of Directors approved the RER

Procurement Plan, which included:

Package 1 Enabling Works

Series of Design-Bid-Build, Build-Finance, and Design-Build-Finance

contracts

Both on-corridor and off-corridor construction

Target completion by 2020

Package 2 and 3 procurements (to be awarded in 2019)

Off-corridor (stations and parking)

On-corridor (track, signals, electrification, vehicles)

88

Project Status - RER

9

Corridor Project Stage In-Service

Date On-Time On-Budget

Regional Express Rail Projects

Barrie Design 2025

Kitchener Design 2025

Lakeshore East Design 2025

Lakeshore West Design 2025

Milton Design 2025

Stouffville Design/Construction 2025

USRC Design 2025

Network Infrastructure Design 2025

Vehicles Design/Study 2025

Parking, Access & Property Design/Study Various

TOTAL RER $13,500,000,000

RER Projects: Short Term Launch

(Package 1)

No. Project Model Issue RFQ Issue RFP FC

1Stouffville Stations

PackageDBF 16-Jul 16-Sep Q3 2017

2HWY 401 / 409 Rail

TunnelDBF 16-Sep 16-Dec Q3 2017

3Cooksville Station

RedevelopmentDBF 16-Sep Q1 2017 Q3 2017

4 Union Station upgrades DBF Q4 2016 Q2 2017 Q1 2018

5 Barrie Corridor Grading BF Q1 2017 Q3 2017 Q4 2017

6

Lakeshore East

Grading Package (East

Corridor Expansion)

BF Q1 2017 Q3 2017 Q1 2018

7

Lakeshore East

Grading Package

(Central Corridor

Expansion)

BF Q1 2017 Q3 2017 Q1 2018

10

RER Projects: Short Term Launch

(Package 1)

No. Project Model Issue RFQ Issue RFP FC

8

Lakeshore East

Grading Package (West

Corridor Expansion)

BF Q1 2017 Q2 2018 Q4 2018

9Rutherford Station

PackageDBF Q1 2017 Q3 2017 Q2 2018

10Lakeshore East -

Eastern StationsBF Q1 2018 Q2 2018 Q1 2019

11Lakeshore West

Corridor PackageDBF Q3 2017 Q4 2017 Q4 2018

12Davenport Diamond

Grade SeparationDBF Q3 2017 Q4 2017 Q3 2018

13 Kipling Bus Terminal DBF Q1 2017 Q2 2017 Q3 2017

11

Cooksville Station

Station improvements and 1,900

space parking structure

Coordinated with the Hurontario

LRT

In the RFQ stage

12

Kipling Station

New bus terminal

integrated into the

TTC subway station

GO station

accessibility

In the RFQ stage

13

Bridges, Track and Grade Separations

New infrastructure

Approximately 150 kms of upgrades to

tracks

Nearly 100 bridge modifications

146 rail/road crossings being

evaluated for grade separations

Rouge River Bridge Expansion

Davenport Diamond Grade Separation

14

LRT Initiatives

15

Corridor Project Stage Approved Budget for Capital Construction

In-Service Date

On-Time On-Budget

Rapid Transit Projects

Eglinton Crosstown LRT Construction $5,300,000,000 2021

Finch West LRT Design $1,000,000,000 2021

Hurontario LRT Design $1,400,000,000 2022

Hamilton LRT Design $1,000,000,000 2024

Viva BRT Various $1,500,000,000 Various

Delivery of Projects – Methods Used

AFP – Specific for transit - Bundled

DBF

BF

DBFM

DBFMO

(Vehicles -In)

CCDC 2/4- Revised

DB –New

Technical Advisors - Bundled

QBS – New approach

16

Risk Transfer Principles

Assign risk to the party best able to:

Manage and mitigate the risk

Price the risk and/or accept cost risk

Recognize and plan for sector-specific and project-specific risks

Maintain the principles that risks allocated to Contractor must be

capable of being priced by Contractor

Establish clear contractual and technical rules in the agreement

Go to market with consistent approach on Risk Management

17

Transit Projects have Unique and Complex

Risks

Long Linear projects in urban environments with long timescales

Geotechnical

Environmental

Utilities

Existing Major Infrastructure

Permits, Licenses, Approvals and Agreements

Track Access Regime

Impact on Existing Service

Property Impacts - acquisitions

18

Transit Projects have Unique and Complex

Risks

Stakeholder Relationships

Payments Mechanism

Community Benefits

Key Individuals

Liquidated Damages

VPM

Injurious Affection

Safety

Value for Money

19

Some Issues - Expanded

Geotechnical

As is where is basis

Baseline Reports

Project Specific

Environmental

Rail Corridor = Rail Corridor Contamination

PLAA

Risk of stakeholder review, political risk (volume issues)

20

Some Issues - Expanded

Utilities

Unknown and Mislocated Utilities

Metrolinx risk where location is severely mislocated

Relocation

Shared risk regime for cost and/or schedule for relocation

work that must be completed by the Utility company

themselves that is of a significant value or impact on

schedule (Category 1 utility regime)

What can be done ahead of time

Existing Infrastructure

Latent Defects and integrated infrastructure

21

Some Issues - Expanded

Track Access

Establish clear rules for the submission and processing of

requests for access to track

Flagging provided by Metrolinx supplier with clear rules for

requesting flagging services and clear commitment to

provide

Delay and Compensation Event eligibility for failure to

provide flagging where properly requested

22

Some Issues - Expanded

Impact on Service

In circumstances where Metrolinx service to customers must

be impacted by Project Co, establish contractual terms and

conditions to motivate proponents to limit impacts (include

the pricing of these provisions in the procurement process to

be evaluated)

Damages associated with delays – LDs – Interim

Completion, Substantial Completion, Train Delays, Track

Closures, Customer Impacts

23

24