Autopsy of a 690 million fiasco

Poorly laid out plans, streets opened, then closed, then reopened, immense delays: the Pie-IX Rapid Bus Service (SRB) project was a true comedy of errors, claims a recent $72 million lawsuit. A fiasco which illustrates through the tape the flaws in the way public transport projects are carried out in Quebec.

I only had one question in mind after going through the 76 pages of the lawsuit filed by an entrepreneur against the City of Montreal and the Regional Metropolitan Transport Authority (ARTM), in the SRB Pie-IX file.

How could this project have been so poorly planned, from the very first stages of its development?

Some sub-questions, too:

Were the people who prepared the plans and specifications drunk?

Under the influence of magic mushrooms?

Astral travel?

I’m joking a little, but what we can read in this $72 million lawsuit is absolutely no laughing matter. Everyone loses in this story.

***

I am summarizing the main points of the SRB Pie-IX, for those who have not followed its painful progression over the last 14 years.

The project was announced in 2009 by the administration of Gérald Tremblay. Its objective: to provide a reserved bus lane from the north to the south of the island of Montreal, in the middle of Pie-IX Boulevard, for approximately 11 kilometers. It was an “integrated” project, which aimed to redo all the infrastructures such as aqueducts and sidewalks at the same time.

Estimated bill at the time: 154 million.

The project took a decade to get off the ground, which is surreal in itself. But it was at the moment of the first shovelful of earth that the unpleasant surprises really began, alleges the EBC company in a lawsuit filed on 1^er December at the Montreal courthouse.

Bad surprises by the hundreds.

EBC, which obtained three contracts worth 167 million, claims to have found itself grappling with “incessant” conflicts involving underground infrastructure, placed in the wrong place or completely absent from the plans and specifications.

For example: gas pipes, large concrete electrical blocks or even sewer pipes. Some in operation, others abandoned, others still in an unknown state.

All of these discoveries had a “major and colossal impact” on the construction site, which forced EBC to hire additional teams to try to meet the schedule, we can read in the lawsuit.

The clients – the City of Montreal and the ARTM – have already recognized several problems and agreed to pay additional costs, but EBC also wants to be compensated for the indirect costs that it says it has incurred. This is the central point of his approach initiated before the Superior Court.

The City, for its part, filed a 5 million lawsuit in 2022 against the firm AECOM, the one which developed the plans and specifications for the project. She accuses him of having made several errors and omissions which caused the cost of the project to skyrocket.

***

It will be up to the court to rule on the wrongs of each party in this case. To determine whether the City gave bad information to AECOM, or whether the firm did its job poorly, or whether it was a combination of all of these.

These legal proceedings could last for years and produce no results.

What we already know is that the costs of this project are enormous. The SRB Pie-IX will cost at least 690 million, including a 1.6 kilometer extension announced earlier this year^⁠1.

Perhaps unintentionally, the pursuit of EBC also highlights the limits of the “traditional” mode of carrying out major infrastructure projects in Quebec.

A rough summary: under this model, the client prepares the plans and specifications (often with the help of an external firm), and then makes a public call for tenders to find contractors who offer a price based on the information provided.

Information that is believed to be accurate.

The group that wins the contract is generally the lowest bidder, which includes a contingency reserve in its bid.

This “traditional” method is increasingly being called into question by construction companies. They no longer want to assume the majority of the risk in large infrastructure projects, without having a say in their development.

The model began to change in many places in the late 2010s, and even more accelerated during the pandemic as construction costs skyrocketed. In Ontario and Western Canada, in particular.

I went to Calgary earlier this year, where I met the head of the Green Line project, a $5.5 billion light rail project currently under development. I will talk to you about it in more detail soon, but I can tell you that the mode of development of this project is light years away from what we observe in Quebec.

Basically, the promoters of the Green Line (a public project, by the way) have planned a development phase of 12 to 18 months with the selected consortium. During this period, they meet every week with all the stakeholders involved to identify potential risks and problems. A real collaboration.

The objective, broadly speaking, is to modulate the expectations of both sides, to work together on solutions and to validate throughout the process the realism of what is proposed. This aims to avoid unpleasant surprises at the end of the journey, like the one recently experienced with the Quebec tramway.

“With our approach, we are only going to pay for the risks that materialize: if they do not materialize, the manufacturers benefit, and so do we,” Darshpreet Bhatti, CEO of the Green Line project, summed up to me.

The Legault government wants to fundamentally review the way in which major infrastructure projects are carried out in Quebec, with a new agency which would notably simplify calls for tenders. A bill was to be tabled this fall, but it will not ultimately be tabled until winter 2024, at the earliest.

While the extension of the Montreal metro blue line appears threatened (once again!) due to the rigidity of the calls for tenders process^⁠2this reform cannot come quickly enough.