The cost of the Gordie-Howe Bridge, which will link Windsor and Detroit in 2022, was initially valued at $4.8 billion. However, in documents released this week, we learn that the project is now estimated at 3.46 billion. What explains this difference in price?
In November, at a public meeting on the construction of what will become the largest cable-stayed bridge in North America, the Windsor-Detroit Bridge Authority (WPAA) announced the start of work in 2018. The The cost of construction was then estimated at $ 4.8 billion.
At that time, no bidder had been selected yet: the precise budget was not yet known. The schedule was also subject to change.
In April 2018, Ottawa ordered a review of the project budget . The federal government feared cost overruns.
The three listed bidders were afraid of not being able to meet the government’s budget limits. Experts were consulted to find savings and propose technical changes.
APWD Director of Communications Mark Butler says these savings have not been made at the expense of user safety.
There is absolutely no concern. This cross-border link will exist for the next 125 years. We want to ensure that it is a safe, reliable and secure bridge.
Mark Butler, Windsor-Detroit Bridge Authority
Financed by tolls
In July, the APWD announced that the Bridging North America group had been selected for the construction, management, maintenance and financing of the bridge.
We now learn, a month later, that the consortium responsible for the project now estimates the cost of construction at $ 3.46 billion.
The information, contained in a pre-sale document prepared by Standard & Poor’s (S & P), specifies that the project will be 80% subsidized by Canadian taxpayers. The rating agency at the same time gives the rating of A – to the project, stating that the outlook is
The federal government, through the Windsor-Detroit Bridge Authority, will cover the costs throughout the construction as part of a public-private partnership. Ottawa hopes to recover construction costs through toll revenues in the first 30 years of the bridge.
- Windsor-Detroit Trade Corridor is the busiest commercial land crossing between Canada and the United States
- In 2017, more than 2.6 million trucks crossed the Windsor-Detroit border
- They were carrying goods worth more than 130 billion dollars
Source: Infrastructure Canada
The $ 3.46 billion budget, however, is not the total cost of the bridge. The amount will be known at the end of September, when the agreement will be formally ratified between the Bridge Authority and the successful bidder.
Bridging North America will have to build, manage and maintain the bridge for 30 years at this price.
In the event of cost overruns, it will be up to the private company to assume these unforeseen events and not to the Canadian government.
Patrick Leblond, an economist and professor at the University of Ottawa, says the Bridging North America group is entirely responsible for its budget estimate.
“The consortium has proposed a fixed price in the presale report. The group is therefore able to respect this budget in the deadlines that have been established. So if there is cost overruns, the consortium assumes them. “
Anticipate the unexpected
According to Patrick Leblond, in a budget of $ 3.46 billion,
contingencies are expected .
However, Gilles LeVasseur, professor of management and law, from the University of Ottawa, considers that the risks of cost overruns for such a project are very high.
Inflation may surprise! In large projects, an increase of just 2% over the next three or four years is catastrophic.
A crisis on tariffs and a lack of a trade agreement in the United States in addition to the high number of subcontractors could also lead to a rapid increase in bridge construction costs, according to Gilles LeVasseur.
The details of the agreement will be known at the end of September. For the moment, the APWD and Bridging North America are still in negotiation.
Renata Clack is a reporter for Spruce Tribune. She’s worked and interned at Glboal News Toronto and CHECX. Renata is based in Toronto and covers issues affecting her city. In addition to her severe Cinnabon addiction, she’s a Netflix enthusiast, a red wine drinker, and a voracious reader.