According to an analysis by the Construction Design Alliance of Ontario (CDAO), Ontario and Toronto taxpayers could save up to half a billion dollars in construction and design costs for Metrolinx's Eglinton Crosstown transit project by tendering it differently.
“Simply put, bundling the station and maintenance facility construction into one contract has hamstrung the tendering process, limited competition, stifled innovation and isolated the small- and medium-sized construction and design firms,” said CDAO Chair Clive Thurston. “This procedure will cost taxpayers more in the end. It is a case where bigger is not always better.”
In the case of the CA$4-billion (US$3.9 billion) Eglinton Crosstown line, the size and scope of the project alone has resulted in only two consortiums expressing public interest in the massive project. One consortium is Canadian-based and the other is led by foreign multi-national firms, says Thurston, who is also president of the Ontario General Contractors Association (OGCA).
An analysis done by OGCA, on behalf of CDAO, reveals had the tender been broken down into smaller bites and stations been tendered individually, up to 10 small- and medium-sized, Ontario-based construction and design firms would have bid on each of the smaller projects, resulting in increased competition and lower costs to taxpayers. The OGCA notes that such a process has the potential to save up to CA$500 million (US$482 million).
“CDAO is not opposed to bundling, but it is a procurement tool that has to be done in the right place, at the right time and for the right reasons with the right market research to support the decision,” said Thurston.
“We believe the Eglinton Crosstown project is just too big to be handled under a single contract,” he explained. “The current scale of the project is such that there is a huge risk profile and even some of the largest companies in Canada are not willing to bid. Breaking it up into smaller chunks would result in better value for taxpayer dollars.”