O-Train Confederation Line Project Update

O-Train Confederation Line Project Update Transportation Services Department Finance and Economic Development Committee March 6, 2018 Overview 1. Construction Update 2. Project Agreement: • Revenue Service Availability (RSA) Date; • Liquidated Damages; • Delay Claims/Events; • City Costs – Expenses and Revenues; and, • Negotiations. 3. Lessons Learned applied to Stage 2 2 Placeholder - Video 3 Blair Station 4 Cyrville Station 5 Cyrville Station 6 Train Testing & Operator Training 7 St. Laurent Station 8 St. Laurent Station 9 Tremblay Station 10 Hurdman Station 11 Hurdman Station 12 Lees Station 13 uOttawa Station 14 Rideau Station – concourse / platforms 15 Parliament Station – East Entrance 16 Parliament station – Platform 17 Lyon Station - Platform Level 18 Lyon Ventilation Fan 19 Pimisi Station 20 Pimisi Station 21 Bayview Station 22 Tunney’s Pasture Station 23 Tunney’s Pasture Station 24 Trackwork – Segment 1 25 Trackwork – Segment 2 26 Maintenance Storage Facility 27 East Guideway 28 City Confederation Line Priorities RTG meets the November 2, 2018 RSA date; The City receives a safe, reliable and world class Light Rail Transit (LRT) system; RTG covers all incremental costs resulting from the new RSA date; and, The interests of taxpayers, transit users and all residents of Ottawa are protected. 29 Project Agreement 1. The City will continue to hold the Rideau Transit Group (RTG) accountable for fully meeting the requirements of the Project Agreement; 2. The City continues to work in partnership with RTG, at the same time ensuring that the taxpayer, transit users and all residents of the city remain protected; 3. Public Private Partnership (P3) – An Alternative Finance and Procurement process that includes measures to protect the taxpayer should the Revenue Service Availability date be adjusted including the recovery of all incremental costs resulting from the delay from RTG; and, 4. The PA serves as the basis for negotiations. 30 Revenue Service Availability (RSA) Date RTG’s notice of November 24, 2017 stated that Revenue Service Availability (RSA) can be achieved by the required date under the contract (May 24, 2018) “as such date may be extended due to Delay Events and Variations”; City advised RTG a conditional RSA date notice was not acceptable as per PA Section. 26.7(a) and (c); and, The schedule issued by RTG on December 7, 2017 demonstrated the RSA date if all the delays were mitigated. 31 RSA Date Timelines December 2016 - RTG Works Schedule shows RSA on May 24, 2018; December 2016 to May 2017 - RTG continues to issue Works Schedule updates showing RSA on May 24, 2018; December 2016 to May 2017 – the City closely monitors schedule and advises RTG of activities showing a month over month slippage; May 2017 - the City commissions an Independent Assessment Team to undertake a joint review of the schedule without the benefit of the detailed schedule that met the City’s requirements and as requested of RTG to assess the probability of a successful May 24, 2018 RSA date; 32 RSA Date Timelines (Cont’d) May 2017 – the City advises RTG that there is a high probability that the RSA date could occur in Q4 2018; May 2017 - RTG did not agree and the PA did not oblige them to change the Works Schedule; May 2017 – Aug 2017 – RTG continues to issue Works Schedule updates showing RSA on May 24, 2018; August 2017 – the City issues the first “Failure to Maintain Schedule Notice” indicating that the May 24, 2018 RSA Date was at risk and requested a “recovery plan”; October 2017 – RTG issues Delay Event Notices for ceiling material and ‘Fare Control’; October 2017 – the City rejects the Delay Event Notices; 33 RSA Date Timelines (Cont’d) October 2017 – a follow-up schedule review with the Independent Assessment Team again indicates that the May 24 RSA date is not achievable; November 24, 2017 - RTG submitted the 180 day notice confirming that they would achieve the May 24 RSA date as such date may be amended due to Delay Events and Variations: November 2017 – The City immediately rejects the notice as ambiguous and requests RTG to provide either an unconditional notice that May 24, 2018 will be achieved or provide a new RSA date; December 2017 - RTG submits a revised Works Schedule indicating a RSA date of August 14, 2018; 34 RSA Date Timelines (Cont’d) December 2017 – The City rejects the latest Works Schedule and schedules RTG to attend another joint schedule review with the Independent Assessment Team in January 2018; January 2018 – This is the first time RTG provides the detailed schedule meeting the City’s requirements and as requested by the City. This enables a joint schedule review to be undertaken and RTG is informed of the assessment conclusion that there is a low probability of achieving an August 14, 2018 RSA date and that a date in Q4 2018 is more achievable; February 5, 2018 - the City receives a new Works Schedule from RTG indicating a new RSA date of November 2, 2018 subject to the resolution of contractual matters; and, February / March 2018 – negotiations with RTG are ongoing. 35 Liquidated Damages Liquidated Damages apply whenever RTG provides an RSA date and then fails to achieve that date [PA Section 26.7(b) and (e)]; Liquidated Damages do not apply when there is a valid Delay Event, as defined under Section 40 of the PA [definition of “Required Revenue Service Availability Date” which provides that such date may be extended by Delay Events]; The $1M in Liquidated Damages will be applied if the November 2, 2018 date is missed [PA Section 26.7(e)]; If RTG were to provide a new RSA date and subsequently missed that date, Liquidated Damages would apply again [PA Section 26.7(d) and (e)]; 36 Liquidated Damages (Cont’d) There is no limit to the number of times this could occur between Nov 2, 2018 and the Longstop Date (default of contract) of May 24, 2019 [PA Section 26.7(d) and (e)]; and, Liquidate damages are not a penalty, but, rather, are a genuine pre- estimate of damages the City could incur if the City has less than 180 days to plan for a new RSA date. Penalties are not permitted under Canadian law. 37 Delay Claims / Events Similar types of construction contracts contain provisions allowing for delay claims and events and mechanisms to deal with these and any disputes; Regardless of the delay in the RSA date, RTG always retained the ability to submit delay claims / events; The PA includes certain provisions which if exercised could assist or compensate RTG in the event of a delay event or claim . [PA s. 40.1(a) and 41.2(a)], For example: if, as the result of a certain event or circumstance RTG is unable to fulfil all or part of its obligations and/or incurs costs; The City’s opinion is that the sinkhole did not constitute a Delay Event as defined in Section 40 of the PA; RTG submitted a Relief Event Notice for the sinkhole and a corresponding Delay Event Notice for delays they believed would be incurred as a result of the Relief Event; In our opinion, RTG is not entitled to a Relief Event on the grounds that the sinkhole was a result of their acts and omissions; Under the terms of the PA, both parties have a general duty to mitigate the effects of these events immediately upon their occurrence; 38 Delay Claims / Events (Cont’d) RTG is obligated to use “commercially reasonable efforts” to reduce or eliminate the effects of the sinkhole; Following the sinkhole, RTG immediately implemented measures to stabilize the ground conditions and develop proposals to recommence tunneling as soon as reasonably practicable and continue to mitigate the effects of the sinkhole event; RTG has acknowledged that the sinkhole had a significant impact on the project; RTG also claims to be delayed by other factors, in addition to the sinkhole, such as the change in ceiling material and weather protection for fare control equipment; The City has rejected both of these claims in writing and they remain a matter of dispute between the parties; and, In the event of any further dispute, the matter will be referred to the Independent Certifier for determination or referred to an Arbitrator in accordance with the Dispute Resolution Procedure in the PA. 39 City Costs - Expenses & Revenues Staff are currently itemizing all City costs, which will include the following: • Detours; • Bus Operations; • Ready for Rail communication, education and marketing campaign; • Traffic management and OTC project office costs; • Property costs; and, • Lost revenue for OC Transpo due to delay, etc; The amount of these costs are in line with what has been previously shared with Members of Council. The detailed breakdown forms part of the negotiations with RTG and should remain confidential at this time to protect the City's negotiating position; 40 City Costs - Expenses & Revenues (Cont’d) The 2018 budget includes an expectation that there will be a one per cent increase in ridership beginning with the opening of the O-Train Confederation Line; The 2018 Budget included increased fare revenues starting in July. Increased revenues are now expected to begin post November 2, 2018; The budget calculations were based on a mid-year opening, and the ridership increase would have generated $1.83M in fare revenue over the final 26 weeks of the year; and, With a 23.1 week delay, 89 per cent (23.1/26), or $1.63M, of this budgeted revenue can no longer be expected in 2018. 41 Basis For Negotiation In order to fully recover our costs and lost revenues the City will: Negotiate with RTG; Use budgeted Monthly Service Payments

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