Infrastructure Build: Risks in Construction Contracts

January 2017 | Paul Jachymek – Senior Legal Counsel Road Map - Presentation

 Who is ?

 What we are Building

 How we Procure

 What Keeps us up at Night – Risks on these Projects

2 Who is Metrolinx?

 Metrolinx was created in 2006 by the Province of as the first Regional Transportation Agency for the Greater Toronto and Hamilton Area.

 Metrolinx Planning is guided by a Regional Transportation Plan – “”. Plan Build Operate

3 We Plan: From 2008…

4 We Plan: To A Network Vision

5 Building the Regional Rapid Transit Network

Transforming New transit Two bus rapid UP Express Connecting it all GO train service lines (LRT) transit projects together – Regional  Express air Express Rail Under construction:  Partially in- rail link from  Expanding and  Eglinton (RER) service, Union Station revitalizing Crosstown with to Pearson Union Station,  More service remainder airport the heart of the on all lines  In design/planning: under regional network  Finch West construction:  Delivered on  Hurontario  Electric trains,  Viva in York  One payment  Hamilton time and on every 15 Region budget system across minutes or the 905 region  better in both  Started and now Transitway directions, for service June deploying on most GO 6, 2015 TTC, on UP and customers on OC Transpo

6 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)

8 8 Project Status - RER

In-Service Corridor Project Stage On-Time On-Budget Date 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

9 RER Projects: Short Term Launch (Package 1)

No. Project Model Issue RFQ Issue RFP FC Stouffville Stations 1 DBF 16-Jul 16-Sep Q3 2017 Package HWY 401 / 409 Rail 2 DBF 16-Sep 16-Dec Q3 2017 Tunnel Cooksville Station 3 DBF 16-Sep Q1 2017 Q3 2017 Redevelopment 4 Union Station upgrades DBF Q4 2016 Q2 2017 Q1 2018

5 Barrie Corridor Grading BF Q1 2017 Q3 2017 Q4 2017 Lakeshore East 6 Grading Package (East BF Q1 2017 Q3 2017 Q1 2018 Corridor Expansion) Lakeshore East Grading Package 7 BF Q1 2017 Q3 2017 Q1 2018 (Central Corridor Expansion)

10 RER Projects: Short Term Launch (Package 1)

No. Project Model Issue RFQ Issue RFP FC Lakeshore East 8 Grading Package (West BF Q1 2017 Q2 2018 Q4 2018 Corridor Expansion) Rutherford Station 9 DBF Q1 2017 Q3 2017 Q2 2018 Package Lakeshore East - 10 BF Q1 2018 Q2 2018 Q1 2019 Eastern Stations Lakeshore West 11 DBF Q3 2017 Q4 2017 Q4 2018 Corridor Package Davenport Diamond 12 DBF Q3 2017 Q4 2017 Q3 2018 Grade Separation 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

Approved Budget for In-Service Corridor Project Stage On-Time On-Budget Capital Construction Date 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

15 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

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