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covid19 cost overruns
April 9, 2020

Liberals asked to help cover overruns on projects delayed by COVID-19

Cities and construction groups are asking the Trudeau Liberals to relax the rules for expected cost overruns from infrastructure projects facing delays from the COVID-19 pandemic — or add more cash to help them deal with it.

Federal rules around the $186-billion infrastructure program don’t permit provinces and cities to seek additional help from Ottawa if a project goes over budget for any reason, such as delays due to weather or a labour disruption.

But some provinces, such as Ontario, are curbing work on a number of job sites for public health requirements just as construction season is set to begin in earnest.

A data analysis by The Canadian Press shows federal funding is set to cover more than $5 billion for 607 projects with an expected start date of this spring, with 84 more in the summer.

Those projects range from new sewers in small towns to electric-vehicle charging stations at for-profit companies like Canadian Tire, and their combined value is over $10 billion based on figures posted to a government website.

Pandemic-related delays on projects will inevitably lead to cost overruns that cities could struggle to cover without some federal help, said Bill Karsten, president of the Federation of Canadian Municipalities.

Infrastructure Minister Catherine McKenna wasn’t available for an interview and her office referred questions to the department. In an email, Infrastructure Canada said no decision on changes to funding rules has been made.

“We are working closely with the provinces and territories to identify how we can support them during this period,” part of the statement said.

“Infrastructure Canada is taking all steps necessary to provide flexibility to all ultimate recipients as they face possible delays in completing projects due to the COVID-19 crisis.”

The federal Liberals rode to power in 2015 on a platform that promised to spend heavily on new roads, bridges, transit and water systems at a time when the economy was faltering, predicting the economic spinoffs would more than cover government spending.

The program has since been subject to criticism about whether the expected economic benefits would materialize, due to the slow pace of spending. The federal government regularly carries over infrastructure money budgeted in one year to the next, often the result of reasons beyond the government’s control.

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