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Metrolinx settles lawsuit with builders of $5.4-billion Crosstown light-rail project

Metrolinx is tapping into its contingency fund for Toronto's Crosstown light-rail project to get assurances that the job will be finished on time. It will not say how much extra money is involved, but notes that the overall budget of $5.4-billion has not risen.

The Ontario government transit agency had been in negotiations about how to resolve delays in construction since late winter with Crosslinx Transit Solutions, the consortium building the project. Crosslinx filed a suit in July seeking more money and an extension beyond the project's 2021 target for opening. Metrolinx had asked to have the case deferred until after the project was done.

The Crosstown is the largest transit project in Canada, a 19-kilometre light-rail line across the city’s midtown Eglinton Avenue. It is being built as a public-private partnership (P3) by ACS-Dragados, Aecon Group, EllisDon and SNC-Lavalin. Its timeline, which had slid already from the original promise of completion in 2020, was put in further doubt by the Crosslinx suit.

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The Globe and Mail has learned that the two sides recently reached an agreement that, pending the approval of Crosslinx’s financial backers, would end the suit and retain the 2021 deadline. The deal includes changes to various construction processes, such as the possibility of 24-hour work in some underground sections, and additional money for Crosslinx to deal with unanticipated difficulties.

Metrolinx would not disclose how much money the agency is giving the consortium to meet the deadline, calling it commercially sensitive information. Phil Verster, chief executive of the transit agency, would say only that it is less than half of the contingency fund.

“Less than half, and we are more than halfway through the contract,” he said on Thursday.

He would not reveal the overall size of the contingency fund. Such funds vary depending on the project and, on one such as this, could be expected to be about 10 per cent of the total.

“It sort of shatters that rhetoric around P3s keeping cost down and downloading the cost onto the private sector,” said Shelagh Pizey-Allen, executive director of the advocacy group TTC Riders.

Mr. Verster argued that it would be incorrect to say the project had become more expensive, even though more of its contingency fund has been soaked up than was the case a few months ago.

“The contingency is an anticipation of costs that will be required,” he said. “You know that the probability of spending this money is really high … you just don’t assign it to a line item because you don’t know which of the 700 [or] however many risks you’ve got on the contract is actually going to materialize.”

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The negotiations over who was responsible for construction problems, how they could be fixed and who should pay have dragged on for months. In the suit it filed in July in Ontario Superior Court of Justice, Crosslinx said it was owed compensation because it was prevented from using some construction methods and “events and circumstances … beyond the reasonable control” of the builders delayed the work.

On Thursday, Crosslinx president Bill Henry denied the lawsuit was a pressure tactic, and called it "more of a formality." Metrolinx and Crosslinx now say the path is clear to finishing by 2021.

Mr. Henry said that the consortium is “absolutely confident” it will deliver on time.

Many transit watchers expect the opening date to slip again, but that would be costly for Crosslinx. A substantial part of the payment is due on completion, and under the terms of the contract, the sum would gradually get smaller if it is late.

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