I am happy to see more money coming from the Federal government in helping to pay for the bridge. The extra $16.5 million announced last weekend brings the Federal funding to $37.5 million. So where does that leave the City with the costs of the bridge?
The estimated cost of the bridge at this time is $77 million but this is still only from an estimate and not a project budget. Should this amount end up being enough, the City will only need to borrow $40 million for the bridge. I still remain concerned about cost controls with the bridge and worry that given the track record of this sort capital project done by a government. We have already seen some early cost overruns.
I think it is realistic to expect the project to cost abotu $100 million when all is said and done. With the new addition of money from the Federal government, we are still looking at a likely cost of around $62.5 million for the City of Victoria. This is a gap of $13.5 million more than the City has the authority to borrow for this project. I think it is only prudent for the City to prepare for how to pay for this extra cost.
The only way to avoid this would be for the City to introduce some significant cost control measures. Outside of a P3, the only other option is for the City to negotiate a fixed price contract that limits costs to $77 million. If no contractor is willing to do it for that price, this is a strong indication that the estimate of $77 million for the bridge is likely too low.