Quote:
Originally Posted by milomilo
What happens if/when no contracts come in within the current budget?
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Then we don't have to sign them. I don't expect this to happen, that is not saying it won't. The contracting strategy has lots of potential to blow up, but it still isn't a reason to pull the plug. Mostly since I think we will never get the province's commitment over the near term for a new iteration.
The city's contracting strategy makes little sense to me. It isn't as bad as how the TTC does projects, but I don't think it is anywhere close to best practice. It all comes back to city council: they insist too much on absolute certainty rather than using well defined goals and scope definition. Council also has ideas on how to deliver projects that aren't best practice, and administration didn't push back enough when it was important.
For the contracting strategy: The tunnel segment will be the most difficult and it is entirely possible that it will blow up in the city's face, because their contracting strategy took a roundabout way of addressing risk. The city was like 'the tunnel has a 25-50% risk premium, but the rest of the project has a 10% risk premium, and vehicles has a 0% risk premium, so therefor, if we divide up the project we can minimize risk'. But that misunderstands the sophistication of bidders. By doing a single contract, the risk can be spread amongst the entire project, and be less risky overall, since it is less likely that everything will go wrong. By keeping it as a single project, risk can also be made up in the maintenance and operation phase, which reduces risk premium too. Instead the city since it is also asking for financing which has added more risk, especially since the risk isn't offset by operations and maintenance contracts.