Metrolinx splits unfinished Hazel McCallion LRT work into 2 contracts

Metrolinx, Ontario's provincial transit agency, has restructured its approach to the troubled Hazel McCallion LRT project by splitting the outstanding work into two distinct contracts. This move is intended to resolve ongoing commercial disputes that have plagued the light rail line in Mississauga.

The 18-kilometer route, which began construction in 2020, has faced significant delays and legal battles. Initially slated for completion in 2024, the project's opening is now projected for 2028, pending successful testing and commissioning. The original $4.6 billion contract with the consortium Mobilinx, signed in 2019, has been rewritten.

Under the new structure, Metrolinx has moved from a single, comprehensive P3 (public-private partnership) contract to two separate agreements. These include an alliance agreement specifically for the construction phase and the continuation of existing P3 terms for the operation and maintenance of the line. Alliance contracts are favored by Metrolinx and the provincial government for offering greater flexibility and shared responsibility among project participants, aligning incentives towards successful project outcomes.

This contractual shift also signifies the parties' decision to set aside previous legal disputes. Mobilinx had been involved in legal challenges related to equipment non-return, unpaid rental fees, and outstanding bills with subcontractors. The company's credit rating had also been impacted by project delays. Metrolinx has reportedly spent $3.5 billion of the project's total cost to date.

“

In this contract model, the project owner (Metrolinx) partners directly with private sector companies to form an ‘Alliance’ rather than administering a third-party consortium. All project participants share responsibility for project costs, outcomes, risks, and rewards. Instead of operating as separate entities with individual commercial interests, the alliance structure aligns incentives around achieving the best overall results for the project.