Transit Cost Clarity: Canada’s Costly Transit Problem

Why we should standardize cost tracking now

Canada is building some of the most expensive transit projects in the world. We have ample capabilities when it comes to designing and constructing these projects, however we need to revisit the way we approach the work. Too often, transit agencies are handed a hammer and told to drive screws. This method works, but it can be slow, costly and unsustainable.

This is why we’re launching our Transit Cost Clarity series – a multi-part series that cuts through the noise and offers practical solutions to some industry-wide issues. We’ll take findings from the landmark study Understanding the Drivers of Transit Construction Costs in Canada: A Comparative Study, and turn them into clear, actionable steps. Each article will zero in on one of the major cost drivers of transit construction and show you how to tackle it strategically.

Our first focus is on cost tracking. Transit agencies are spending billions of dollars without the benefit of a common playbook to track where that money goes. Without consistent, transparent data, it’s much more challenging to compare projects, pinpoint cost drivers or learn from peers. Standardizing cost tracking isn’t glamourous, but it’s the critical first step toward building transit faster and more affordably.

“One highly actionable step? Develop and implement a standardized cost tracking and reporting template for transit capital projects. This won’t solve every issue, but it will provide greater visibility on the path to project success.”

No common language for costs

Today, public sector owners and transit agencies across Canada track capital costs in disparate formats which are often at an extremely rolled-up level. Even when numbers are shared publicly, critical questions remain unanswered.

• • Are contingency and escalation identified separately?
  • Is project management costed as a lump sum or blended into other rates?
  • Are all project costs captured, or are some absorbed by other agencies?
  • Does the cost include property acquisition or other corporate transfers?

This inconsistency leads to three predictable consequences:

• • internal benchmarking is unreliable, even within the same agency;
  • inter-agency comparisons are difficult, stifling shared learning and process improvements; and
  • public trust erodes when estimates change dramatically or differ sharply from comparable projects abroad.

As a result, agencies are challenged to effectively diagnose and address the underlying cost pressures they face.

Better data, better decisions

Canada’s high transit costs won’t be solved by one reform. But better data is a foundational enabler of better decisions. A standardized cost template can:

• • identify cost pressures early, before design commitments lock them in.
  • improve project scoping, reducing re-work and costly delays.
  • build institutional knowledge by connecting learnings across departments and projects.
  • strengthen public confidence by clearly showing where taxpayer dollars go.

Ultimately, the value lies in shifting from blind design and procurement to proactive cost management.

Overcoming challenges

Concerns about commercial sensitivity and institutional inertia are real but surmountable. Several Canadian jurisdictions working in adjacent sectors already publish cost benchmarks. Alberta Transportation and Economic Corridors, for instance, releases an annual Unit Price Averages Report by region.

A practical implementation path could include:

• • co-developing a shared cost taxonomy internally and with peer agencies;
  • piloting the template on projects where the commercial model already supports transparent cost tracking; and
  • using the data internally first, demonstrating value before public release.

Don’t wait for the next overrun

Transit agencies have an opportunity to lead the sector by piloting change now. The first step is clear: develop and test a standard cost template that works in your organization’s context.

Consulting partners can help guide this process by objectively working with owners to:

• • • facilitate cost breakdown workshops;
    • align practices with industry norms;
    • roll out easy-to-use tools for data capture and reporting;
    • train teams to use the template effectively; and
    • benchmark against historical project data.