Staff Report #5
March 30, 2022
To All Commissioners
Re: Recosted 2022 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2022 capital budget of $23,538,800 as summarized below noting the recosted budget reflects the previously approved 2022 capital budget program, program updates and carry forward amounts relating to deferred or active 2021 capital projects.
2022 Recosted Capital Budget
| Description | Source of Investment | Total | |||
| Capital Program Reserve | City of London | Federal and Provincial (ICIP) | Provincial Gas Tax | ||
| Bus replacement | $ – | $ 8,260,300 | $ – | $ 3,323,600 | $ 11,583,900 |
| Bus expansion | – | 889,400 | 2,445,600 | – | 3,335,000 |
| Facility upgrades | – | 603,000 | – | – | 603,000 |
| Fare processing equip. | – | 747,500 | – | 1,747,500 | 2,495,000 |
| Information systems | 730,000 | – | – | – | 730,000 |
| Shop & garage equip. | 200,000 | – | – | – | 200,000 |
| Service fleet replacement | 50,000 | – | – | – | 50,000 |
| Stop upgrades | 866,900 | – | – | – | 866,900 |
| Bus stop amenities | – | 278,700 | 766,300 | – | 1,045,000 |
| Fleet radio replacement | – | 312,500 | – | 312,500 | 625,000 |
| Smart card program | – | – | – | 505,000 | 505,000 |
| TMP 2030 – BRT strategy | – | – | – | 1,500,000 | 1,500,000 |
| $1,846,900 | $11,091,400 | $ 3,211,900 | $7,388,600 | $ 23,538,800 | |
Background
At the August 25, 2021 Commission meeting, the 2022 capital budget program of $16,362,200 was approved. A recosting exercise for both capital and operating budgets occurs at the beginning of the year after all City of London funding is confirmed and takes into consideration pricing updates, program changes as well as any prior year projects that have not been completed or deferred to the future. The following table provides a summary by project of the proposed recosted capital budget highlighting the original approved budget, program updates as well as 2021 projects to be carried forward.
Summary of 2022 Recosted Capital Budget
| Description | Original Approved Budget | 2022 Program Updates | 2021 Carry Forward | Total |
| Program: | ||||
| Bus replacement | $ 10,874,500 | $ 709,400 | $ – | $ 11,583,900 |
| Bus expansion | 4,064,500 | (729,500) | – | 3,335,000 |
| Facility upgrades | 500,000 | – | 103,000 | 603,000 |
| Fare processing equip. | – | – | 2,495,000 | 2,495,000 |
| Information systems & hardware | 550,000 | (210,000) | 390,000 | 730,000 |
| Shop & garage equip. | 200,000 | – | – | 200,000 |
| Service fleet replacement | 50,000 | – | – | 50,000 |
| Stop upgrades | 123,200 | – | 743,700 | 866,900 |
| Bus stop amenities | – | – | 1,045,000 | 1,045,000 |
| Fleet radio replacement | – | – | 625,000 | 625,000 |
| Smart card program | – | 210,000 | 295,000 | 505,000 |
| TMP 2030 – BRT strategy | – | – | 1,500,000 | 1,500,000 |
| Total | $ 16,362,200 | $ (20,100) | $ 7,196,700 | $ 23,538,800 |
| Funding: | ||||
| Provincial Gas Tax | $ 2,614,200 | $ 709,400 | $ 4,065,000 | $ 7,388,600 |
| Capital Program Reserve | 923,200 | – | 923,700 | 1,846,900 |
| City – Dev. Charges | 433,600 | (77,900) | – | 355,700 |
| City of London | 6,544,700 | (116,700) | 1,441,700 | 7,869,700 |
| City – Federal Gas Tax | 2,866,000 | – | – | 2,866,000 |
| ICIP – Provincial | 1,354,700 | (243,100) | 348,300 | 1,459,900 |
| ICIP – Federal | 1,625,800 | (291,800) | 418,000 | 1,752,000 |
| Total | $ 16,362,200 | $ (20,100) | $ 7,196,700 | $ 23,538,800 |
Program Updates
The capital budget for the 2022 replacement and expansion bus programs require updates for the following:
- Unit Cost (Bus replacement) – the original unit cost was based on 2021 pricing and is updated to reflect the actual 2022 price per the contract with New Flyer, which includes updates to the build and a general price increase.
- Unit Cost (Bus expansion) – the updated unit cost is also applied to the expansion bus project, but it should be noted that the original budgeted unit cost for the project assumed a weighted average price of 40’ and 60’ models given uncertainty relating to what type of buses would be required each year. The 2022 Service Plan calls for all 40’ buses.
- 40’ Buses vs. 60’ Buses (Bus replacement) – the original budget included a total of seventeen buses (sixteen 40’ buses, and one 60’ bus). The approved bus replacement order for 2022 (see Staff Report #1 dated November 24, 2021) included fifteen 40’ buses and two 60’ buses.
- Ancillary Equipment (both bus programs) – included in the original approved budget program for 2022 replacement buses were additional costs associated with fully replacing the AVLC equipment (MDT & APC units) along with the equipment for the camera system. Historically these parts have been re-used from the retiring buses; however, given the increased amount of technology on board buses, and the rapid pace of change/upgrades to it, this approach is no longer applicable. The recosted budget reflects the most recent estimates of these costs impacting both the replacement and expansion programs.
- Inspections (both bus programs) – the budgeted cost for contracting bus inspections during the assembly process is being updated to reflect the actual anticipated unit rates for 2022.
The table below sets out the updates to the original budget for the 2022 Bus Replacement project.
Summary of 2022 Recosted Bus Replacement Project
| Original Approved Budget | 2022 Recosted Capital Budget | Program Change | |||||
| Qty | Unit Cost | Total Cost | Qty | Unit Cost | Total Cost | ||
| Bus cost (40′) | 16 | $ 595,100 | $9,521,600 | 15 | $ 615,800 | $9,237,000 | $(284,600) |
| Bus cost (60’) | 1 | 916,000 | 916,000 | 2 | 934,600 | 1,869,200 | 953,200 |
| Farebox, AVL, Cameras and Radio | 17 | 19,800 | 336,600 | 17 | 21,300 | 362,100 | 25,500 |
| Inspection | 17 | 3,400 | 57,800 | 17 | 4,300 | 73,100 | 15,300 |
| Preparation cost | 17 | 2,500 | 42,500 | 17 | 2,500 | 42,500 | – |
| 17 | $ 639,700 | $10,874,500 | 17 | $ 624,700 | $11,583,900 | $ 709,400 | |
| Funding: | |||||||
| Provincial Gas Tax | $ 2,614,200 | $ 3,323,600 | $ 709,400 | ||||
| City of London | 5,394,300 | 5,394,300 | – | ||||
| City – Fed Gas Tax | 2,866,000 | 2,866,000 | – | ||||
| 10,874,500 | $11,583,900 | $ 709,400 | |||||
The increase of $709,400 is the result of the unit price change, the net increase of one additional 60’ bus offset by one fewer 40’ bus, additional ancillary equipment required and inspection costs price changes. Consistent with past practice, the increased cost is funded from Provincial Gas Tax as the funding levels from the City of London have been set in the 2022 budget process.
The table below sets out the updates to the original budget for the 2022 Bus Expansion project.
Summary of 2022 Recosted Bus Expansion Project
| Original Approved Budget | 2022 Recosted Capital Budget | Program Change | |||||
| Qty | Unit Cost | Total Cost | Qty | Unit Cost | Total Cost | ||
| Bus cost – 40′ Diesel | 5 | $ 768,200 | $ 3,841,000 | 5 | $ 615,800 | $ 3,079,000 | $ (762,000) |
| Farebox, AVL, Cameras and Radio | 5 | 40,500 | 202,500 | 5 | 44,400 | 222,000 | 19,500 |
| Inspection | 5 | 1,700 | 8,500 | 5 | 4,300 | 21,500 | 13,000 |
| Preparation cost | 5 | 2,500 | 12,500 | 5 | 2,500 | 12,500 | – |
| 5 | $ 812,900 | $ 4,064,500 | 5 | $ 650,200 | $ 3,335,000 | $ (729,500) | |
| Funding: | |||||||
| City of London | 16.0% | $ 650,400 | 16.0% | $ 533,700 | $ (116,700) | ||
| City of London – DC | 10.7% | 433,600 | 10.7% | 355,700 | (77,900) | ||
| ICIP – Provincial | 33.3% | 1,354,700 | 33.3% | 1,111,600 | (243,100) | ||
| ICIP – Federal | 40.0% | 1,625,800 | 40.0% | 1,334,000 | (291,800) | ||
| 100.0% | $ 4,064,500 | 100.0% | $ 3,335,000 | $ (729,500) | |||
The reduction of $729,500 is primarily due to the application of actual cost for a 40’ bus from the original weighted average price of 40’ & 60’ buses included in the initial ICIP submission. Inspection costs and ancillary equipment have also been updated as noted above.
Funding for the Bus Expansion program for the years 2020-2027 has been identified and funded through the Investing in Canada Infrastructure Program (ICIP), for a total of 31 buses with a total cost of $23.2 million. The deferral of the 2020 bus expansion program, updates in unit costs, the mix of 40’ & 60’ buses as well as impacts on overall expenditures pertaining to ancillary equipment, will be managed within this funding envelope.
Budget and associated funding from the Information Systems & Hardware program have been reallocated to the Smart Card Program to better reflect the actual anticipated spending. While the $210,000 will be utilized for hardware, it is hardware that will be required to implement the smart card system on the specialized service.
2021 Actual Results and Projects Carried Forward to 2022
The table below sets out the 2021 Capital Program Summary for the twelve months ending December 31, 2021 with notes indicating the status of the project at year end. Consistent with prior years, a number of the projects were not completed in 2021. Given funds have been approved for the projects, the outstanding amounts are carried forward to 2022 where necessary. The table also highlights the amounts to be carried forward and included in the 2022 Capital Program.
2021 Capital Program Summary (for the twelve months ending December 31, 2021) & Carry Forward of Projects to 2022
| Description | 2021 Actual | 2021 Budget | Amount Under (Over) Budget | 2022 Carry Forward | Notes |
| Program: | |||||
| Bus replacement | $ 10,345,404 | $ 10,619,900 | $ 274,496 | $ – | 1 |
| Bus expansion | 1,293,177 | 1,300,400 | 7,223 | – | 1 |
| Facility upgrades | 396,903 | 500,000 | 103,097 | 103,000 | 2 |
| Fare processing equip. | – | 2,495,000 | 2,495,000 | 2,495,000 | 3 |
| Information systems | 288,418 | 680,000 | 391,582 | 390,000 | 2 |
| Shop & garage equip. | 76,894 | 200,000 | 123,106 | – | 1 |
| Service fleet replacement | 36,198 | 50,000 | 13,802 | – | 1 |
| Stop upgrades | – | 743,700 | 743,700 | 743,700 | 3 |
| Bus stop amenities | 54,950 | 1,100,000 | 1,045,050 | 1,045,000 | 2 |
| Fleet radio replacement | – | 625,000 | 625,000 | 625,000 | 3 |
| Smart card program | – | 295,000 | 295,000 | 295,000 | 2 |
| TMP 2030 – BRT strategy | – | 1,500,000 | 1,500,000 | 1,500,000 | 3 |
| Bus air purification system | 897,186 | – | (897,186) | – | 4 |
| Total | $ 13,389,131 | $ 20,109,000 | $ 6,719,869 | $ 7,196,700 | |
| Funding: | |||||
| Provincial Gas Tax | $ 2,276,204 | $ 6,615,700 | $ 4,339,496 | $ 4,065,000 | |
| Capital Program Reserve | 401,511 | 1,463,700 | 1,062,189 | 923,700 | |
| City – Dev. Charges | 137,930 | 138,700 | 770 | – | |
| City of London | 5,821,719 | 7,264,700 | 1,442,981 | 1,441,700 | |
| City – Fed Gas Tax | 2,866,000 | 2,866,000 | – | – | |
| Safe Restart Funding | 897,186 | – | (897,186) | – | |
| Provincial – ICIP | 449,291 | 800,000 | 350,709 | 348,300 | |
| Federal – ICIP | 539,291 | 960,200 | 420,909 | 418,000 | |
| Total | $ 13,389,131 | $ 20,109,000 | $ 6,719,869 | $ 7,196,700 |
Notes:
- Program completed
- Program not completed. Amount to be carried forward to 2022
- Program deferred. Amount to be carried forward to 2022
- The Bus air purification system project was approved in-year and funded via Safe Restart Agreement funding
The Commission will be provided with regular updates on the status of the programs included in 2022 capital budget.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager