Bridge researcher finds hidden costs
Yellowknifer - Wednesday, March 7, 2012

It's not uncommon for government and corporations to only release capital costs of a project. The surprises typically come later, when the project is complete, and the cost of borrowing becomes part of the equation.

Such is the case with the Deh Cho Bridge, which has been pegged at a cost of $192 million for construction, up from the original cost estimate of $55 million, close to a decade ago.

NWT residents now have a former Yellowknifer, who goes by the moniker NorthernRaven, to thank for creating an online "bridge calculator" which extrapolates the numbers so people can get an idea of what the true cost of the bridge will be to taxpayers over the next 35 years.

A permanent span across the Mackenzie River at Fort Providence has been talked about in the Northwest Territories for many years. Some feel strongly about a year-around connection to the south, so that Northerners are not at the mercy of Mother Nature each spring and winter, when ferry service can be interrupted for a few weeks during break-up and freeze-up.

Mining, construction and other activities can be disrupted, not to mention our supply of groceries and our own travels.

But all of that additional convenience for a few weeks a year will come at what cost? NorthernRaven, a computer programmer, said he couldn't find a decent summary of the cost of the Deh Cho Bridge "and got hooked into trying to figure it out."

Among the variables NorthernRaven looks at are the cost of borrowing, the anticipated opening date, estimated annual operating and maintenance costs, cost savings from not running the ferry each summer or constructing an ice road each winter, estimated costs of toll collection and the annual interest cost from construction cost overruns.

Then there is the matter of the estimated cost of borrowing. NorthernRaven projects the total repayable amount over the life of the loan, in 2011 dollars, to be around $297 million, meaning the Government of the NWT will have paid close to $132 million in interest - based on a previous $165 million project estimate - by the time the principal is repaid.

At the end of the day, the researcher projects the estimated final bill for the bridge will be in the neighbourhood of $357.9 million.

A spokesman for the territorial Department of Transportation said he "wouldn't quarrel" with the numbers as presented by NorthernRaven.

Further, Transportation Minister David Ramsay, once a vocal critic of the bridge project prior to becoming a cabinet minister, said NorthernRaven's total projected cost over the next 35 years "doesn't come as a surprise." He equated the bridge project to buying a house, which usually comes with a mortgage in which a bank charges interest.

Obviously, it's too late to turn back now. Construction has progressed to the point that the bridge spans the width of the river.

On the positive side, the bridge has an estimated lifespan of 75 years and the projected opening date of the bridge remains the fall of this year. When it does open, it will likely garner much fanfare and publicity, potentially enticing more tourists to come North to see what makes the territory spectacular.

One of the lessons to be learned from NorthernRaven's infatuation with calculating the full cost of the project is when government and corporations list the estimated capital cost of a project, taxpayers and shareholders will know that number is just a portion of the total amount of money that will need to be paid.

Now let's hope when we go to buy a loaf of bread at the grocery store after this autumn, we're not forced to pay a bridge tax.