Dubai Metro could run as much as 30 per cent over budget, costing the emirate an additional $1bn, as it struggles to keep the project on schedule, industry sources tell MEED.
When the project was awarded in 2005, the original budget for building the network’s first two branches, the Red and Green lines, was AED15.5bn ($4.2bn).
But officials at Dubai’s Roads & Transport Authority (RTA) now concede that the cost of building these lines will far exceed even the 15 per cent overrun anticipated in 2007 (MEED 2:11:07).
Privately, industry sources say extensive changes to the project’s specifications, and increases in the cost of raw materials since 2005, mean the two lines could easily finish 30 per cent or more over budget. At that level, the cost overruns would reach about AED4.65bn ($1.27bn).
“Projects never finish for the cost that is agreed,” says Abdul Redha Abu al-Hassan, director of planning and design at the RTA’s rail agency.
“We have made many changes [since 2005], particularly to the architecture, the interior and some of the systems, so the cost has increased.
“I think it will be much more [than 15 per cent over budget]. I cannot give a figure because we are still working with the consultant and the contractor.”
Al-Hassan insists that the city’s Red line remains on schedule to open on 9 September 2009, the date set down at the project’s inception.
Meeting that schedule is of greater importance to the government than keeping costs down as, with much of the city in gridlock, a mass transit system is urgently needed.
“The metro is not expected to make a profit for some time,” says Al-Hasan. “It is not being built for profit; it is being built to solve a problem of traffic congestion in Dubai.
The changes we have made take more time. You can use more labourers, but you have to pay more.”
In 2007, the Dubai Urban Rail Link (Durl) consortium, led by Japan’s Mitsubishi Corporation, which is building the Red and Green lines, requested an extension to the deadline, but was rebuffed by the RTA.
Work has since been accelerated, with hundreds of new labourers brought in, while Mitsubishi has enlisted additional engineers (MEED 19:10:07).
The budget for the metro’s third line, the Purple line, is facing greater uncertainty as it could be re-routed underground.
Speaking at MEED’s Rail Projects conference in Dubai on 15 October, Al-Hassan admitted that the RTA was considering building the majority of the 52-kilometre-long line below street level, which would increase the price of the project enormously.
However, no final decision has been taken, he said, with the RTA still in discussions with its consultant on the Purple line, the US’ Parsons Brinckerhoff.
The Purple line will link Dubai International airport with the new Al-Maktoum International airport being built at Jebel Ali.
However, the pace of Dubai’s development has been so rapid that Al-Hassan admits finding an overland corridor for the line is difficult.
Finding contractors to take on building the project under ground could also be problematic.
Al-Hassan hopes the RTA will issue tenders for the construction of the Purple line early next year, with work getting under way by 2010. It is expected to take four years to complete.
However, he acknowledges that this schedule looks doubtful. Prequalification for the contract has been put back to March 2009 from January that year, and Al-Hassan says a completion date of 2015 is now more likely.
Despite the increased cost involved in building an underground line, he insists the government has the money available to finance the Purple line.
“It will be very difficult [to find contractors],” says Al-Hassan. “Just imagine, if you want to build this in four years – the Red and Green lines cost $15bn, imagine how much [the Purple line] will cost.”
However, other sections of the metro project are making progress. The contract to build the extension to the Red line, from Jebel Ali to the border with Abu Dhabi, will be tendered by the end of 2008, following a brief delay.
The RTA will also award the consultancy contract to design the extension to the metro’s Green line in the coming weeks.
This extension will run from Jadaf to International City. The RTA is considering a further extension to Academic City and also plans to unveil details of the metro’s ticket pricing structure by the end of 2008.
A smart card will be usable across the city’s public transport network, including the metro, buses and water taxis.
Dubai also plans to launch a consultancy tender for the $100bn rail transit system across the city by the end of 2008, although the cost overruns on the metro must also place this anticipated budget in doubt.