Victorian Auditor General releases Metro Tunnel report

Planning and early works on Melbourne’s Metro Tunnel project have cost $150 million more than originally approved or anticipated, according to the Victorian Auditor General.

The Phase 1: Early Works report assessed whether planning processes and early works had adequately prepared Melbourne’s Metro Tunnel project for main tunnel and station works.

“Unexpected cost increases for the early works phase have put some pressure on internal budgets and wider project contingency funds. The heavy use of project-wide contingency funds is an early warning flag for the project, particularly as there are at least five more years of complex and risky construction works ahead,” the report reads.

“Due to the early stage and challenging risk profile of this large and complex transport infrastructure program, it is not yet possible for us to make conclusions about overall time and cost outcomes for the whole project.”

Report recommendations:

1. Ensure project proponents have undertaken sufficient and comprehensive analysis of all sensible and realistic strategic interventions and project options in business cases.

2. Review the remaining Melbourne Metro Tunnel Project contingency funds, taking into consideration the construction risks experienced to date and the likely time and complexity pressures expected for the remaining works.

3. Review and revise the original assumptions contained in the Melbourne Metro Tunnel Project business case, considering the impacts of new rail system projects, and republish the refreshed assumptions in an updated project benefits management plan.

4. Prior to commencing the next major transport infrastructure project with an early works stage, review the impact of technical interface risks between early and main works packages with the Office of Projects Victoria.

5. Improve governance and visibility of the calibration and validation processes used for Victorian transport modelling and do more frequent and timely updates.

6. Implement the recommended improvements from recently completed strategic modelling reviews for the various transport demand and simulation models used in the transport portfolio, and explore opportunities to better align and integrate transport service demand forecasting approaches.

7. Further develop the various transport demand forecasting models so they can include a range of scenarios testing key areas of uncertainty, and provide a high/medium/low-growth range when supporting key investment decisions.

8. Provide more disclosure and transparency around demand forecasting model assumptions and likely error and uncertainty bands when these modelling outputs are used as evidence by key decision-makers to support an investment decision.

9. Analyse and explicitly determine passenger load trigger points for the introduction of 10-car High Capacity Metropolitan Trains in the Melbourne Metro Tunnel and allow sufficient timeframes for consequential activities such as any necessary rail network upgrade projects and platform extensions.

10. Transmit to the Planning Minister and, if there are no specific legal impediments or restrictions, publish summaries of key findings and recommended actions from past and future Independent Environmental Auditor reports produced for the Melbourne Metro Tunnel Project on the project’s official website.

11. Require proponents of public infrastructure projects subject to an Environment Effects Statement process to publicly publish any environmental audit reports that an independent environmental auditor or equivalent undertakes and delivers as part of the environment management framework for the project.

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