Metro Tunnel cost blowout warning: Project enters risky phase

Transport Infrastructure Minister Jacinta Allan said major projects were being delayed around the world due to supply chain disruptions from the COVID-19 pandemic, and the government had been upfront about challenges on the Metro Tunnel.

“I’m acknowledging that this is a project that has those ongoing cost pressures like projects around the world,” she said.

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“A project of this size and scale has had some challenges, and we’ve had some particular budget challenges. We’re continuing … to work through the consequence of the impact of COVID on our workforce. Those impacts are continuing to be felt by the project.”

The Auditor-General’s report warned “risky and complex” future stages of the project that could lead to more blowouts included installing rail systems, testing trains in the tunnels, integrating signalling and communications systems, and fitting out the five new underground stations.

Extra costs to the state could also stem from a proposal from the builders to accelerate construction to make up for the time lost to the COVID-19 shutdown.

The report recommends Rail Projects Victoria finalises its position on this plan and brief the government on “any cost or other implications” of accepting it.

The government should also conduct a comprehensive review of the project’s overall budget and determine how much extra funding could be needed, the audit report said, while formalising measures to mitigate electromagnetic interference.

The government has saved $91 million by cutting 27 kilometres, or about a third, of the high-capacity signalling that was to be installed as part of the project, and saved another $236 million by limiting several “wider network enhancements”, including signalling upgrades and “train turn-back locations”.

Allan said the project changes were prudent as they could be delivered more effectively as part of other related rail projects, like the Airport Rail Link.

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Opposition transport infrastructure spokesman Matt Bach said that every major Andrews government project had “failed to stick to a deadline and budget”.

“Labor has shown time and time again that it can’t manage major projects and it is sending our state broke,” Bach said.

The state government and the project’s builders consortium, the Cross Yarra Partnership, rewrote their 2017 construction contract in 2020 to accommodate cost blowouts of up to $2.74 billion, with taxpayers to cover $1.37 billion of that.

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