Melbourne’s Metro Tunnel (pictured under construction in 2021) faces further cost blowouts.Credit:Joe Armao
An Auditor-General’s report released on Wednesday found the key tunnel and station phase of construction was running $364 million over budget,after it was hit by pandemic-related delays and supply chain disruption.
However,the Andrews government’s decision in May to cut some network upgrades as part of the project has offset that overspend. Rail Projects Victoria forecast that with those savings,the overall project would cost $12.58 billion – or $1.88 billion more that the original budget approved in 2017.
“The[Metro Tunnel Project] has experienced some cost overruns and time delays since the contract reset. As the project moves into the next risky phases further cost and time pressures could appear,” the report says.
Rail Projects Victoria (RPV) needs to “diligently manage the project’s emerging risks” to stay within the revised budget of $12.58 billion and meet the project’s September 2024 target opening date.
“These ongoing cost and time pressures leave RPV limited flexibility to address future risks because they have either used or allocated almost all their risk contingency funds.”
Rail Projects Victoria has already spent $727 million of the project’s $740 million risk contingency funding after the COVID-19 pandemic delayed construction by 52 days and it was forced to find a solution to electromagnetic interference from trains disrupting equipment at hospitals and research institutions in Parkville and near the State Library.
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.