Metro Tunnel builders battle claimed $2bn blowout

 

News article: Metro Tunnel builders battle claimed $2bn blowout

The cost of the Victorian government's flagship $11 billion infrastructure project, the Melbourne Metro rail tunnel, may have blown out by as much as $2 billion.

  8077 Chief Train Controller

Location: Crossing the Rubicon
If true then this is shocking and the project must immediately be reviewed and a new PMO put in place.

Metro Tunnel builders battle claimed $2bn blowout

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  SinickleBird Chief Train Controller

Location: Qantas Club at Mudgee International Airport
So it isn’t just projects in NSW that suffer cost overrun issues, then. Laughing
  Madjikthise Assistant Commissioner

Nothing new here, standard government contract clause. "If we ask for more money you'll give it to us."
Along with "If we stuff up the job you'll give us more money to come back and fix it."
  justarider Chief Train Controller

Location: Stuck on VR and hoping for better.
Nothing new here, standard government contract clause. "If we ask for more money you'll give it to us."
Along with "If we stuff up the job you'll give us more money to come back and fix it."
Madjikthise
@Madjikthise , try actually reading the original article.
The costs are expected to be worn by the consortium Cross Yarra Partnership (CYP), led by listed construction giant Lendlease, John Holland Group and Bouygues Construction Australia, not the state government.
The Age - Timma Jacks et al
Lend Lease and friends are on the hook to keep to budget, and pay for the difference themselves.

No doubt that CYP bosses are telling staff "we are over budget". Name one development project anywhere where that wasn't used as a tool to spur the workers on.
All the internal whingeing by "sources" eg: "they've got 'kids' on site doing big jobs" , is a symptom of how  CYP need to keep their project under control (fix their problems, not the messengers)

The article is all about how much trouble Lend Lease might be in, and typical panic stations "analysis" by Macquarie.
Of course those would be the analysts that think shorting the market is good fun and sport for all.


sorry @PIMM, this silly thread will not shut down. Just another forum for anti-anything bias to have a rant.

cheers
John
  potatoinmymouth Chief Commissioner

sorry @PIMM, this silly thread will not shut down. Just another forum for anti-anything bias to have a rant.
justarider

Exactly, this is a good example of why PPPs benefit the taxpayer compared to traditional contracting. The Early Works package went over, and the state wore it, because the it had the contractual risk. The Tunnelling package goes over, and that’s firmly on CYP, not the state, and it’s their fault for underquoting.

Is there still risk to the state? Yes, obviously, especially if CYP goes belly up, which isn’t out of the question. But the febrile outrage from the Opposition and certain posters on here is pathetic.

Anyway, three good articles from The Age on it, that would have explained all of the above quite well. But since it’s optional to actually read things before commenting on them around here, we get nonsense opinions like this.
  bevans Site Admin

Location: Melbourne, Australia
What amazes me on the story is the size of the blow-out.  $2b in $11b is a large error in estimates for the job. circa 15%

For the last 12 months of the build in Swanston Street at RMIT I have passed on the tram (it may have been longer) and I rarely see much activity at the site which sits adjacent the city baths.
  potatoinmymouth Chief Commissioner

For the last 12 months of the build in Swanston Street at RMIT I have passed on the tram (it may have been longer) and I rarely see much activity at the site which sits adjacent the city baths.
bevans

Case closed, then...
  justarider Chief Train Controller

Location: Stuck on VR and hoping for better.
What amazes me on the story is the size of the blow-out.  $2b in $11b is a large error in estimates for the job. circa 15%

For the last 12 months of the build in Swanston Street at RMIT I have passed on the tram (it may have been longer) and I rarely see much activity at the site which sits adjacent the city baths.
bevans
so, Macquarie guesses Lend Lease is +$300M,
then a journalist says maybe the other 2 partners also are over
= $1B
then somebody else says "double it"
= $2B

I'm glad those somebody's are doing the project finances, NOT.

Some pretty faulty logic:
Guesstimate that the total project is over by $X, 3 partners therefore same total is now $3.3X  and double 'cos it sounds big .
And they call themselves business journalists...

@bevans there is a simple reason for your inability see anything going on. Get off the tram and walk around at night.
There is a bloody great big shed on the whole block, with the entrance at the other end.
Not seeing all the dust is the whole point.

cheers
John
  bevans Site Admin

Location: Melbourne, Australia
For the last 12 months of the build in Swanston Street at RMIT I have passed on the tram (it may have been longer) and I rarely see much activity at the site which sits adjacent the city baths.

Case closed, then...
potatoinmymouth

Just my observations of the area.  It just feels like the project is going slower than we would all like or imagined.
  ngarner Train Controller

Location: Seville
I agree that it feels like it's taking time but considering the first TBM is being put together inside the North Melbourne station box cavity which didn't exist a year ago I would suggest they're actually moving at a decent pace.
When you think that they are working on underground station sites, two tunnel entrances and turnback all at the same time there is a lot to do at lots of different locations.

Below is an idea of what is happening at each site and when you look at it in its entirety there has been a lot done and lots more to do:

TBM “Millie” completed & to be shipped soon. “Alice” due later in 2019

West Footscray: Overhead relocated, two Tottenham sidings removed, another being re-laid to replace down independent goods line, piling for third platform almost complete, storm water drain under installation, overhead stanchion piling begun, overpass supports strengthened & preparation begun for stair & lift access to overpass


Kensington: piling for decline well underway to support existing tracks with slab being poured, D-walls for tunnel entrance underway, TBM retrieval box piling nearing completion, retaining wall along Childers St almost complete, Bentonite plant construction, overhead stanchion relocation/replacement complete

North Melbourne: western base slab underway, eastern box excavation underway, TBM “Joan” being assembled inside station box & “Meg” to be assembled soon

Parkville: first base slab poured, station box closed excavation almost reached western end with temporary deck constructed just short of that, 3 Gantry cranes installed commissioning underway, investigation for entries on Royal Parade underway

City Ford staging site in full use. Gantry cranes commissioning underway

State library: Road headers “Jane” & “Clara” at work from A’Beckett St shaft, “Louise” at work at Franklin St East, Franklin St West capping and deck underway, La Trobe St excavation underway. Excavation reached 15+m at La Trobe St (4th road header will operate from here), Little La Trobe St piling begun. La Trobe St northbound closed to enable connection between Melbourne Central & Library platforms to be constructed

Town Hall: Decking steelwork installation & existing basement slab removal in City Square, acoustic shed going to be built. Piling underway at Fed Square & Flinders Quarter (3 road headers to come)

ANZAC: northern station box roof slab pour nearly finished, 40+% excavated. Southern box piling nearing completion, diaphragm walls completed with excavation beginning, roof slab pours to begin soon. TBM support site being established

South Yarra: decline piling complete parallel to Sandringham line, piling and excavation for lower level of TBM retrieval box underway, William St bridge removed, cutting widened & piling underway for replacement, cutting retaining walls under constructed, decline retaining wall piling underway and excavation begun. Tunnel segment of decline under future Frankston line completed, Sandringham line work underway – slab laid on location of Sandringham rails.


Once all of the excavation is done and the TBMs are at work the visible signs of work will be even less than currently.

Neil
  simstrain Chief Commissioner

Same thing happened with the light rail up here. The pre works are often the hardest part especially when working in the city centre. If you see progress then stop worrying.
  potatoinmymouth Chief Commissioner

Same thing happened with the light rail up here. The pre works are often the hardest part especially when working in the city centre. If you see progress then stop worrying.
simstrain
The Auditor-General's report actually points out that the large scope of the early works package was partly intended to avoid the disaster that occurred on the light rail project when the main works contractor underestimated how hard service relocation would be.

Don't you wish the authorities did more learning from each others' mistakes!
  simstrain Chief Commissioner

Contrary to what many people believe the light rail project had significant pre works done. There were other well documented factors that played in to the issues that had nothing at all to do with pre works being able to resolve. If the area is difficult to work in and has legacy issues and a recalcitrant utility provider then these cost over runs are going to happen and there isn't anything anybody can do.
  kitchgp Chief Commissioner

Where does the figure of $2 billion come from? Nowhere in the article is this figure supported. The closing line is “Assuming the other partners also incur the same costs, as sources predict, the total cost blow out could be more than $1bn.”
  RTT_Rules Dr Beeching

Location: Dubai UAE
I believe govt capital projects are similar to private in that there is usually a contingency which is based on the "risk" profile of the project and tunneling in a capital city i would have thought was high. Contingency is usually listed as a separate line item so depending who you are talking to if its factored into the "over budget" comments.

From my limited personal experience, boards tend to consider using contingency as failure in project spending, not project planning or budgeting as all too often large capital projects are built to a price and this is often lower than the FEED and Feasibility studies. ie the Project Feas study came back at $2.2B, the board will say you have $2B, they seem to like round numbers and I feel they need to feel they are doing their job by setting a target lower than what 50 experienced Engineers and Managers will achieve knowing the same have likely added some fat.

I think the classic built to a price was the Vic NE SG project.

Regards
Shane

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