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The $11 billion Metro Tunnel project is facing a 30 per cent budget blowout on early construction works, the Victorian Auditor-General has revealed.
The state's financial watchdog has found that construction work done in the early stages of the project has exceeded the original approved budget of $476 million, with a final forecast cost of $625.5 million.
The 31.2 per cent increase has been covered by a contingency fund, but the auditor-general warns this could mean the project eventually exceeds its $11 billion price tag.
The auditor says the governemnt's heavy reliance on the rapidly decreasing back-up funds, which are meant to last for the length of the entire project, serves as an "early warning flag” of a project cost blowout.
"With at least five years of complex and risky construction to go, this raises some risk that the project may exceed the publicly announced $11 billion budget," Auditor-General Andrew Greaves warns in his report released on Thursday morning.
Metro Tunnel's North Melbourne siteCREDIT:JOE ARMAO
The total budget of the "early works phase", which includes the early construction, was originally set at $1.2 billion.
But the forecast for all the work related to the early phase is now $1.3 billion, an increase of $95.8 million, or 7.6 per cent, the report says.
But Transport Infrastructure Minister Jacinta Allan said the report states "the project is ahead of time and is within overall project budget".
The minister attributed the $95.8 million increase in the cost of early works to a decision to expand the scope of those works, and bring tunnelling work forward.
"The tunnelling package was brought into the early works package primarily to de-risk the project and get a fast start," she said.
The early works, which include land acquisition, relocation of utilities and traffic management, have been carried out by John Holland, who are part of the consortium picked to build the tunnels and stations.
The blowout as been partly driven by the way that the State Library precinct has been built.
Rail Projects Victoria (RPV) originally budgeted the State Library works at $75.7 million. By March 2019, its final forecast cost was $201 million. This is an increase of $125.3 million, or 165.5 per cent, the report says.
This article first appeared on www.theage.com.au
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