costing of australian urban passenger rail project 2000-2012

Conference On Railway EngineeringBrisbane 10 – 12 September 2012

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Conference On Railway Engineering Brisbane 10 – 12 September 2012

COSTING AUSTRALIAN PASSENGER RAIL PROJECTS 2000-2012: HOW MUCH DID WE PAY AND WHAT DID WE GET?

Scott Martin, CMILT University of Melbourne

SUMMARY

Between 2000-2012, 28 major urban passenger rail projects were constructed in Australia, at a cost of approximately A$8.8 billion. The projects represented in this paper includes heavy rail and light rail projects constructed in Australian capital cities between 2000 and 2012 involving the construction of new rail lines and extension, amplification and electrification of existing rail lines.

The data collected in the survey has been scaled up to constant 2012 dollars and further analysed to develop indicative construction cost profiles for certain kinds of rail projects, along with a discussion of the various risks and circumstances associated with the inception, development and delivery of these projects.

This is the only known Australian survey examining the finished costs of urban rail infrastructure projects and represents an important piece of research into the costs of public transport infrastructure provision in Australia.

INTRODUCTION

In the years between 2000 and 2012, 28 major urban rail projects were completed in Australia. These projects covered an array of heavy rail and light rail (tram) projects, costing approximately A$8.8 billion (2012 dollars). While some of these projects (most notably the Sydney and Brisbane airport rail links) were constructed as Public-Private Partnerships (PPPs), the majority of these projects were fully funded by state governments. As such, these projects represent significant expenditure of public monies by their respective State treasuries and have had significant implications on each state’s budgets and finances. During the period of this study, Australia’s Federal government resumed its involvement in urban public transport. After sporadic involvement in urban rail infrastructure funding during the 1970s and the 1990s, the Federal Government’s announcement of $4.62 billion in funding for state urban public transport projects in its FY 2009-2010 Budget (1). While none of the projects examined in this paper received Federal Government funding, a number of passenger rail projects that are currently underway or commencing construction are co-funded by both state and federal governments.

This study attempts to rank the 28 identified urban rail projects by total project cost and cost per kilometre to develop indicative costings for light and heavy rail projects. This represents the ‘first level findings’ of research into the cost structure of major public transport projects. There is specific focus on per route-kilometre construction costs for heavy rail and light rail projects in an attempt to develop a reliable set of indicative costs for:

• Construction of new lines • Extensions of existing lines • Amplification of existing lines • Electrification of existing lines

WHY THIS RESEARCH IS IMPORTANT

This research is important in ultimately developing a support tool for decision makers who develop, fund and manage urban rail projects in Australian state and federal governments to have better knowledge about the recent history of urban rail projects and the likely costs of delivering future projects. By the author’s own calculations there are at least another $16 billion of urban rail projects either underway or being planned in Australia at present. In recent years, state governments and their public transport infrastructure delivery agencies have

Scott Martin

Martin, Scott

Costing Australian Passenger Rail Projects 2000-2012:

How Much Did We Pay and What Did We Get?


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Scott Martin Costing Australian Passenger Rail Projects 2000-2012: University of Melbourne How much did we pay and what did we get?


been criticised by the media (2), public transport lobby groups (3), Parliamentary Committees (4) and Auditors-General in New South Wales and Victoria (5-7) over the escalating costs of public transport projects, particularly urban rail projects. Better knowledge of public transport infrastructure project costs may assist governments, transport agencies and their contractors to prepare more robust business cases with more realistic costings. These will give political leaders, state and federal treasuries and other key decision makers greater confidence in the ability of infrastructure delivery agencies to complete projects on time and on budget.

LITERATURE REVIEW

There is a growing theoretical literature addressing the risks, causes and effects associated with cost overruns on major infrastructure projects, particularly transport projects in the 20th Century. Sir Peter Hall was an early entrant to the field, featuring a history of the faulty assumptions and cost overruns in the construction of a landmark piece of urban rail infrastructure (San Francisco’s BART system) in his landmark study Great Planning Disasters (8). From the 1990s onward, a range of studies were undertaken on evaluating the real and potential risks associated with large-scale infrastructure projects (called ‘mega-projects) around the world, including Kharbanda and Pinto (9), Flyvbjerg, Bruzelius and Rothengatter (10) and Altshuler and Luberoff (11) have added to the body of literature dealing with the management (or non-management) of risks associated with the development and delivery of major projects. Also relevant to this study are works on urban rail project selection (12) and route-kilometre capital costs for metro projects in Europe and America. (13) A common thread in these analyses of transport megaprojects are claims that cost estimation methods are particularly prone to miscalculation, with overruns from initial estimated costs the rule rather than the exception (12). Rail projects in particular are viewed as highly vulnerable to poor cost estimation, with analysis of a range of rail projects showing average cost overruns of 45 per cent. (10) It is also argued that CBA methods have a weakness as analytical tools being effectively ex-ante valuation methods with methodologies focusing on valuing project benefits rather than ensuring estimates of project costs are well defined. The corollary of cost estimation is the ability of project managers to control costs. Kharbanda and Pinto (9) viewed cost control as the key to management of infrastructure projects; from sound project scoping to initial cost estimation, managing risk and maintaining detailed expenditure records

to control costs. Flyvbjerg argues that a key cause of overruns is a lack of realism in initial cost estimates. He argues that: “the length and cost of delays are underestimated, contingencies settings are too low, changes in project specifications and designs are not sufficiently taken into account, changes in exchange rates between currencies are underestimated or ignored, so is geological risk, and quantity and price changes are undervalued as are expropriation costs and safety and environmental demands” (12). In an Australian context, cost-benefit analysis (CBA) remains the best model of estimating the costs and benefits of constructing major infrastructure projects (14) and is an important aspect of state and territory governments developing infrastructure project funding proposals as part of Infrastructure Australia’s assessment processes.(15) Other factors identified in the literature such as ‘scope creep’, procurement practices, poor cost controls, the project complexity of construction in a ‘live’ rail operating environment and problems in managing and mitigating risk management have all been observed as contributing factors to cost overruns in Australian passenger rail infrastructure projects. The Victorian Auditor-General’s Office’s reports into the delivery of Regional Fast Rail (5) and five Victorian rail projects (7) identified these issues as contributing to increased costs in delivering passenger rail projects, as did the NSW Legislative Council’s report into the cost of rail projects in that state.(4) ‘Local’ factors peculiar to Australia’s market for transport infrastructure also played a role in increased costs for rail projects, including labour costs and the small size of the domestic infrastructure market (16). The NSW Audit Office reported on shortages of skilled workers as one of a range of reason for delays and cost escalation on a range of urban rail projects in Sydney (6). The NSW Legislative Council’s inquiry into the cost of rail infrastructure projects reported that a range of factors impacting on the cost of rail projects in the state. These included poorly defined project scope, the state’s lack of a long-term rail infrastructure plan and a pipeline of projects to support it, low-levels of technical expertise in railway agencies along with changing political and other objectives. All of these it was claimed contributed to NSW’s experience of cost overruns on rail projects (4). The range of studies evaluating cost overruns and project failure help greatly to fill the gaps in cost-benefit analysis, providing a method for ex-post evaluation of rail (and other) infrastructure projects. These studies also provide a way to analyse problems and failures in previous projects. If, as is often stated, past behaviour is a predictor of future behaviour, knowledge of cost and risk profiles of previous rail infrastructure construction


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projects is useful in helping to estimate future costs and guide transport agencies and decision makers in development and delivery of projects.

METHODOLOGY 1. Project definition and filtering

In developing this study, a review was undertaken of the main transport industry trade press and academic literature to identify an initial list of urban public transport projects from Australia and New Zealand for consideration. From this initial list of over 80 projects, a number of filters were applied to remove certain projects types. Project deemed ‘out of scope’ and rejected for further analysis in this study included:

• Grade separations (essentially road rather than rail projects)

• Projects predominantly benefiting rail freight traffic

• Projects predominantly benefiting interurban or ‘country’ passenger rail traffic

• Infrastructure projects supporting improved urban rail operations (train stabling, depots, turnbacks, discrete re-signalling projects)

• ‘Station’ works (Accessibility programs, park and ride, modal interchanges)

• New stations (i.e. Melbourne’s Southern Cross) unless it is part of a larger urban passenger rail project

The narrowing of scope in this way meant that some public transport infrastructure projects were excluded from the scope of this study. Other exclusions encompassed non-rail infrastructure projects, most notably the range of bus rapid transit projects built in New South Wales and Queensland during this period. Also excluded were five Victorian regional rail upgrading projects on existing rail lines, including Regional Fast Rail (costing $931.2 million in 2012 dollars) and works upgrading four regional rail lines (Ballarat-Ararat, Ballarat-Maryborough, Bendigo-Echuca and Sale-Bairnsdale) to support the reintroduction of rail passenger services. One NSW regional rail project (Dapto-Kiama electrification) was also excluded from the scope of this study. As a result of applying these filters, a core list of key infrastructure projects remained within scope for consideration by this study. The final list consisted of projects in four categories, namely:

• Construction of new lines • Extensions of existing lines • Amplification of existing lines • Electrification of existing lines

The 28 remaining rail projects were further investigated to develop profiles of project scope,

size and cost. These were assembled and ranked by total cost and are shown in Figure 1 below. 2. Refinement of included projects

One of the key issues in developing cost profiles for major infrastructure projects involves a need to compare projects consistently on an ‘apples-with-apples’ basis. The NSW Legislative Council’s inquiry into that state’s rail project costs heard evidence regarding the importance of comparing projects on this basis for developing accurate costing benchmarks (4). This has also found to be true overseas, where attempts to benchmark rail construction costs requires the use of tightly defined project criteria (13). When and as supporting information was available, each project was further examined to strip out non-infrastructure cost items (such as operating costs), the costs of ‘movable’ infrastructure (new rolling stock) and the costs of ‘enabling’ or ‘network-wide’ infrastructure works (such as train stabling and depots) if possible to provide construction costs for just the right-of way and stations. It was considered going to a further level down to screen out the cost of stations to develop a ‘basic’ per route-kilometre cost for rights-of-way only. However, this was not pursued further due to difficulties in collecting such information through ‘open source’ methods. The success or otherwise of this methodology and the level to which costs can be isolated depends on levels of financial transparency and project governance practiced by infrastructure delivery organisations and governments in annual reports, budget papers and other material. The quality and quantity of this material varies between jurisdictions. Analysing this data is often assisted by the use of other ‘open source’ material found in the mainstream media and transport trade press (whose data also differs in quantity and quality) and increasingly, through the use of social media. Weblogs (‘blogs’) covering transport issues are particularly useful, both as sources of information and informed (sometimes ill-informed) comment on transport projects. An important part of the refinement process involved minimising the possibility of making ‘apples-and-oranges errors’ by comparing final out-turn construction costs based on published data of uneven specification and quality (13). The author has examined in great detail all publicly available information on the 28 projects featured in this paper and has removed extraneous costs to, where possible provide an finalised cost of delivering a particular urban rail infrastructure project with the full range of railway technology (permanent way, safeworking, traction power supply and passenger facilities) required for the functioning of the project once commissioned. Three examples of how basic construction costs were determined are shown at different ends of the


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Rank Project Name State / Territory Project type Completed Cost ($M) Cost $M

(2012 PPI)Length

(km)

Cost per km $M

(2012 PPI)

1 Epping-Chatswood Railway line

NSW New line 2009 $2,350.0 $2,602.4 12.5 $208.2

2 Perth-Mandurah Railway line

WA New line 2007 $1,103.0 $1,363.0 72.0 $18.9

3 Sydney Airport railway NSW New line 2000 $762.0 $1,251.0 10.0 $125.1

4 Darra-Richlands Railway line

QLD New line 2011 $417.7 $423.0 4.5 $94.0

5 Airtrain QLD New line 2001 $220.0 $372.1 15.9 $23.4

6 Robina-Varsity Lakes Railway extension

QLD Extension 2009 $325.0 $354.5 4.1 $86.5

7 Caboolture-Beerburrum duplication

QLD Amplification 2009 $298.0 $330.0 13.7 $24.1

8 Salisbury - Kuraby triplication


9 South Morang rail extension

Vic New line / amplification

2012 $261.0 $261.0 8.5 $30.7

10 Quakers Hill - Schofields duplication

NSW Amplification 2011 $246.0 $246.0 3.6 $68.3

11 Corinda-Darra quadruplication


12 Cronulla line duplication NSW Amplification 2010 $185.0 $191.3 6.6 $29.0

13 Craigieburn Rail electrification

Vic Electrification 2007 $115.0 $125.9 10.0 $12.6

14 Turrella-Kingsgrove quadruplication


15 Helensvale - Robina duplication


16 Thornlie spur WA New line 2005 $57.1 $76.0 3.5 $21.7

17 Currumbine-Clarkson rail extension

WA Extension 2004 $58.0 $71.3 4.0 $17.8

18 Sydenham rail electrification


19 Port Road Tram extension

SA Extension 2010 $53.0 $53.0 2.8 $18.9

20 Clifton Hill rail project Vic Amplification 2009 $49.9 $52.4 1.0 $52.4

21 Mitchellton-Keperra duplication


22 Marayong - Quakers Hill duplication


23 Vermont South tram extension

Vic Extension 2005 $30.5 $36.5 2.8 $13.0

24 Box Hill tram extension Vic Extension 2003 $28.0 $35.2 2.2 $16.0

25 Adelaide CBD tram extension

SA Extension 2008 $31.0 $33.6 2.1 $16.0

26 Sydney Light Rail Extension

NSW Extension 2000 $20.0 $32.3 3.6 $9.0

27 Ormeau-Coomera duplication


28 Docklands Drive tram extension

Vic Extension 2005 $7.5 $9.0 1.0 $9.0

TOTAL COST $M $8,815.4

Figure 1 – Passenger rail projects 2000-2012 ranked by total project cost (2012 dollars)


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Scott Martin Passenger Rail Infrastructure Projects in Australia 2000-2012 University of Melbourne How much did we pay and what did we get?


cost spectrum. The construction cost of the 2.8 kilometre tram extension from East Burwood to Vermont South (Melbourne) is usually quoted as costing $42.5 million (2005 dollars). However, this amount was an aggregated one that included $12 million of operating costs alongside $30.5 million in capital costs (17). Melbourne’s South Morang Rail Extension was originally announced as costing $650 million (including initial operating costs) in the Victorian Transport Plan. When capital costs only were costed the project price was reduced to $562.3 million (2). Subsequent investigation by a public transport lobby group found the project scope consisted of several related projects beyond the rail extension, collectively increasing capacity on the Clifton Hill group of lines to accommodate increased services from South Morang (18). The contract value of the actual rail duplication and extension works from Keon Park to South Morang was $261 million.(19) Perth’s New Metro Rail project (which included construction of the Perth-Mandurah railway line) with its often-quoted cost of $1.663 billion (20) consisted of a range of different, but related projects under the ‘New Metro Rail’ umbrella (21). Stripping out the parts not directly related to the Perth-Mandurah line (the Thornlie Spur and Clarkson Extension), network-wide elements (Nowergup railcar depot, new rolling stock), the capital spend directly attributable to the Perth-Mandurah railway was calculated to be $1.103 billion in 2007 dollars (21). 3. Costings methodology As these projects were completed across a 12-year time period from 2000 to 2012, a method was sought to approximate each project’s publicly known cost at the time of completion into constant (2012) dollars. Data on total costs across the range of projects was obtained using ‘open source’ (that is, publicly available) data, as found in annual reports, budget papers, media releases, newspaper articles and the transport trade press. Once a basic cost profile for all projects was developed, there was a need to equalise all projects across the 12-year time horizon of the study from dollars of the day into constant dollars. Two methodologies for doing this were examined. The first method developed a simple set of calculations where ‘as built’ project costs in dollars of the day were escalated into constant (2012) dollars utilising the Australian Bureau of Statistics (ABS) Consumer Price Index (CPI) figures (22). Although this methodology is useful to escalate costs into constant dollars, it is limited by being derived from changes in the prices of the basket of goods and services that determine CPI. A comparative, trans-national study of rail project costs in Europe and the US conducted by Flyvgberg et al (13) used a second methodology, based on movements in the OECD Construction Cost Index. It was decided to approximate this

methodology in an Australian context by using the ABS Producer Price Indices (PPI) indices (23). Discussions with a range of stakeholders indicated that using PPI over CPI to calculate constant dollar values for projects would give better and more accurate results.

ANALYSIS

The projects shown in Figure 1 above cover a wide variety of public transport infrastructure, ranging from tramway and light rail extensions to the amplification, extension and electrification of suburban heavy rail lines. The costs for these projects ranged from a relatively modest $9 million for the one kilometre length of Melbourne’s Docklands Drive tram extension to $2.602 billion for the mostly tunnelled 12.5 kilometre-long Epping-Chatswood railway line. The geographical breakdown of these projects by state is displayed at Figure 2 below. It was observed that the majority of these projects were clustered in the capital cities of Australia’s eastern states, with over 80% of metropolitan rail projects considered in this study being constructed in the three states of New South Wales, Queensland and Victoria. The two largest states of New South Wales and Victoria jointly accounted for 52% of the projects by number. Queensland also featured strongly accounting for 31% of the listed projects by number.

Figure 2 : Percentage of completed Australian metropolitan rail projects 2000-2012 by state Western Australia’s very creditable performance saw the state’s three metropolitan rail projects (the Thornlie spur line, the Clarkson extension and the Perth-Mandurah Line) accounting for 10% of the projects by number and 15.5% or $1.51 billion (2012 dollars) of the total value, while the two tram extension projects in South Australia made up the remainder. It is worth noting that Tasmania, the Northern Territory and the Australian Capital Territory did


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not construct any public transport infrastructure projects during the last decade that fit the criteria for this study. The percentage contribution of each state’s metropolitan rail projects to the total national spend is shown below in Figure 3.

Figure 3 : Australian metropolitan rail projects 2000-2012 by state as percentage of total value Analysis of the projects examined in this study has seen patterns emerge that are, in the author’s opinion significant and worthy of undertaking further in-depth research and refinement in the future. The detailed results of this further research could add to efforts to provide more accurate costing for public transport projects that would be of great usefulness to Australasian infrastructure planning and delivery agencies in developing the next wave of public transport infrastructure projects that will be delivered during the second and third decades of the 21st Century.

INDICATIVE CONSTRUCTION COSTS FOR AUSTRALIAN RAIL PROJECTS

The preliminary results of this research provided below outlines general per route-kilometre capital cost profiles for metropolitan light rail and heavy rail projects. Figure 4 shows the 28 projects considered in this study ranked in terms of cost per route-kilometre from the most expensive to least expensive. The findings of this research and the cost profiles generated suggest that decisions made on route alignments (particularly decisions to utilise underground rights-of-way, rights-of-way with extensive elevation or entrenchment or rights-of-way fully separated from surrounding vehicle or pedestrian traffic) commit project proponents to greatly escalated per route-kilometre construction costs compared to building in mixed traffic or partially separated surface right-of-way. These escalated costs are based on the need to mitigate or manage a range of engineering, environmental, safety and other risks as part of the project scope. In recent years, the print media and public transport advocates have argued the final outturn construction costs for passenger rail infrastructure projects in Australia (especially heavy rail projects in Sydney and Melbourne) are much higher than in

other Australian and international jurisdictions. In the report of its inquiry into rail infrastructure project costings, the NSW Legislative Council ascribed factors contributing to cost escalation in rail projects as including poorly defined scope of works, changing user requirements requiring variation, overdesign or ‘gold plating’ of projects and a desire by governments to announce big-budget infrastructure projects before the scope of works and cost estimates are fully defined (4). Other factors include previously mentioned examples of aggregating rail project construction costs with project ‘enabling works’ such as resignalling, train stabling or major station upgrades,(18) the bundling of project capital and operating costs together, (17) and the extra costs incurred from client requirements to construct projects in a ‘live’ railway environment with minimal disruption to regular services.(24) While there may be many sound reasons behind the escalating costs of infrastructure projects, there is a perception that governments and their transport infrastructure agencies have a poor knowledge of indicative per route-kilometre costs for building public transport infrastructure (particularly rail) projects in Australia. Better knowledge of these costs and indicative values of the likely costs to construct, extend, electrify or amplify a route-kilometre of light or heavy rail would benefit decision makers and arguably provide better value for money in public transport infrastructure projects across Australasia. This is important as in the present decade there is (by the author’s calculations) a $16 billion pipeline of public transport infrastructure projects in Australian cities either planned or under construction. The research undertaken in this paper to identify eligible public transport infrastructure projects has provided some preliminary cost indications for constructing light rail extensions and heavy rail electrification, amplification, extensions and new lines. These preliminary values are the result of high-level analysis and still require further qualitative and quantitative refinement and testing. However they are valuable in providing some initial analysis as outlined in the remainder of this paper. The basis of the observations made here is Figure 4 below. This table ranks the projects listed in Figure 1 in terms of average cost per route-kilometre from most to least expensive. 1. Methodology

The chosen methodology to derive the per route-kilometre construction costs is straightforward, as costs for each transport technology type (light rail, heavy rail, new lines, extensions, amplification, electrification) from the sample list of projects in Figure 1 have been aggregated together and averaged out to provide the mean construction cost for a route-kilometre of light or heavy rail in the four main project types (electrification, amplification, extension or new construction).


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Rank Project Name State / Territory Project type Completed Cost ($M) Cost $M

(2012 PPI)Length

(km)

Cost per km $M

(2012 PPI)

1 Epping-Chatswood Railway line

NSW New line 2009 $2,350.0 $2,602.4 12.5 $208.2

2 Sydney Airport railway NSW New line 2000 $762.0 $1,251.0 10.0 $125.1

3 Darra-Richlands Railway line

QLD New line 2011 $417.7 $423.0 4.5 $94.0

4 Robina-Varsity Lakes Railway extension

QLD Extension 2009 $325.0 $354.5 4.1 $86.5

5 Quakers Hill - Schofields duplication


6 Clifton Hill rail project Vic Amplification 2009 $49.9 $52.4 1.0 $52.4

7 Corinda-Darra quadruplication


8 Salisbury - Kuraby triplication


9 South Morang rail extension

Vic New line / amplification

2012 $261.0 $261.0 8.5 $30.7

10 Cronulla line duplication NSW Amplification 2010 $185.0 $191.3 6.6 $29.0

11 Turrella-Kingsgrove quadruplication


12 Caboolture-Beerburrum duplication


13 Airtrain QLD New line 2001 $220.0 $372.1 15.9 $23.4

14 Thornlie spur WA New line 2005 $57.1 $76.0 3.5 $21.7

15 Mitchellton-Keperra duplication


16 Perth-Mandurah Railway line

WA New line 2007 $1,103.0 $1,363.0 72.0 $18.9

17 Port Road Tram extension

SA Extension 2010 $53.0 $53.0 2.8 $18.9

18 Currumbine-Clarkson rail extension

WA Extension 2004 $58.0 $71.3 4.0 $17.8

19 Box Hill tram extension Vic Extension 2003 $28.0 $35.2 2.2 $16.0

20 Adelaide CBD tram extension

SA Extension 2008 $31.0 $33.6 2.1 $16.0

21 Vermont South tram extension

Vic Extension 2005 $30.5 $36.5 2.8 $13.0

22 Marayong - Quakers Hill duplication


23 Craigieburn Rail electrification


24 Docklands Drive tram extension

Vic Extension 2005 $7.5 $9.0 1.0 $9.0

25 Sydney Light Rail Extension

NSW Extension 2000 $20.0 $32.3 3.6 $9.0

26 Sydenham rail electrification


27 Helensvale - Robina duplication


28 Ormeau-Coomera duplication


TOTAL COST $M $8,815.4

Figure 4 – Passenger rail projects 2000-2012 ranked by cost per route-kilometre (2012 dollars)


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Further analysis of the mean cost for each transport technology type shows a level of stratification dependent on each project’s ‘level of difficulty’. For example, railway construction that features extensive underground tunnelling in a ‘brownfields’ urban area or grade separated rights-of-way may be more expensive than construction on ‘greenfields’ sites or ‘upgrading’ (such as track amplification or electrification) to a railway line in an existing corridor, although the risks of working in a ‘live’ railway is likely to add to overall per route-kilometre costs. Light rail projects have been considered separately from heavy rail projects in this study for two reasons. First, they form a largely homogeneous set of projects, mostly constructed in on-street environments. Second, unlike most heavy rail projects, they are built in rights-of-way that are least separated from other road and pedestrian traffic. Using Vuchic’s taxonomy of rights-of-way, (25) Australian light rail projects operate either on surface streets in mixed traffic (Category C), or on roads with some physical separation (tram corridors in central medians of arterial roads) but also at-grade vehicle and pedestrian crossings (Category B). Increasingly, New Australian heavy rail projects are moving from rights-of-way largely in Category B rights-of-way (separate corridors bisected by at-grade vehicle and pedestrian crossings) toward Category A rights-of-way that are fully grade-separated from surrounding vehicles and pedestrians. This has an impact on project costs as requirements for grade separation for new lines and level crossing removals on existing lines must be factored into project costs.

2. Light rail construction costs Since 2000, light rail in Australia has undergone something of a renaissance with six projects completed in three cities. Adelaide’s single tram route (Glenelg-South Terrace) was upgraded and extended through the CBD to North Terrace and later extended further from North Terrace to the Adelaide Entertainment Centre; Sydney’s sole light rail route was extended from Wentworth Park to Lilyfield, while in Melbourne two extensions were constructed in the middle suburbs (Mont Albert-Box Hill and Burwood East-Vermont South) and a third in Docklands on the CBD fringe. Figure 5 below shows the per route-kilometre construction cost profiles developed using the sample group of six light rail extension projects. Costs ranged from an upper bound of $18.9 million (2012 dollars) for Adelaide’s Port Road tram extension to a lower bound of $9 million (2012 dollars) for the Sydney Light Rail extension to Lilyfield. Based on the six projects from 2000 to 2012, the average per route-kilometre cost for light rail projects in Australia is $13.65 million. The range of light rail construction costs reflect the different urban environments they are constructed in. The four projects costing $13 million per kilometre or more reflects construction in the Adelaide CBD and arterial roads medians in Melbourne (Box Hill, Vermont South) and Adelaide (Port Road). The two projects costing below average (at $9 million per kilometre) reflect lower construction costs in brownfields areas: inner-urban renewal area (Docklands Drive) and the re-use of an existing, formerly heavy rail alignment with a Category A right-of-way (Sydney’s Light Rail extension).

Figure 5 – Indicative construction costs per-route kilometre for Australian light rail projects 2000-2012


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3. Heavy rail construction costs

In this sample group, 22 heavy rail projects were confirmed as completed between 2000 and 2012. These projects encompassed covered the gamut of rail construction project types including:

• electrification, • amplification of existing lines, • extensions to existing lines and • construction of new lines.

Heavy rail projects often prove most contentious of all public transport infrastructure projects. The risks of scope creep and cost escalation rises due to the need to build in mitigation of real or perceived risks and disbenefits caused by a rail project. These include environmental (flora/fauna, watercourses), social (noise barriers, placing lines in cuttings or culverts) or economic (grade separations to improve road network operation) risks and disbenefits. While the costs of mitigation for these disbenefits and risks and the consequent scope ‘creep’ are more apparent and more likely to occur in the more heavily populated inner and middle urban areas of Australian cities, these risks also need to be managed on the urban fringes, the rural/urban interfaces and regional areas. Increased mitigation costs are often incurred to mitigate perceived disbenefits to local communities in projects that benefit metropolitan areas as a whole. For example, a recent decision by the Victorian Government to review noise management plans for rail projects (26) means that state’s Regional Rail Link (RRL) may need to install noise barriers along the rail corridor to mitigate noise impacts on current and future housing developments at an estimated cost of $20-$50 million. This has also led to ambit claims by residents along more densely populated RRL corridor for noise barriers to be installed.(27) The 22 urban heavy rail projects are ranked by cost, with the different levels of per route-kilometre costs for these projects shown in Figure 6 below. The per route-kilometre costs (in 2012 dollars) for rail projects in this sample range from an upper bound of $208.2 million for the deep-tunnelled underground right of way of the Epping-Chatswood Rail Link to the lower bound of $4.1 million for the Ormeau-Coomera duplication. The average heavy rail construction cost per route-kilometre across all 22 projects was $44 million (2012 dollars).

FURTHER REFINEMENT OF RAIL PROJECT CONSTRUCTION COSTS

However, this average per route-kilometre construction cost figure of $44 million per kilometre masks the differing costs of the variety of project profiles and construction types encountered in this sample of 22 rail projects. A better understanding

of how costs were apportioned in projects through further examination of the data will ultimately provide better cost profiles across the range of projects. The sample group of 22 heavy rail projects considered in this study falls into four key categories. It is now proposed to separate out projects in each category from the sample group of 22 projects to understand their per route-kilometre construction costs and also to look at the special case of tunnelled rights-of-way. 1. Electrification

Of the 22 heavy rail projects examined in this study, only two were electrification projects. Both projects (St Albans - Sydenham and Broadmeadows-Craigieburn) are located in Victoria. At the time of writing, a third electrification project (Sydenham – Sunbury) was nearing completion but not commissioned and is therefore excluded from this study, along with a regional electrification project in NSW (Dapto-Kiama). Based on this small sample of two projects, the indicative cost for electrifying existing lines is $10.7 million/km in 2012 dollars. 2. Amplification of existing lines

This category consisted of 11 projects, a large sample size of projects for examination in this study. Track amplification (duplication, triplication and quadruplicating) of existing lines accounted for 11 of the 22 projects, with costs ranging from a high of $68.3 million/km for the recently completed Quakers Hill- Schofields duplication in NSW to a low of $4.1 million/km for the Ormeau-Coomera duplication in Queensland. The average cost of track amplification based on the sample size is $29.1 million/km in 2012 dollars. 3. Extensions to existing lines

The sample size of this category was four projects only, ranging from $86.5 million/km for the Robina-Varsity Lakes extension in Queensland to Perth’s Currambine-Clarkson extension, costing $17.8 million/km. The Varsity Lakes extension cost significantly more than the next most expensive project (South Morang rail extension, costing $30.7 million/km), due to extensive earthworks, a 300-metre long cut-and-cover tunnel and extensive additional works such as local road reconstruction and essential service relocations. Based on this sample of four projects, the average cost of rail extensions is $39.2 million/kilometre. 4. Construction of new lines

Five projects represented construction of new heavy railway lines. This sample of projects and their per route-kilometre costs ranged from tunnelled routes such as the Epping-Chatswood ($208.2 million/km) and Airport ($125.1 million/km) lines in Sydney; to more conventional lines in Brisbane (Darra-Richlands line [$94 million/km]


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555



Based on this sample of five projects, the average construction cost for new heavy rail lines in Australia is $93.9 million/km. The first three, being the most expensive of these projects represent efforts to retrofit heavy rail transport into a mature urban environment, either in an inner city area (Sydney Airport line), middle suburbs (Epping-Chatswood) or an urban fringe growth area (Darra-Richlands). The latter two represent lines built for the majority of their length in low-density metropolitan areas or in an existing transport corridor. Removing the two most expensive projects with tunnelled rights-of-way (Epping-Chatswood line and the Sydney Airport Railway), average construction costs for new, non-underground railway lines more than halves to $45.4 million/km based on the three remaining new heavy rail construction projects. 5. Tunnelled rights-of-way – a special case study

The greatest escalation factor in construction costs for new heavy rail projects is the decision to pursue tunnelled rights of way. The technical and geological complexity and risk of tunnelling projects greatly increases this cost. The decision to choose a tunnelled right-of-way occurs for a variety of reasons, most typically the high cost of land acquisition, disruption to a city’s inner core and CBD and the need to mitigate risk of disruption during construction to essential services and the built and natural environments. As future opportunities for at-grade railway construction in Australian cities moves to the

middle and outer suburbs, the most feasible option to improve capacity at the inner-core of Australian rail networks is with tunnelled rights-of-way. Tunnelling of new routes to increase heavy rail capacity will be particularly important to the continued functioning of the rail networks in the East Coast capitals of Brisbane, Sydney and Melbourne, with major heavy rail projects using extensive tunnelling being proposed or planned in all three cities (Cross-City Rail, various Sydney metro proposals, Melbourne Metro 1 respectively), currently earmarked to commence construction during the late 2010s-early 2020s.Tunnelled alignments are also seen as important in providing access through urban areas to CBD stations in Brisbane, Canberra, Melbourne and Melbourne as part of any future East Coast high speed rail project. (28) The small sample size of tunnelled rail projects in Australia is of concern and some attempt has been made in this study to address the development of indicative costs for tunnelled rights-of-way in Australian conditions. In determining an indicative per-route kilometre construction cost for new lines in tunnelled rights-of-way, the two predominantly underground rail projects, being Epping-Chatswood ($208.2 million/km) and the Sydney Airport railway$125.1 million/km) in this study were used, in addition to a third project, the section from Perth station to The Narrows bridge which formed ‘Package F’ of the Perth-Mandurah line. While the vast majority of the 72-kilometre long Perth-Mandurah railway line was constructed along freeway medians and sandy scrubland

Figure 7 – Comparative per-route kilometre costs of urban passenger rail projects 2000-2012 by construction characteristics


556



south of Perth, the last few kilometres into Perth’s CBD presented complex engineering challenges, including the Swan River crossing at the Narrows. The tunnelled approach to Perth station and connection to the Joondalup line (‘Package F’) provides another example of the high costs of tunnelling in an inner urban environment. The final cost of Package F was $398.1 million (2007 dollars), or approximately 36% of the project’s total construction costs.(21) Package F encompassed 2.2 route kilometres of underground railway construction costing a total of $299.6 million/km (2012 dollars) or $136.2 million per route-kilometre. Package F’s scope consisted of:

• 600m of open dive tunnels • 700m of cut and cover tunnels • 700m of twin bored tunnels • two underground stations • rail connection to the Joondalup line • railway track, overhead power, signalling

and communications • associated roadworks, drainage and

landscaping(29) When this admittedly small sample of three projects is analysed, the average per-route kilometre cost of constructing rail projects on an underground right-of-way in Australia was determined to be $156.5 million/km. This amount occupies the upper range of construction costs for urban tunnelling ($100-$180 million/km) quoted by AECOM in their recent Stage 1 High Speed Rail study for the Commonwealth Government.(28) The ratio between the average per route-kilometre costs for both underground and ‘at-grade’ rail construction (approximately 3.5:1) is also roughly consistent with the cost ratios for new-build metro system in Europe, the Americas and Asia as outlined in Flyvbjerg, Bruzelius and Van Wee, who claim that their study shows underground alignments cost between 4-6 times more than at-grade alignments (13).

CONCLUSION

The information and figures provided above are the result of an extensive, medium-term research project into the cost of constructing public transport projects in Australia. The preliminary results of this study have developed a likely range of per route-kilometre costs for a range of urban passenger rail infrastructure projects. However, there are many areas touched by this study that require further work and refinement. Additional qualitative work has been undertaken to integrate New Zealand rail infrastructure projects since 2000 to provide a broader and deeper dataset of projects for analysis. Specialist advice on integrating the Capital Goods Price

Index data for civil construction from Statistics NZ with the ABS PPI data to produce comparable per route-kilometre cost figures in constant dollars is being sought by the author. Issues identified in other studies on rail projects costs (particularly the NSW Legislative Council inquiry) of isolating the different elements of project expenditure to better determine actual construction costs would also be a fruitful area for further research.(16) Further quantitative work is needed to isolate the costs for different project components and develop better cost profiles for constructing a route-kilometre of heavy and light rail lines in Australia. Additional quantitative work needs to be undertaken to examine the differences in outturn costs across the range of different procurement options available in public transport infrastructure construction. On another level, work remains to be done on further identifying costs for railway stations and other key infrastructure to develop unit costs for them also. There is also the possibility of including rail projects presently ruled out scope in this study, such as grade separations, rail upgrades and rail freight works. Other questions arising from this study are more qualitative than quantitative in nature, dealing with the making of key decisions defining project scope and management of risk. Obtaining more qualitative information on these projects will involve interviews with past and current project managers involved with these and other projects, along with other key decision makers at the political level of transport policy as part of a more intrusive data gathering process.

ACKNOWLEDGEMENTS

The author wishes to acknowledge the assistance of the two anonymous referees who reviewed this paper and their constructive comments on how it could be improved. He also acknowledges the contributions of Associate Professor Philip Laird of the University of Wollongong, Dr Chris Hale of the University of Melbourne and Messrs Ray Kinnear, Robert Abboud and Justin DiGiulio of the Network Planning Division of Public Transport Victoria, David Rolland of GHD, Evan Granger of MGS Architects and Peter Kain of BITRE for their comments on earlier versions of this paper.


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