New light rail line runs between Circular Quay and Randwick. © Transport for NSW
New light rail line runs between Circular Quay and Randwick. © Transport for NSW

Sydney's rail project arrives late and over budget

9 December 2019

Sydney’s $2.9bn light rail service launches this week nine months late and over budget following contract management issues. 

The Central Business District and South East light rail line project exceeded the proposed budget by $1.3bn due to a “lack of planning, communication and coordination” between the government and contractors, according to a parliamentary impact report.

The initial $1.6bn contract proposal with the ALTRAC Light Rail consortium, which includes subcontractors Acciona, Alstom Transport Australia and Transdev Sydney, increased to $2.1bn after tendering due to “mispricing and omissions” by the government.

Construction of the rail line began in October 2015. Services will start running on 14 December between the central business district of Circular Quay and the suburb of Randwick.

Earlier this year, a parliamentary inquiry was conducted to assess the reasons for increases in costs and delays. 

In October, the impact report found that “a $500 million initial blowout was caused directly by the failure of planning at the outset. The key source of it was the lack of planning, communication and coordination between the government and, at the time, [utilities firm] Ausgrid.”

Project delays occurred after Spanish firm Acciona had to stop construction because it came across utilities under the lines that allegedly weren’t mentioned in the contract.

Acciona sucessfully sued the NSW Government for $1.1bn for “misleading and deceptive conduct in providing information about how to handle Ausgrid’s electricity cables along George Street”. The NSW Government agreed to a $576m compensation payout, withholding $129m until construction deadlines were met.

The impact report also found the government had provided financial compensation of $40m to businesses and residents along the project route due to delays and unplanned construction.

The project has raised concerns about the government’s outsourcing management. The parliamentary committee said: “The questions of how it outsources risk and how the process is managed are serious ones for the future economic management of this state. 

“If businesses cannot sign onto a contract in good faith – which we discovered in this inquiry they did, but they were not provided with the appropriate information – then that seriously questions the ability of those contractors to undertake future business in New South Wales.”

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