One of the big questions in infrastructure planning is why some places can seemingly build infrastructure for just a fraction of what it costs in others. Why did Barcelona’s Sants-La Sagrera subway cost only $40 million per kilometre while projects like New York’s East Side Access and Second Avenue Subway are estimated to cost more than $1 Billion per kilometre?
I’ve discussed the many possible reasons for huge cost differences before – see Why do subways cost so much more here than elsewhere? and Why is infrastructure so bloody expensive?. Potential explanations include differences in geology, geography, regulations, procurement practices, management, standards, resident opposition, scale of land acquisition, and many more.
One of the key explanations though is differences in scope; do the costings being compared actually cover the same components? For example, many projects are built on government-owned land so there’s no provision for the cost of land acquisition in the headline figure; extrapolating to other projects that involve buying land could be misleading.
It’s very hard to tell when judging projects across cities and countries if like is really being compared with like. It’s helpful to consider the cost breakdown for the 9 km Melbourne Metro rail tunnel. It’s due to begin construction under Melbourne’s CBD before the end of the year (the $325 million preliminary works contract was let earlier this month).
Melbourne Metro will permit new high capacity trains to operate on dedicated tracks between outer suburban Pakenham and Cranbourne in the south and outer suburban Sunbury in the west. It’s expected to commence operating in 2026.
The Victorian Government’s official cost estimate for the project is $10.9 Billion in nominal terms. In broad terms, the components that make up the project are:
- $0.3 Billion for early works such as relocating existing services and providing site access.
- $6 Billion for constructing 9 km of twin tunnels and building and fitting-out five new underground stations.
- $1 Billion for providing high capacity signalling from Sunbury to South Yarra, power systems, and communications systems.
- $1 Billion for wider network enhancements i.e. track modifications and station and system upgrades that aren’t part of the tunnel work but necessary for the project e.g. western and eastern turnbacks.
- $3 Billion for remaining tasks, including constructing the tunnel portals, geotechnical investigations, land acquisition, engineering and design, approvals, and overheads.
Apart from the first dot point, these are all estimates; the actual costs won’t be known until they’re tendered. There’s a good chance though that actual prices will come in close to, or below, these estimates.
There are other costs associated with the project that will have been accounted for in the economic analysis but are not counted in the $10.9 Billion headline cost figure. The most prominent is the cost of acquiring the 62 high capacity trains required for the line. Public Transport Victoria is currently procuring the first 37 seven-carriage train sets required on opening at an expected cost of $1.3 Billion.
While it will start with seven-carriage trains, the project is premised on enormous (240 metre long!) ten-carriage train sets. The later decision of the Andrews Government to remove level crossings on the line provides the opportunity to increase frequencies and hence suggests the possibility that ten-carriage trains might not be needed for a long time.
For those interested in the cost of the basic “hardware”, the all-up cost is probably in the region of $7 Billion i.e. $0.3 Billion preliminary works, $6 Billion tunnel and stations, and perhaps (guesstimate) $0.7 Billion for the two portals/declines where the tracks emerge from the tunnel at either end and connect with the existing network (the Sth Yarra end is complex).
But you can’t just have the tunnel, stations and portals without also incurring the other costs; all the items shown in the dot points are necessary for the project. So to be useful, comparisons with projects elsewhere would need to be made carefully to ensure they’re done on a strictly like-for-like basis.
A claim like this one made on behalf Brisbane’s Cross River Rail project – that it it will provide “better value for money than Melbourne’s $10 billion Metro project” – shouldn’t be taken at face value; unfortunately, the Qld Government is much, much less forthcoming with information on the business case than the Victorian Government.