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Secret report reveals $1 billion-plus cost blowout in bungled NSW trains project SMH - Matt O'Sullivan February 6, 2023 KEY POINTS · A $1 billion blowout will put the cost of the entire new passenger train project, which includes a maintenance contract, at nearly $4 billion. · A secret report reveals the project has been plagued by poor scoping, cost overruns, delays and unmitigated risks. · The genesis of the bungled project lies in the government agency’s inability to adequately scope the new train fleet before going to tender. The cost of the NSW government’s new fleet of Spanish-built passenger trains is set to blow out by more than $1 billion – doubling the bill for taxpayers – because the state’s transport bureaucracy botched the handling of the project, which is running three years late. A highly confidential report by Infrastructure NSW, the government’s independent adviser, is scathing of Transport for NSW for inadequate planning, weak oversight and failing to heed warnings which have led to the project suffering a “significant cost and schedule blowout”.
An artist’s impression of the new Spanish-built trains that will run on
interstate rail lines. Creating a major headache for the government weeks out from the state election, a blowout in the cost of the 29 trains and infrastructure upgrades to almost $2.5 billion will double the bill, which had been estimated in last year’s budget at $1.26 billion. The first of the new trains were meant to start running on key interstate lines from Sydney to Melbourne, Brisbane and Canberra, and across NSW last month. However, internal forecasts show it could be as late as December 2025. “There is no way that the project can recoup the lost schedule or be delivered within budget,” the Infrastructure NSW report warns. A $1 billion-plus blowout will increase the cost of the entire project, which includes a 15-year contract to maintain the trains, to nearly $4 billion. The latest estimate is higher than a confidential figure in August by Transport for NSW, which warned of an $827 million funding gap. Transport for NSW has been embroiled in a dispute with a consortium led by Spanish manufacturer CAF, which is building the fleet, for the last 18 months over “contentious design changes” sought by the agency to the trains. Some within Transport for NSW believed the wrong train had been selected, and the agency later sought to alter the “off-the-shelf” design. The space between passenger seats has been a major point of contention between the government and the Spanish train manufacturer. Described as a “deep dive”, the Infrastructure NSW review obtained by the Herald found the bungled project’s genesis lies in the agency’s inability to adequately scope the fleet before going to tender and awarding the contract. The report, which is marked cabinet “sensitive”, found a major rejig of Transport for NSW in the project’s early days led to “changing accountabilities, altered reporting relationships and significant turnover in staff”. “Senior executive supervision (with those occupying these senior positions having now left Transport for NSW) was technically and commercially inadequate,” it says. The report – completed just three months ago – concludes that a lack of understanding of the high cost of the design changes has “led to significant cost and schedule blowout” despite previous warnings from Infrastructure NSW. ‘Poor scoping, cost overruns, schedule delays and unmitigated risks are key features of this project.’ Infrastructure NSW’s report into the bungled rollout of new trains “The time taken for the new train design work and the erosion of the relationship with the [public-private] partners has put significant additional pressure, time and cost risk onto the project,” it states. The dispute between the agency and the consortium has centred on the space between passenger seats, toilets, rubbish bins, crew seats, the audio entertainment system and the location of bicycle racks, as well as grills on the front of trains. Infrastructure NSW says the design changes should have been identified earlier because “the longer the delay, the higher the cost” for a public-private contract. Public transport NSW bureaucrats rushed to Spain to resolve trains dispute The Spanish manufacturer’s forecast date for delivering the first train is May 2025, which is 35 months late. In August, CAF, which built trams for Sydney’s inner west line, gave the agency a revised schedule that reduced the delay to about 27 months, but that was subject to reaching a commercial settlement. Transport for NSW has a range of timeframes for train deliveries it categorises as “optimistic”, “realistic” and “pessimistic”. Under the worst-case scenario, the last of the new trains will enter into service in four years’ time in April 2027. Major delays to the project mean passengers will be stuck travelling on decades-old XPT, Xplorer and Endeavour trains much longer than planned, which poses risks to the reliability of services and increases maintenance costs. NSW Labor leader Chris Minns said the $1 billion blowout could be added to a list of failed overseas transport projects that the government had signed the state up to. Regional Transport Minister Sam Farraway said the project had suffered setbacks from the pandemic and negotiations over the final design of the trains. However, Farraway argued the figures in the Infrastructure NSW report “are no longer current”, saying he was confident negotiations would deliver an “outcome significantly better than the scenario presented”. Labor leader Chris Minns says the trains are yet another failed transport project. The confidential report also warns that the risk of the Rail Tram and Bus Union objecting to the final design of the new trains “remains real”, and that extra modifications could result in “additional cost and time delays”. A protracted dispute last year between the union and the government over a separate fleet of Korean-built intercity trains crippled the rail network. “There is a real likelihood of industrial action against the regional rail train,” the report states. Infrastructure NSW has listed among “critical recommendations” the need for a “deep dive review” of any proposed settlement with the consortium before it is agreed. Transport for NSW will need approval from cabinet to sign a settlement and “re-baseline the project”. NSW budget - Sydney’s metro rail line under harbour blows out by $6b “Given the cost and time blowout of the project and the number of critical risks to be urgently addressed, the review team’s overall confidence in the project being successfully delivered is currently low,” the report states. A spokesman for Transport for NSW said it was “working closely” with the consortium to finalise the last stages of the detailed design for the trains. “A timeline for their entry into passenger service will be known at the completion of the detailed design process,” he said. |
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