Two Sydney motorway projects to blow budgets by combined $209 million

The cost of two major motorway projects in Sydney is set to blow out by a combined $209 million due to their complexity and negotiations with contractors over changes to construction design.

Budget papers show the cost of the first stage of the M6 motorway in Sydney’s south is set to hit $3.193 billion, a $93 million increase on the most recent forecast for the project.

The final bill will hinge on negotiations with contractors after two major sinkholes above a tunnel at Rockdale forced changes to the project’s design and delayed the completion of the motorway by three years to 2028.

Workers fill in a huge sinkhole with cement in March last year to stabilise a two-storey building that teetered on the edge.Credit: Rhett Wyman

Contractors have warned Transport for NSW that all work on the M6 will cease indefinitely by the end of this month after they “terminated” their deal because of tunnelling conditions that “could not have been anticipated by anyone”.

Underscoring the challenges facing major projects, the cost of upgrading the Warringah Freeway at North Sydney is also set to hit $2.116 billion, which is $116 million above the total forecast cost. About $243 million has been set aside in the NSW budget for the project, which is due to be completed by late next year.

The upgrade to the Warringah Freeway, which is one of the country’s busiest motorways, is complicated by construction occurring amid heavy traffic.

Roads Minister Jenny Aitchison acknowledged there were cost pressures on the Warringah Freeway but said the government had contingencies in place, and was looking at opportunities to address project costs.

The cost of the Warringah Freeway upgrade is set to hit $2.11 billion.Credit: Rhett Wyman

The upgrade is required to incorporate the $7.4 billion Western Harbour Tunnel between Rozelle and North Sydney, which will comprise twin three-lane tunnels and is due to open to traffic in 2028. Landscaping and other consolidation works will be completed by the following year.

The government’s signature motorway project is entering the most challenging part of construction. Two giant tunnel boring machines are due to start tunnelling northwards under the harbour towards Waverton from Birchgrove early next year.

The budget made clear that the future of financial relief for motorists who regularly use Sydney’s toll roads will depend on the outcome of negotiations over a shake-up of the tolling system with motorway operator Transurban and other large investors. A two-year government program that caps tolls at $60 a week for drivers is due to expire next January.

As the negotiations enter their final stretch, the government is investing $58 million in a new agency known as NSW Motorways, which is due to start operating next week. Its establishment was a key recommendation of a review into Sydney’s toll roads led by former competition regulator chief Allan Fels.

The new agency will own and operate government toll roads such as the Sydney Harbour Bridge and the Western Harbour Tunnel and take over the existing government retailer E-Toll, as well as collect and publish information about toll roads and operate toll relief schemes.

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