Secret pricing ‘reset’ sparks fears of Suburban Rail Loop budget blowout in latest projects woe

A secretive review into costs of early SRL works dragged on for six months longer than scheduled according to the state’s financial watchdog, raising fears the project will face delays or blowouts.

A secretive “pricing reset” for early Suburban Rail Loop works dragged on for six months longer than scheduled, raising fears the project will face delays or blowouts.

A report by the Victorian Auditor-General says the pricing review for the SRL East early works package, which are budgeted at $2.2bn, was due to a fresh assessment of unknown or uncertain ground conditions and hazards on project sites when the contract was inked.

The pricing reset was due to wrap up in June last year.

The Auditor-General report says delays meant there were concerns that early works – which include shifting energy and water pipelines and preparing sites for major construction – would not be finished before tunnelling was due to begin, next year.

Suburban rail loop renders. Supplied

“The price reset was expected to be finalised by June 2024 but is still in progress,” the report tabled in state parliament says.

The contract for initial and early works was awarded to Laing O’Rourke in 2022, and scheduled to wrap up in 2025.

That schedule was pushed back once other aspects of the project were determined, and the package is now due to be finished in the first half of next year.

This would pave the way for major tunnelling to begin on the $34.5bn project next year, but the Auditor-General report raises concerns about that timeline.

“There is a general potential risk that the emerging time variance in the IEW package could delay the main works package,” it says.

“SRLA (Suburban Rail Loop Authority) told us that it is working with the managing contractor to minimise any possible impact on other packages.”

Contingency plans have been created in case there are delays that impact when major construction can begin.

A report by the Auditor-General has revealed a secret pricing reset for early Suburban Rail Loop works dragged on for six months longer than scheduled. Picture: NewsWire

A spokeswoman for the SRL said the project would not be impacted by the pricing review, and that all early works programs would be included in the $2.2bn budget.

An extra $300 million was budgeted for “program planning and development”.

She said some delays had been experienced on works performed by utilities providers, which were not controlled by SRLA, but they have not affected overall time frames

“SRL East is on time and on budget, with tunnel boring machines arriving this year, tunnelling to start in 2026 and trains taking passengers in 2035,” she said.

But opposition major projects spokesman Evan Mulholland said if there was a pricing review today of things that were unknown when contracts were signed, it would be “ likely that the cost of the project will blow out further”.

BTwo major SRL East contracts worth a total of $5.3bn have been struck for tunnelling the first 26km of the SRL, between Cheltenham to Box Hill. Picture: Mark Stewart

“We’re seeing billions in cost overruns, delays, and poor planning — Victorians are paying the price for a government that simply can’t deliver,” he said.

Two major SRL East contracts worth a total of $5.3bn have been struck for tunnelling the first 26km of the SRL, between Cheltenham to Box Hill.

The SRL East is the first stage in a 90km loop, designed to connect to radial “spokes” of the existing rail network.

Six new stations will be built as part of the first stage, allowing for development of high rise housing towers around those stations.

Controversy has raged about funding of the project, towards which the Allan Government has committed $11.5bn and wants the remaining cash to come from the Commonwealth and land uplift levies known as value capture.

Originally published as Secret pricing ‘reset’ sparks fears of Suburban Rail Loop budget blowout in latest projects woe