2. Introduction

Context

Capital works projects are a major investment and financial risk for the State. The NSW Government has allocated $41.5 billion over the next four years – more than half of its infrastructure budget – to transport-related projects. Transport for NSW (TfNSW) will deliver many of these.

Robust planning and procurement are essential to ensure projects deliver public benefits and achieve value for money. They also underline the importance of learning from past experience and following best practice guidelines for project planning, procurement, delivery and assurance.

In March 2011, the NSW Government, then in opposition, announced during the election campaign that it wanted to build a light rail system through the CBD. In December 2012, the government chose its preferred route from several options in the Sydney Light Rail Strategic Plan.

TfNSW is responsible for planning, procuring and delivering the Central Business District and South East Light Rail (CSELR) project. It must also ensure the project is delivered cost-effectively to maximise the benefits within parameters the NSW Government set in 2012.

This is our fourth performance audit report on construction projects that NSW Government agencies planned and procured during this period. Our previous reports – WestConnex: Assurance to the Government (December 2014), Large construction projects: Independent assurance (May 2015), and Albert ‘Tibby’ Cotter Walkway (September 2015) – informed the context in this report.

CSELR project at a glance

The CSELR project involves constructing a new light rail service that will run from Circular Quay along George Street to Central Station, through Surry Hills to Moore Park, then to:

  • Kensington via Anzac Parade
  • Randwick via Alison Road and High Street.

Exhibit 1 shows the route for the light rail.

Exhibit 2 captures the main project stages from planning and procurement to construction and delivery.

Exhibit 1: CSELR route

Image of CSELR route map

December 2015.

Source: Transport for NSW 2015.

Exhibit 2: CSELR project development

project planning and project procurement steps

Source: Audit Office research.

See Appendix 2 for a detailed chronology of the CSELR project development.

About the audit

Our audit examined whether TfNSW ensured that:

  • project planning and procurement was robust
  • changes to the project scope and cost were justified and represented best value for money
  • appropriate probity and due diligence was undertaken in the tendering process.

We audited TfNSW’s activities against NSW Government capital project planning and procurement policies and guidelines to assess whether it applied appropriate processes.

The processes that apply to the CSELR project include:

  • preparing preliminary and final business cases in line with NSW Treasury circulars and guidelines
  • initiating independent assurance reviews (known as gateway and major project assurance reviews) at key decision points in a project’s life cycle, as shown in Appendix 3
  • reporting to, and being monitored by, NSW Treasury and Infrastructure NSW
  • complying with the NSW Government procurement policy to demonstrate value for money in delivering government services.

The audit did not examine the merits of NSW Government policy objectives or the merits of project-related decisions. We also did not review the appropriateness of the selected technical solution for the CSELR.

Appendix 4 outlines the audit scope and focus, and lists the relevant policies and guidelines.