CBD and South East Light Rail: follow-up performance audit

Executive summary

The CBD and South East Light Rail is a 12 km light rail network for Sydney. It extends from Circular Quay along George Street to Central Station, through Surry Hills to Moore Park, then to Kensington and Kingsford via Anzac Parade and Randwick via Alison Road and High Street.

Transport for NSW (TfNSW) is responsible for planning, procuring and delivering the Central Business District and South East Light Rail (CSELR) project. In December 2014, TfNSW entered into a public private partnership with ALTRAC Light Rail as the operating company (OpCo) responsible for delivering, operating and maintaining the CSELR. OpCo engaged Alstom and Acciona, who together form its Design and Construct Contractor (D&C).

On 14 December 2019, passenger services started on the line between Circular Quay and Randwick. Passenger services on the line between Circular Quay and Kingsford commenced on 3 April 2020.

In November 2016, the Auditor-General published a performance audit report on the CSELR project. The audit found that TfNSW would deliver the CSELR at a higher cost with lower benefits than in the approved business case, and recommended that TfNSW update and consolidate information about project costs and benefits and ensure the information is readily accessible to the public.

In November 2018, the Public Accounts Committee (PAC) examined TfNSW's actions taken in response to our 2016 performance audit report on the CSELR project. The PAC recommended that the Auditor-General consider undertaking a follow-up audit on the CSELR project. The purpose of this follow-up performance audit is to assess whether TfNSW has effectively updated and consolidated information about project costs and benefits for the CSELR project.

Conclusion

Transport for NSW has not consistently and accurately updated CSLER project costs, limiting the transparency of reporting to the public. In line with the NSW Government Benefits Realisation Management Framework, TfNSW intends to measure benefits after the project is completed and has not updated the expected project benefits since April 2015.

Between February 2015 and December 2019, Transport for NSW (TfNSW) regularly updated capital expenditure costs for the CSELR in internal monthly financial performance and risk reports. These reports did not include all the costs incurred by TfNSW to manage and commission the CSELR project.

Omitted costs of $153.84 million for early enabling works, the small business assistance package and financing costs attributable to project delays will bring the current estimated total cost of the CSELR project to $3.147 billion.

From February 2015, TfNSW did not regularly provide the financial performance and risk reports to key CSELR project governance bodies. TfNSW publishes information on project costs and benefits on the Sydney Light Rail website. However, the information on project costs has not always been accurate or current.

TfNSW is working with OpCo partners to deliver the expected journey time benefits. A key benefit defined in the business plan was that bus services would be reduced owing to transfer of demand to the light rail - entailing a saving. However, TfNSW reports that the full expected benefit of changes to bus services will not be realised due to bus patronage increasing above forecasted levels.

1. Key findings

The total cost of the CSELR project will exceed $3.1 billion

In February 2015, the estimated total cost and capital funding approved for the project was $2.104 billion.

In November 2019, the Minister for Transport announced that the revised construction costs for the project were $2.9 billion, based on a briefing prepared by TfNSW staff. The briefing stated the updated estimated total cost of the project was $2.993 billion (excluding financing costs).

Our audit found the total cost of the CSELR project will exceed $3.1 billion as the briefing did not include:

  • $36.07 million for pre-contract award costs
  • $60.0 million for the small business assistance package
  • $57.77 million in additional financing costs (as at 30 June 2019) directly attributable to delays in the project.

The cost of the CSELR project will exceed the cost reported by TfNSW.

A lack of provision of financial performance and risk information limited the effectiveness of the CSELR’s main governance bodies

The project delivery office prepared monthly Financial Performance and Risk (FPR) reports throughout the delivery of the light rail. The reports contained accurate capital expenditure information, but the information was not complete as it did not include other known project costs.

Between February 2015 and mid-2018, the CSELR Advisory Board was responsible for oversighting costs against budget. TfNSW regularly provided the Board with FPR reports until May 2017. After this time, TfNSW provided one report (August 2017) to the Advisory Board.

Subsequently, the CSELR Project Control Group (established mid 2018) had responsibility for monitoring spend against project funding allocation and revised forecasts. TfNSW did not regularly provide this group with FPR reports. TfNSW advises that some members of the Project Control Group had access to these reports, but was unable to provide evidence that the reports were regularly considered by the Project Control Group.

TfNSW publishes information on project costs and benefits on the Sydney Light Rail website. However, the information on project costs has not always been accurate

In our first report on the CESLR (2016), we recommended that TfNSW update and consolidate information about project costs and benefits and ensure that it is readily accessible to the public. In 2016, in response to our recommendation, TfNSW published current information on the 2015 project cost and benefits to the Sydney light rail website. Since then, TfNSW updated the information on the website on two occasions. However, TfNSW's updates have not always been accurate:

  • On the June 2019 Light Rail Benefits factsheet (published on the Sydney Light Rail website), TfNSW described the project cost as $2.1 billion and noted that it had entered into a revised agreement with ALTRAC Light Rail operating company (OpCo) which included an additional sum of $576 million. This information did not align with the approved revised budget of $2.734 billion used internally as it did not include $57.77 million in additional financing costs.
  • On the November 2019 Light Rail Benefits factsheet (published on the Sydney Light Rail website), TfNSW used an updated construction cost figure of $2.9 billion. The source figure for this reported project cost was actually $2.993 billion. This cost figure also did not include other associated project costs.
TfNSW is working with OpCo to deliver the expected journey time benefits

The 2015 CSELR project benefits realisation plan noted that ‘Journey times and service capacity are central to realising customer benefits.’ The June 2019 amended project deed includes required journey times of 37.5 to 38.5 minutes for 97 per cent of services from Circular Quay to Randwick and Kingsford branches respectively.

From 1 March to 7 March, 97 per cent of journeys from Circular Quay to Randwick were 51 minutes and 25 seconds or less, with an average journey time of 42 minutes and 5 seconds.

TfNSW has established a committee with OpCo to bring the average journey time down to meet the contracted journey time included in the project deed.

TfNSW will not be able to realise the full expected benefit of changes to bus services

In the 2013 detailed economic appraisal of the CSELR (developed as part of the business case for the CSELR), TfNSW estimated that the net present value of transport operating benefits at $707 million, of which $442 million (or $47.0 million per annum) would be savings due to avoided bus service costs.

In November 2014, in response to changes to the project scope, TfNSW revised the transport operating benefits (which included savings due to avoided bus service costs) to $686 million.

In June 2019, TfNSW estimated that it achieved savings of $8.2 million per annum as a result of the October 2015 changes to Sydney CBD bus services. TfNSW expects to achieve an additional cost savings of $8–10 million per annum following implementation of its 2020 integrated bus service plan for South Eastern Sydney. The final integrated bus service plan is yet to be finalised and endorsed.

These latest estimated savings resulting from changes to bus services are significantly lower than the figure TfNSW used to calculate the project benefits in 2013.

TfNSW advised us that there have been changes in customer demand for travel in South Eastern Sydney since the CSELR project business case was prepared in 2012, which it attributes to significant growth of residential development in the eastern suburbs of Sydney.

2. Recommendations

By June 2020, Transport for NSW should:

1. publicly report average weekly journey times

2. publicly report the final project cost

By December 2020, Transport for NSW should:

3. publicly report the updated expected project benefits

By April 2021, Transport for NSW should:

4. publicly report on benefits achieved during the first year of operations.

1. Introduction

1.1 CSELR project at a glance

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

  • Kingsford via Anzac Parade
  • Randwick via Alison Road and High Street.
Map of Sydney Light Rail route
Exhibit 1: Shows the route for the light rail
Source: Transport for NSW 2015.

1.2 2016 Performance Audit on the CBD and South East Light Rail project

In 2016, the Auditor-General published a performance audit report on the CSELR project. The audit assessed how well Transport for NSW (TfNSW) ensured that planning and procurement for the CSELR project achieved value for money within the parameters set by the NSW Government. It covered the period from the development of the Sydney Light Rail Strategic Plan beginning in August 2011 to the major construction contract completion in February 2015. The audit found that TfNSW would deliver the CSELR at a higher cost with lower benefits than in the approved business case and recommended that TfNSW update and consolidate information about project costs and benefits and ensure that this information it is readily accessible to the public.

Specifically, the Auditor-General made the following recommendations:

  1. TfNSW should, by December 2016:
    1. finalise outstanding design and scope issues
    2. ask the project Advisory Board to confirm that controls over the budget and use of contingency funds are consistent with NSW Government decisions and NSW Treasury guidelines
    3. update and consolidate information about project costs and benefits and ensure that it is readily accessible to the public
    4. ensure the Sydney Light Rail Project Director provides six-monthly briefings to the TfNSW Audit and Risk Committee.
  2. For all capital projects, Transport for NSW should comply with the Infrastructure Investor Assurance Framework.

1.3 Parliamentary Reviews

In November 2018, the Public Accounts Committee (PAC) examined TfNSW's actions taken in response to our 2016 performance audit report on the CSELR project. The PAC recommended that the Auditor-General consider undertaking a follow-up audit on the CSELR project. The PAC noted ‘the paucity of detailed information provided in additional responses to questions taken on notice by TfNSW witnesses about a range of financial and project management information raises significant concerns about the current state of the project’. The PAC concluded that there is merit in increasing the transparency and accountability of information.

Between May 2018 and the January 2019, the Legislative Council Public Accountability Committee conducted an inquiry into the ‘Impact of the CBD and South East Light Rail Project’. Its January 2019 report similarly ‘questions whether the costs of the project are being managed effectively.

1.4 Timeline and progress

In October 2014, TfNSW selected Connecting Sydney (which subsequently changed its name to ALTRAC Light rail) as the preferred proponent for the light rail public private partnership (PPP). ALTRAC Light Rail is the operating company (OpCo) responsible for delivering, operating and maintaining the CSELR. OpCo engaged Alstom Transport Australia Pty Limited and Acciona Infrastructure Australia Pty Ltd, who together form its Design and Construct Contractor (D&C).

The project’s business case summary was published in November 2013, estimating a cost of $1.6 billion. However, the budget had increased by $549 million to $2.1 billion when Transport signed the main works PPP contract in December 2014.

Major construction of the CSELR started in October 2015. The project experienced significant delays, and by March 2018, financial performance reporting prepared by TfNSW showed that expenditure on construction of the light rail was $213 million behind schedule, and that the project would likely cost $135 million more than budget.

In April 2018, D&C filed a lawsuit in the NSW Supreme Court, alleging that the NSW Government had engaged in misleading or deceptive conduct when providing information on how to manage electricity cables on George Street.

Between April 2018 and June 2019, TfNSW engaged in a facilitation process with OpCo and D&C. The Minister for Transport established a Steer Co to coordinate the response to the litigation and negotiate new commercial positions on behalf of government.

On 3 June 2019, the Minister for Transport announced that the NSW Government had reached a settlement agreement with OpCo. The settlement agreement resolved existing disputes on modifications to the scope of the project and introduced new construction and delivery milestone incentives for the OpCo. As part of the settlement, D&C also agreed to permanently withdraw its claim of misleading or deceptive conduct. The cost to government for the settlement is $576 million, which includes incentive payments ($44.0 million) and a two year extension to OpCo's licence to operate the light rail (worth $221 million).

From 3 June 2019, OpCo and D&C increased their efforts to construct and deliver the light rail, in line with the new timetable agreed as part of the settlement. First passenger service for Circular Quay to Randwick started on 14 December 2019. Passenger services on the line between Circular Quay and Kingsford commenced on 3 April 2020.

1.5 Changes to governance arrangements

After the NSW Government approved the final business case, TfNSW consulted the Department of Premier and Cabinet, NSW Treasury and Infrastructure NSW on an appropriate governance model. In November 2013, the Minister for Transport appointed the Sydney Light Rail (SLR) Advisory Board to provide project oversight and independent assurance; advice to the Minister and Premier; advice to the Secretary and the Project Director on critical decisions and endorsement of recommendations to government.

In April 2015, TfNSW established a stand-alone project delivery office to deliver the CSELR project and oversee the operation of the existing Inner West Light Rail service. The delivery office originally reported to the Secretary for TfNSW but TfNSW advises that in later years the delivery office reported to the Deputy Secretary Infrastructure and Place. TfNSW advises that this structure has subsequently changed, and the delivery office currently reports to the Head of the Sydney Project Delivery office. TfNSW also advises that the project delivery office also provides information to the TfNSW Program Management Office.

We also note that in July 2015, Infrastructure NSW strengthened its assurance role of the CSELR project to:

  • conduct regular health checks
  • administer gateway reviews at key stages in line with the Infrastructure Investor Assurance Framework
  • report monthly to the NSW Government.

In July 2018, the Minister for Transport approved further changes to the governance arrangements by establishing the SLR Steering Committee (referred to as the Steer Co) and Project Control Group. The role of the CSELR Advisory Board changed to an advisory only role.

The objective of the Steer Co is to:

  • develop and govern strategy and execution in relation to the Sydney Light Rail project's financial, commercial and project performance issues
  • recommend solutions and negotiate commercial positions
  • provide advice to the Secretary of Transport on critical/major decisions and endorsement of recommendations to government
  • co-ordinate litigation, progress, performance, disputes, communications (media) and major risks in relation to the Sydney Light Rail project.

2. Project costs

2.1 Did Transport for NSW regularly and accurately update all project costs during construction

The total cost of the CSELR project will exceed $3.1 billion

In February 2015, the estimated total cost and capital funding approved for the CSELR project was $2.104 billion, excluding financing costs.

In June 2019, following the execution of the deed of settlement and release on 31 May 2019, the NSW Government approved an increase of $576 million in capital funding for the project, increasing the total budgeted cost of the project to $2.680 billion.

In November 2019, based on a briefing prepared by TfNSW, the Minister for Transport announced that the revised construction costs for the project were $2.9 billion. The briefing stated the updated estimated total cost of the project was $2.993 billion excluding financing costs, and noted that TfNSW was exploring funding options for the increase of $313 million.

The $2.993 billion total project cost contained in the briefing included:

  • $2.104 billion (approved budget at February 2015)
  • $576 million deed of settlement (announced May 2019)
  • $87.0 million remaining funds from an advance payment made by TfNSW to OpCo
  • $73.0 million for additional direct project management and delivery costs
  • $72.0 million for additional costs relating to the Sydney co-ordination office, including safety measures and campaigns, and corporate overheads
  • $81.0 million project contingency provision
  • an assumption that all milestone and incentive payments included as part of the facilitation settlement are payable.

At March 2020, we identified $153.84 million in additional costs incurred by TfNSW that should be attributed to managing and commissioning the CSELR project, bringing its estimated total cost to $3.147 billion. Namely:

  • $36.07 million for pre-contract award costs.
  • $60.0 million for the small business assistance package - TfNSW advises that it did not include this in the estimated total cost as TfNSW are funding the package as an operating, not a capital, expense. However, the package is a related cost, and as such we have included it in our estimate. As at February 2020, TfNSW has spent $52.0 million of the $60.0 million allocated.
  • $57.77 million in financing costs (at 30 June 2019) - TfNSW advises, in line with TPP15-02 Budgeting for Availability based on Public Private Partnerships, it does not include financing costs in the published budget figures. However, TfNSW has incurred additional financing costs for the project as a result of entering into a $500 million Supported Bank Liquidity Facility in July 2018. These additional financing costs are directly attributable to delays in the project, as such, we have included them as part of the estimated total cost.

We also note that the figure does not include any funding for the Light Rail Nuisance Class Action. TfNSW advises that its insurer is currently underwriting this potential expense, and is unlikely to result in additional cost to government for the project.

Transport for NSW regularly updated project costs during construction

The project delivery office prepared monthly Financial Performance and Risk (FPR) reports throughout the delivery of the light rail project. The reports contain capital expenditure information and are accurate, and were prepared for management and governance use. However, the reports are not complete as they do not include the additional costs to the CSELR project that we identified above.

In June 2017, TfNSW identified that projected costs were likely to exceed budget but did not revise the final forecast cost until June 2019

TfNSW included risk information associated with costs in the monthly FPR reports. Between June 2017 and September 2018, each of the FPR reports we examined showed a decreasing likelihood that TfNSW could deliver the CSELR project within its approved $2.1 billion budget. However, TfNSW did not revise the Final Forecast Cost to $2.734 billion until June 2019, when a settlement outcome was achieved as part of the facilitation process. TfNSW has advised that the uncertainty of the facilitation process between mid-2018 and May 2019 made it difficult to revise the Final Forecast Cost.

Exhibit 2 shows reporting on the Final Forecast Cost and the likelihood of the project being delivered on budget. In May 2018, TfNSW's risk analysis identified a zero per cent chance of the project being delivered within budget. By July 2018, the risk model produced a final forecast cost $379 million greater than the $2.104 billion forecast cost.

Line graph showing forecast cost and likelihood of project being delivered within budget January 2016 to September 2018
Exhibit 2: Internal Financial Performance and Risk Reporting on final forecast cost and likelihood of project being delivered within budget
Source: Transport for NSW.

2.2 Were the project costs against budget regularly reported to the relevant governance bodies and INSW as required?

The CSELR’s main governance bodies met as required but did not regularly receive financial performance information

From February 2015, the main governance bodies for the CSELR project were the Sydney Light Rail Advisory Board (Advisory Board), the Sydney Light Rail Project Control Group (Project Control Group) and the Sydney Light Rail Steer Co (Steer Co). The responsibilities of the governance bodies are shown in Exhibit 3.

In May 2016, the Advisory Board asked TFNSW to provide it with quarterly Final Forecast Cost estimates. TfNSW did not regularly report project costs against budget to the Advisory Board. In July 2017, the Advisory Board identified that the level of confidence in delivering the project on budget was decreasing and recommended that TfNSW monitor this closely. Between June 2017 and May 2018, TfNSW provided the August 2017 FPR report in October 2017. No other FPR reports were provided during this period. TfNSW did not regularly provide the Project Control Group with FPR reports. TfNSW advised that some members of the Project Control Group had access to the FPR reports but was unable to provide evidence that the Project Control Group regularly considered these reports.

Exhibit 3: Financial Performance Information received by CSELR Governance bodies
Governance bodies and responsibilities Dates of operation Did TfNSW provide Financial Performance and Risk reports to the governance bodies?
Sydney Light Rail Advisory Board    
Responsible for oversighting costs against budget. February 2015 - Mid 2018 One FPR report provided between June 2017 and May 2018.
Sydney Light Rail Project Control Group    
Responsible for tracking delivery as planned to meet the agreed objectives, business requirements and documented benefits. This included monitoring of spend against project funding allocation and revised forecasts. Mid 2018 - present Not regularly
Sydney Light Rail Steer Co    
Responsible for developing and governing strategy and execution in relation to the CSELR project’s financial, commercial and project performance issues. Mid 2018 - present Not required
Source: Audit Office analysis.
 
TfNSW's Audit and Risk Committee received regular reports from the Project Director

Our 2016 performance audit on the CSELR project recommended that TfNSW ensure that the CSELR Project Director provide six-monthly briefings to TfNSW's Audit and Risk Committee. We found that, with one exception, the project director provided these briefings and that TfNSW has met the intent of our recommendation.

TfNSW provided regular reports to Infrastructure NSW, in line with the requirements of the Infrastructure Investor Assurance Framework

Since 2015, the CSELR has been subject to Infrastructure NSW's 'Infrastructure Investor Assurance Framework' (IIAF). TfNSW has participated in INSW reviews in line with the IIAF. These reviews include:

  • monthly high profile/high risk reports - which provide a snapshot of the project during delivery
  • independent gateway reviews
  • health checks
  • deep dive reviews.

2.3 Have project benefits been updated to reflect changes in project scope, issues and additional benefits identified during construction and testing?

TfNSW reports that it intends to measure benefits after full completion of construction

TfNSW intends to undertake benefits realisation activities as part of the IIAF. Under the IIAF, at the final gateway review, NSW Government agencies assess benefits realisation when a project is fully delivered.

TfNSW is working with OpCo to deliver the expected journey time benefits

The 2015 BRP noted that ‘Journey times and service capacity are central to realising customer benefits.’ The 2015 BRP uses an average journey time of 35 -38 minutes (for travel from CBD to Randwick and Kingsford branches respectively. The June 2019 amended project deed includes required journey times of 37.5 to 38.5 minutes for 97 per cent of services from Circular Quay to Randwick and Kingsford branches respectively.

From March 1 to March 7, 97 per cent of journeys from Circular Quay to Randwick were 51 minutes and 25 seconds or less, with an average journey time of 42 minutes and 5 seconds. 60 per cent of journeys made during this week were 42 minutes and 37 seconds or less. The scheduled journey time during this period was 40 minutes. TfNSW has established a committee with OpCo which aims to meet the contracted journey time included in the project deed.1 Exhibit 4 shows CSELR journey time data for three separate weeks in February, March and April 2020.

Exhibit 4: CSELR Circular Quay to Randwick journey time data - February to April 2020
  February 5 to February 11 March 1 to March 7 April 2 to April 8
Contracted journey time (for 97% of services) 0:37:30 minutes 0:37:30 minutes 0:37:30 minutes
Timetabled journey time 0:40:00 minutes 0:40:00 minutes 0:40:00 minutes
Actual journey time (97% of services) 0:51:26 minutes 0:51:25 minutes 0:47:53 minutes
Average journey time 0:43:35 minutes 0:42:05 minutes 0:40:24 minutes
Actual journey time (60% of services) 0:43:46 minutes 0:42:37 minutes 0:40:10 minutes
Source: Transport for NSW.

Under the terms of the Project Deed, TfNSW can, in some circumstances, reduce the monthly service payment it pays to OpCo if the journey time for a service exceeds the maximum service time by four minutes. The Project Deed also includes an interim ‘bedding in’ period, to allow OpCo time to optimise journey time, where this penalty does not apply.

TfNSW engaged consultants to model likely journey times to inform adjustment of traffic light controls and to consider impacts on the broader road network. This work has been ongoing since 2016, and updates on the achievability of journey times have been a regular feature of Advisory Board and Project Control Group meetings. The audit team has sighted evidence regarding TfNSW’s work in developing traffic signalling control plans for intersections as well as repeated modelling to ascertain the impact of signalling changes on light rail journey time and the surrounding road network. TfNSW advised that this work is iterative.

TfNSW will not be able to realise the full expected benefit of changes to bus services

In the 2013 detailed economic appraisal of the CSELR, TfNSW estimated that the net present value of transport operating benefits at $707 million, of which $442 million (or $47.0 million per annum) would be savings due to avoided bus costs.

In November 2014, in response to changes to the project scope, TfNSW revised the transport operating benefits (which included savings due to avoided bus costs) to $686 million.

In June 2019, TfNSW estimated that it achieved savings of $8.2 million per annum as a result of the October 2015 changes to Sydney CBD bus services. TfNSW expects to achieve an additional cost savings of $8–10 million per annum following implementation of its 2020 integrated bus service plan for South Eastern Sydney. The final integrated bus service plan is yet to be finalised and endorsed. The savings resulting from changes to bus services are significantly lower than the figure TfNSW used to calculate the project benefits in 2013.

TfNSW notes that there have been changes in customer demand for travel in South Eastern Sydney since the CSELR project business case was prepared in 2012, which it attributes to significant growth of residential development in the eastern suburbs of Sydney.


1 COVID-19 has had an impact on TfNSW and OpCo’s ability to optimise journey times within normal traffic and operating conditions. As a result, this audit was unable to comment on whether the light rail is likely to achieve its intended journey times.

2.4 Have changes to project finance arrangements been assessed and approved by appropriate governance and oversight bodies?

TfNSW made changes to project finance arrangements which were assessed by the appropriate governance and oversight bodies

Since 2016, TfNSW made several changes to project finance arrangements. These changes are shown in Exhibit 5. Approved changes to the project budget are shown in Exhibit 6.

Exhibit 5: Changes to project finance arrangements
Date Project finance arrangement Change to project budget? Detail
2 July 2018 $500 million Supported Bank Liquidity Facility (SBLF) No On 2 July 2018, TfNSW entered into project finance arrangements, a $500 million Supported Bank Liquidity Facility. TfNSW made the facility available to OpCo and D&C to progress the Project, pending resolution of certain disputed modifications and claims between OpCo, D&C and TfNSW.
June 2019 $576 million change to project budget post settlement Yes On 3 June 2019, TfNSW announced that it had agreed a restructure and settlement package with OpCo, resulting in an additional payment of up to $576 million. The settlement also resolved issues with outstanding modifications and claims, and provided additional incentive payments to encourage the consortium to hasten delivery of the light rail. It also resolved a claim of misleading and deceptive conduct by the consortium delivering the project and its D&C. TfNSW has included this amount in the current cost estimate for the project.
November 2019 $313 million budget increase Yes In November 2019, detailed reforecast of the remaining construction period to end March 2020 highlighted estimated additional costs of $313 million bringing the cost of the project to $2.993 billion.
Source: Audit Office analysis.

We found that all the appropriate governance and oversight bodies assessed and reviewed these changes to project finance arrangements.

2.5 Is up to date and accurate information on project costs and benefits publicly available?

TfNSW publishes information on project costs and benefits on the Sydney Light Rail website. However, the information on project costs has not always been accurate

Our 2016 performance audit on the CSELR project recommended that TfNSW update and consolidate information about project costs and benefits and ensure that it is readily accessible to the public. In response to our recommendation, TfNSW published current information on the 2015 project cost and benefits to the Sydney light rail website. Since then, TfNSW updated the information on the website with project costs twice. On 3 June 2019, the website was updated to reflect the outcome of the settlement and stated that the final cost and an updated benefit-cost analysis will be determined following project completion and a final completion review by Infrastructure NSW. TfNSW updated the information again on 27 November 2019 to reflect the updated $2.9 billion project cost.

Public information on project costs has not always been accurate. In June 2019, TfNSW approved a revised project budget of $2.734 billion. Following this, TfNSW updated information on the website stating that the project cost was $2.1 billion and that there was an addition sum of up to $576 million post settlement, this would bring the total project budget to $2.676 billion. This means that the project costs published on the website were not accurate as it did not include $57.77 million in additional financing costs. TfNSW advises that, in line with TPP15-02 Budgeting for Availability based on Public Private Partnerships, it does not include financing costs in the published budget figures. However, TfNSW has incurred additional financing costs for the project as a result of entering into a $500 million Supported Bank Liquidity Facility in July 2018. These additional financing costs are directly attributable to delays in the project, as such, we have included them as part of the estimated total cost. Exhibit 6 shows project cost revisions and public reporting on project costs.

In November 2019, the Minister for Transport announced the revised project cost of $2.9 billion. A briefing note prepared by Transport for NSW that supports this announcement details that the total cost of the project is $2.993 billion. The $2.9 billion is incorrectly rounded down from the $2.993 billion source figure in the briefing note.

Additionally, the $2.9 billion figure does not include other known costs, such as the early works and small business assistance package. TfNSW advises that it did not include these costs in its public statements about the cost of delivering the light rail as they are not capital expenditure relating to the main project. We consider these costs to be directly related to the cost of delivering the light rail regardless of how TfNSW funds them.

Exhibit 6: CESLR project cost revisions and public reporting on project costs
Date Approved revised project cost Publicly reported project cost Was a revised cost publicly reported? Was the publicly reported cost accurate? Audit comment
December 2014 $2.1 billion $2.1 billion Check circle mauve Check circle mauve Prior to 27 November 2019, the website reported the December 2014 revised cost amount of $2.1 billion.
June
2019
$2.734 billion $2.1 billion + additional
$576 million
Check circle mauve Exclamation mark red On 3 June 2019, TfNSW updated the website with the outcome of the settlement. The project cost on the website did not align with the approved revised project cost of $2.734 billion.
November 2019 $2.993 billion $2.9 billion Check circle mauve Exclamation mark red On 27 November 2019, TfNSW published a fact sheet on the CSELR project benefits on the website which included a revised construction cost of $2.9 billion. This update reflected the public announcement made by Minister for Transport on 22 November 2019. The $2.9 billion figure is incorrectly rounded down from $2.993 billion and does not include other known costs.
Key: Check circle mauve Yes Exclamation mark red No      
Source: Audit Office analysis.

Appendices

Appendix one – Response from agency

Appendix two – Governance and reporting arrangements for the CSELR

Appendix three – 2018 CSELR governance changes

Appendix four – About the audit

Appendix five – Performance auditing

 

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Parliamentary reference - Report number #335 - released 11 June 2020