New MetroRail budget increase

3/9/07

The New MetroRail (NMR) project budget has been increased by $50million or 3.3 per cent to $1.66billion.

Planning and Infrastructure Minister Alannah MacTiernan said today that the increase followed a thorough review of the project’s budget.

“The review determined that an increase of $50.4million is needed to accommodate previously unanticipated cost increases,” Ms MacTiernan said.

“Barring unforseen events, we expect to link the northern and southern railway lines in the second week of the October school holidays, to enable commencement of passenger services to Mandurah before Christmas.

“This will mean that rail services on the Fremantle line and between Stirling Station and Perth on the northern lines will be replaced by buses for up to six days.”

Ms MacTiernan said that the revised total cost for the $1.664billion NMR project was:

• 9.6 per cent more than the $1.518billion established as the actual cost of the project when the last of the major contracts was let in 2004; and
• 17 per cent more than the original $1.419billion budget set at the completion of the planning phase in 2002.

“These are modest increases given the scale and complexity of this very crucial project, and the significant and continuing cost pressures generated by a volatile, overheated construction industry,” Ms MacTiernan said.

“Prudent financial management has meant that the overall increases have been less than 20 per cent since the finalisation of the planning phase, and less than 10 per cent since the award of the final contracts.

“This result compares very positively with major comparable private sector construction projects which regularly come in at more than 30 per cent above forecast.”

Ms MacTiernan said there would be a final review as part of next year’s budget process, when the remaining project components were completed and various legal claims had been finalised.