In April 2016, the Victorian Government signed an in-principle agreement with Transurban to build the West Gate Tunnel, at an expected cost of $5.5 billion. The expected benefit cost ratio was 1.1.25
The plan was to build a 5km toll road linking the West Gate Freeway at Yarraville with the Port of Melbourne and CityLink at Docklands, including twin tunnels beneath Yarraville, a bridge over the Maribyrnong River, and a road above Footscray Road. Transurban had put the plan to the Government as a market-led proposal.
Today, the story is very different. The expected cost has increased to $6.7 billion.26 The latest publicly available estimate of the benefit cost ratio, in 2018, put it at 1.0.27
The increase in costs has been attributed primarily to the discovery of soil contamination. Other problems include the need to relocate utility pipes, and shortcomings in governance.
____________________________________________________________________________
25. VAGO (2019a, p. 43). The business case for the project included a headline benefit cost ratio of 1.3, but this number referred to a combined 'project' which
26. Ibid (p. 52).
27. Ibid (p. 53).