4.2.1 WestConnex
WestConnex is a 33km tolled motorway that will link the west and south-west of Sydney with Sydney Airport and Port Botany. It includes about 19km of tunnels. The project is being completed in stages, with two major sections already open: WestConnex M4 between Parramatta and Haberfield, and WestConnex M8 between Kingsgrove and St Peters. Two 7.5km tunnels to link these sections (the 'M4-M5 Link') are due to be completed in 2023.81
While the fundamental purpose of the project has remained unchanged, scope changes have seen its estimated cost rise by about $2 billion. And because of uncertainty about the basis of early cost estimates, many people expect an overrun closer to $7 billion.82
WestConnex was first proposed by Infrastructure NSW, and adopted by the NSW Government, in October 2012.83 The initial proposal differed to the final plans in a number of respects, but the essential nature of the project was the same: a 33km motorway to connect a widened and extended M4 to the M5 East corridor, providing better access to the airport and the port.84 While the original plan was to connect to a widened M5 East, the final plan involved connecting to a 'New M5', later renamed the WestConnex M8.
The initial cost estimate for the project that grabbed the headlines was $10 billion.85 However, a joint study by Infrastructure NSW and the NSW Government published at the time of the original announcement noted that the cost could be as high as $13 billion.86 That study also indicated that the estimate had been discounted to 2012 dollars, meaning the 'outturn' cost - the nominal amount that would be spent in total over the project's expected 10-year life - would be a lot higher.
The 2013 NSW Budget referred to the $10-to-$13 billion range as the 'Estimated Total Cost'.87 This caused confusion because 'Total estimated cost' is usually reported on a nominal outturn basis in budget infrastructure statements.
The business case was completed later in 2013, and contained a refined estimate of $11 -to-$11.5 billion ($2012).88 The $11.5 billion estimate was then reported in the 2014 NSW Budget, where an outturn cost of $14.9 billion was also reported.
The estimated outturn cost was half-a-billion dollars higher in the 2015 Budget, with the increase attributed to the addition of tunnels for a future southern extension and additional scoping works around the St Peters interchange.89 The estimate jumped a further $1.4 billion to $16.8 billion in the 2016 Budget after an updated business case in late 2015. This remains the current estimate. The updated business case attributed the almost-$2 billion increase since the first business case estimate of $14.9 billion to:90
• extension of the M4-M5 Link to the Anzac Bridge, Victoria Road, and the future Western Harbour Tunnel and Beaches Link ($1.2 billion); and
• provision for an 'enhanced' connection to the terminals of Sydney Airport (the 'Sydney Gateway') ($402 million); and
• 'acceleration costs and associated delivery costs for scope enhancements' ($322 million).
Figure 4.2: Just six mega megaprojects have caused $24 billion in cost overruns so far
$ billion
Sources: As referenced throughout Section 4.2.
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81. Transurban (n.d.).
82. For example: O'Sullivan (2016), Australian Associated Press (2016) and Sanda (2017).
83. Trembath (2012).
84. SGS Economics & Planning (2015).
85. For example: Budd (2013).
86. Infrastructure NSW, TfNSW, and RMS (2012, p. 26).
87. NSW Government (2013, Section 3, Page 4).
88. WestConnex (2013, p. 15).
89. Saulwick (2015).
90. WestConnex (2015, Table E2, p. 24).