Construction of the Metro Tunnel commenced in 2018.121 The project is expected to be completed in 2025,122 and remains officially on budget, at a cost of $11 billion.123 However, it was reported in October 2020 that the Victorian Government had agreed to pay an extra amount to cover a share of cost overruns incurred by the contractors.124
The Auditor-General has noted that early construction works cost $150 million (or 30 per cent) more than anticipated, funded from the budget for the main works phase.125 The Auditor-General noted that 'the heavy use of project-wide contingency funds is an early warning flag for the project, particularly because there are at least five more years of complex and risky construction works ahead'.126
It has also been reported that unexpected problems, including geological problems, have created additional costs.127 The consortium building the Metro Tunnel project, Cross Yarra Partnership (CYP), has sought additional Government funding.128 In 2019, a mediator was appointed to negotiate between the CYP and the Victorian Government.129
The consortium ceased tunnelling work for a period in December 2019 and has reportedly threatened to quit the project entirely unless the Government agrees to contribute to the increased costs, reported to be about $3 billion.130
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121. Victorian Department of Treasury and Finance (2019).
122. Metro Tunnel (n.d.).
123. Ibid.
124. Jacks and Towell (2020).
125. VAGO (2019b, p. 9).
126. Ibid (p. 8).
127. Jacks and Danckert (2019).
128. Willingham (2019); and Baxendale (2020).
129. Willingham (2019).
130. Jacks and Danckert (2019).