Experts in cost estimation are calling for, and should get, better data.
Road experts from all jurisdictions are recommending a cross- jurisdictional database of final project costs and what gave rise to them.147 It should be established. Minor variations in how state and territory governments select and procure infrastructure projects are insignificant when compared with the value of being able to learn from a large pool of projects generated by very similar processes. Such data would help specialists to develop better cost estimates at early stages of a project.
The database should contain sufficient information to enable experts to contextualise costs, such as project type, site, materials, utilities, environmental mitigation costs, and techniques. To do their job properly, experts also need:148
direct costs from contractor, client-side project management/ stake-holder engagement/ environmental costs, costs arising from unfore-seen risks, and contingencies ... important categories of costs like utilities relocation that can have a significant impact on costs.
The Department of Infrastructure, Regional Development and Cities agrees. It has pointed to the challenges a cost estimator may face - key among them being 'not having access to historical cost databases' of the kind that are available to their US and European counterparts.149
This is not a new problem. In 2014, the Productivity Commission called for strategic benchmarking data, including costs per major unit, using a standard cost breakdown, and average expenditures over the construction period. The commission envisaged that this information would be required for any infrastructure project where there was a Commonwealth funding component, and that it would be independent of both government and industry influence.150 Benchmarking data would complement the detailed data called for by cost estimation specialists, enabling a 'top down' view alongside the 'bottom up' view of detailed historical cost data.
Grattan Institute, too, has called for better data to assist cost estimation. In 2016, we recommended that the Commonwealth seek the cooperation of the states to create new benchmarking data to improve risk measurement in new project proposals.151 We also recommended that the Commonwealth put to use the post-completion reports that states are already required to provide as a condition of their final milestone payment, by aggregating the data into a useful product.
Despite widespread understanding of the scarcity of data, it seems that almost nothing has happened since then.
The only progress has been a first step on the path towards achieving a benchmark series of construction costs per lane kilometre for roads. The Bureau of Infrastructure, Transport and Regional Economics conducted a pilot study in 2015 of 45 road projects and a 2017 update of 32.152 This work was carried out at the request of the Transport and Infrastructure Council of the Council of Australian Governments,153 which commissioned the work in response to recommendations of the Productivity Commission's inquiry.154 The bureau's findings were interesting and suggestive, but limited by the small sample size and lack of detail (Figure 6.1 on the next page). The bureau recommended that the benchmarking be repeated in 2019 - which did not happen.155
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147. Chowdhury et al (2020, p. 32).
148. Ibid (p. 32).
149. DIRD (2017, p. 8).
150. PC (2014, pp. 47-48).
151. Terrill and Danks (2016, pp. 7-8)
152. BITRE (2018).
153. Transport and Infrastructure Council (2015).
154. PC (2014, p. 47).
155. BITRE (2018, p. 21).