The Investment Monitor generally records the expected and final cost of a project in nominal, outturn dollars. To compare the costs of projects that occurred at different times, we adjusted costs for inflation using the Australian Bureau of Statistics's Producer Price Index for road and bridge construction (Index Number 3101).177 Although this index does not include railway construction, we considered it a more appropriate index of transport construction costs than its parent indices, which include many non-transport construction activities.178
We assume that the distribution of project costs across time is the same for all projects, and we convert nominal outturn costs to Q1 2020 dollars from the middle year of the period during which each project was under construction. While only approximate, this approach is sufficient for controlling for the effect of inflation at the aggregate level under the assumption that the distribution of project costs over the construction period does not vary with time. Importantly, the inflation adjustment procedure does not affect the estimates of the size of cost overruns in this report, only the relative size of projects that are constructed in different periods.
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177. ABS (2020c, Table 17).
178. We consider our approach here to be an improvement on that in our 2016 report, Cost overruns in transport infrastructure, where we adjusted for inflation using Index Number 30 'Building construction'.