Category: megaprojects

Lack of a Transport Plan Slammed by the VAGO

Post author By Roger Taylor
Post date 17/08/2021
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Transport for Melbourne (TfM) and other well qualified transport forums have been constantly reminding the State government of the need for a transport plan. This is mandated under the Transport Integration Act (TIA), so we are relieved that at long last the Victorian Government Audit Office has finally taken the government to task.

However this has fallen on deaf ears and the government continues to insist it has a plan. TfM would respectfully point out that a series of schemes that were developed independently does not constitute a plan. If the government has a plan it needs to tell us what it is, but it is important the government be reminded what constitutes a plan in the context of the TIA. Ultimately it is the quality and relevance of the plan that matters and that is a governance issue.

Quoting from the Transport Integration Act

The transport plan must—

(a) set the planning framework within which transport bodies are to operate;

(b) set out the strategic policy context for transport;

(d) be prepared having regard to the vision statement, transport system objectives and decision making principles;

(e) be prepared having regard to national transport and infrastructure priorities;

(f) demonstrate an integrated approach to transport and land use planning;

(g) identify the challenges that the transport plan seeks to address;

(h) include a short term action plan that is regularly updated.

Almost all of the above are ignored by the current government. The government’s plan comprises an ad-hoc bunch of mega infrastructure projects including the Big Build program and others and a handful of strategies developed by the Department of Transport for different elements of the transport portfolio some of which are poorly developed. There is no vision to guide the plan, or strategic policy context apart from using it to create jobs and win government at the next election, and no attempt to identify the challenges facing us in the future. Government planning remains based largely on the continuation of business as usual.

It was clear from our last TfM forum, The Future We Must Plan For, it will not be business as usual. Covid has demonstrated the vulnerability of our economy and how quickly it can be disrupted. This event is only one of many that is likely to impact our economy and our way of life in the future. The latest IPCC report should be a stark reminder that the future we must plan for is changing rapidly. It will be dominated by environmental change and become a very different world to the one we live in today. This must be reflected in transport planning. The State government’s Big Build program does not anticipate any of this and as a consequence will ultimately result in stranded assets that have no value in the future and a burden of debt.

The absence of a properly constituted plan prescribed by the TIA is a concern but of even greater concern is the lack of checks and balances and proper process by which it has been progressed.

A transport plan must be developed and implemented in a way that is transparent, and follow processes which ensure its integrity and accountability. This requires a framework for assessing and ranking programs and projects in terms of their contribution to the “vision”.

It is critical that priority is given to actions that deliver the greatest return. Such actions are not confined to formal programs or projects. They may include policy and regulatory change, changes in works practices which can result in improvements in operational efficiency and improved customer service that generate better outcomes.

Achieving these goals may require recruitment and training supported by appropriate organisational structures to ensure government is provided with high quality advice and skills to develop and implement policy and ensure proper process is carried out, conducted in an environment which encourages communication of frank and fearless advice to government based on best practice. There is plenty of scope for improvement in this area; it would be a good place to start and that should be part of the plan.

These actions can provide the basis for the development of formal programs and projects funded from working expenses or capital budgets but again the priority must be given to those which generate the highest return on investment.

TfM has long held the view that governments should focus first on the existing “system” and its supporting infrastructure and make it as good as possible before building new. There is no shortage of transport infrastructure, but much of it is poorly maintained, in need of renewal and not used efficiently. This is a critical issue but needs to be addressed as part of the plan and funded accordingly.

Maintenance is usually funded from recurrent budgets instead of capital. It also tends to be tightly constrained so there is pressure to do more with less and focus on measurable outcomes. Investment in this area is therefore likely to be well targeted, yield high rates of return on investment as well as being subjected to a high level of scrutiny and accountability.

Benefits from capital works projects are more difficult to assess and have the potential to be subject to political influence or used for political purposes. Benefits also take longer to be realised, sometimes many years, often long after the minister or government responsible for the project has moved on. This makes it more difficult to audit and hold those responsible to account. As a general rule returns on capital investment vary inversely with the size and cost of the project and mega infrastructure projects have a particularly poor record. The Westgate Tunnel project is a good example but there are plenty more in the government’s Big Build pipeline.

Despite these problems capital works projects continue to dominate transport planning today in terms of publicity and budget allocations, and for many, particularly politicians, perceived to be the essence of a transport plan today.

It is argued that investment in capital infrastructure can be a lazy way to address transport problems. It promotes a mindset that says problems can be solved simply by throwing money at it without the need to understand the business itself and how it can be improved. This mindset is often reinforced by the belief that the bigger and more expensive the project the better the outcome. Under this scenario it is little wonder transport outcomes in this State have been so poor for so many years. This will continue so long as governments prioritise the least efficient and least effective measures to improve our transport system ie capital investment, particularly in major infrastructure projects whilst ignoring or underfunding far more effective mechanisms outlined above.

VAGO is absolutely right to criticise the State government for not having a transport plan. However TfM’s greatest concern is the quality and relevance of the plan and the political environment in which it is created. It is also important that transport planning not exist in a vacuum and must reflect broader environmental obligations including global emission reduction targets which must also be achieved for the transport system as a whole. This must be included in the transport plan and given top priority. All of this requires political leadership, courage, good governance and the environment required to create it. Achieving this will require fundamental changes of a systemic nature – without this we cannot expect better transport outcomes.

The importance of good governance has been highlighted by the covid pandemic. Governments at both State and Federal levels have been forced to listen to medical experts and appropriate institutional structures have existed for them to provide advice. For the most part this advice has been accepted but there have been occasions when politicians have ignored it thinking they knew better, and we have seen the consequences measured in loss of life.

Unfortunately political respect for independent expert advice does not always extend to government departments, which have often become politicised. Too often government ministers and their too commonly unqualified advisors think they know best and poorly treat those who should be providing them with expert advice. This is reflected in poor outcomes, not just in transport but all government portfolios. Addressing this will become increasingly critical if we are to have any success in responding to the challenges that lie ahead, particularly those driven by climate and environmental change.

Tags disaster, poor planning, VAGO

best practice freeways governance government policy megaprojects

WestGate Tunnel Project Another “Big Build” Disaster

Post author By Roger Taylor
Post date 15/08/2021
1 Comment on WestGate Tunnel Project Another “Big Build” Disaster

This project was always a disaster waiting to happen. It is a terrible project and should never have been contemplated let alone built in the first place. It was not part of any transport plan, although to be fair the State government does not have a plan. It is just a project bowled up to the State government by Transurban, an unsolicited bid designed to strengthened its position as a toll road operator, which the government bought because it helped its image of getting on with the job and would create jobs in the construction industry. The case against it is included in the papers section on this web site and have referred to it in an earlier blog.

Lack of feasibility studies and planning was always problematic and has doomed this project. Like all mega infrastructure projects promoted by the State government today, they are rushed to suit political objectives and tenders are called before the design work is carried out. It is a bit like quoting to build a house when you have no idea what the building will look like or the ground conditions on which it will be built. The risk is huge and must be built into the tender price. Everyone knew or should have known that the ground through which the tunnel was to be bored would be heavily contaminated but this was never properly tested so it is no surprise this has become a serious issue and stalled the project at enormous cost.

Quoting Timna Jacks and Patric Hatch “The Age has confirmed with sources close to the project that the joint building venture, CPB Contractors and John Holland, is claiming the project has blown out by as much as $5.2 billion. The dispute centres on the handling of about 3 million tonnes of soil, with an unknown portion of it believed to be contaminated with perand polyfluoroalkyl chemicals – the potential carcinogens known as PFAS”. “PFAS” is so toxic there is no safe way to dispose it but the State government is trying to have it reclassified as a less toxic chemical and has been struggling to find a site where it can be safely stored.

So who is going to pay for this costly mess? The premier has rightly argued that this was not the government’s project “ Transurban came to the government with this project, they chose the builder so they need to sort it out with the builder”. But will it end up like the East West Link where the government ended up paying more than $1billion to cancel the contract after declaring that it could be cancelled at little or no cost?

Whatever the outcome we the broader community will be the losers. Apart from the waste of public funds on a project we don’t need, the opportunity cost of not investing in projects and programs of real need is huge. But perhaps the greatest cost will be ongoing failure of governance, absence of proper process, lack of integrity and breach of public trust. These issues have been nomalised under this government and we will continue to pay a huge price if they are not addressed.

Tags disaster, westgate tunnel

megaprojects public transport value for money

Risks of Megaprojects in Post-Covid Recovery

Post author By Nicholas Low
Post date 14/09/2020
No Comments on Risks of Megaprojects in Post-Covid Recovery

The Grattan Institute’s transport and cities program director, Marion Terrill has been urging caution in the rush to build mega-infrastructure projects for a post-Covid recovery (The Age 09/09/2020). Support for her position comes from a formidable source. Danish geographer and social policy analyst Professor Bent Flyvbjerg, in a paper to be published shortly in the journal Environmental Science and Policy argues that, in the case of certain kinds of events, we cannot rely on accumulated data from the past to predict what will happen in the future. Among other kinds of events, he lists pandemics, bushfires and floods, all too familiar to Australians.

Flyvbjerg is the Director of the Major Project Management Programme at Oxford University. He made his name through exhaustive analysis of hundreds of multibillion megaprojects worldwide such as motorways, rail lines, airports and dams. He showed that, on average, such projects failed to meet their performance goals, projects ran late and over budget. Final benefits were overestimated and costs underestimated. While a high level of performance was always argued for each individual project, the mean for actual completed projects showed otherwise.

The statistical theory predicting such underperformance is called ‘regression to the mean’. In simple terms, over-optimistic assumptions about individual cases are invalid because they ignore the impact of unpredicted random effects on the outcome. A recent example in Melbourne is the discovery of high concentrations of PFAS chemicals in contaminated soil dug out for the West Gate Tunnel. But in all such projects there are factors that cannot be predicted which can be summed up as ‘luck’. The actual performance of megaprojects, Flyvbjerg argued, reverts to the historical mean for most actual projects.

Now, in new research, he challenges the premises of his own past work which was based on seeking the mean performance of megaprojects. He now argues that regression to the mean is meaningless when considering the risks of mega-projects affected by unpredictable future variables such as climate change and pandemics.

The reason lies in the unusual extremes now known to be occurring. The distribution of the performance of any large number of actual cases normally has the shape of a bell curve with a large hump in the middle and a ‘tail’ with extreme cases showing up at each end. We don’t need to worry about the positive tail where the outcome is much better than expected. We do need to worry about the negative tail where the outcome is much worse than expected. But Flyvbjerg goes further, arguing that in the rapidly changing context of pandemic or climate change risk we have to take account not only of past events but also of the future.

When we find evidence of new and larger extremes becoming ever more frequent in any distribution of events over time (what he calls ‘fat tails’), we need to anticipate the possibility that it will be these fat tails and not the mean that will give us clues to the future. Hence his theory of ‘regression to the tail’.

Flyvbjerg argues that where regression to the tail applies, prudent decision makers and their risk managers will do two things: reduce the tail by mitigation measures, and avoid tail risk by taking a cautious approach. He particularly targets measures to rebuild the economy after the Covid 19 pandemic. These measures include giant construction projects with ‘fat-tailed’ risks such as multibillion dollar megaprojects in IT, transport, energy, water, education, housing, health and defence. The financial risks increase with the uncertainty of the future, which in a post-Covid world afflicted by global atmospheric heating is very uncertain indeed.

As far as transport is concerned, Flyvbjerg, like Terrill, points out that lockdowns and stay at home measures have reduced traffic and pollution levels. The aim should be to prevent traffic demand from returning to pre-Covid levels, to turn the focus from high risk supply-side measures (freeways, massive rail projects to meet assumed demand) to demand-side measures such as encouraging working from home for at least part of the working week. I would add, following Flyvbjerg’s risk mitigation logic that low risk supply-side measures (which may also shape demand) such as providing safe infrastructure for cyclists and pedestrians, and serious investment in fast and effective bus transport across metropolitan cities and regions must also be included to relieve traffic congestion.