Completing the troubled Murray Basin Rail Project has a high price tag

Work on the next stage of the project, converting the Sea Lake and Manangatang lines to standard gauge, has been put on hold.

An inspection showed they were heavily degraded and the Manangatang line would need urgent repairs, before this year's grain season.

Engineer Martin Baggott said he estimated the remaining work that needed to be done could cost an additional $250m.

"Budget allowances of up to $250m should be made - $100m to sort out the requirements at Ballarat, and each of $50m for the Sea Lake, Manangatang and Ballarat/Geelong lines," Mr Baggott said.

He said the amount was beyond the original estimate, but catch-up work now needed to be done.

The government has announced the remaining $23m, of the $440m set aside for the project, would go on urgent repairs to the Manangatang line and a new business case.

At last year's Victorian Farmers Federation conference in Ballarat, Premier Daniel Andrews said the project was a complex one, and needed to be completed properly.

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Another leading expert, Rail Futures Institute (RFI) president John Hearsch said future work must consider installing a standard gauge track between Ballarat and Maryborough.

Previous scoping work has looked at both standard and dual gauging, between the two centres.

But sources argued the option of "doing nothing" would throw away all the project's benefits, because freight trains from Mildura would continue to have to travel hundreds of kilometres further than they used to.

"It's highly inefficient, and makes rail uncompetitive, while standard gauge trains with exports from the Sunraysia region to Melbourne and grain trains to Geelong have to take a long diversion via Ararat," Mr Hearsch said.

"That is pending completion of the project south of Maryborough and through Ballarat to Gheringhap, where the line would merge with the Adelaide interstate line.

"Compared with running via Ballarat, which is what the project was designed to achieve, this adds 120km and additional hours of slow travel on the recently rebuilt line between Maryborough and Ararat."

Mr Hearsch said parts of the line were still limited to only 40km an hour, for nearly all locomotives.

Engineers said there were issues at Ballarat, which had a restricted number of platform tracks, while serving as a hub for four lines.

Eliminating the need for the Ararat line broad gauge and standardising the Geelong and Maryborough lines would significantly simplify those arrangements.

"New signalling to speed up trains through the Ararat Junction is yet to be commissioned," Mr Hearsch said.

Completing the project would still involve standard gauge conversion, and some upgrading of 387km of track between Dunolly, Sea Lake and Manangatang, including sidings, and the 141km of track between Maryborough, Ballarat and Gheringhap.

"Some of that work will likely include a maintenance catch-up so that the converted track is fit for purpose," Mr Hearsch said.

"The previously announced freight/passenger separation project at Ballarat was designed to ensure that standard gauge freight trains could pass through Ballarat, when required, without detriment to regular passenger services."

Works would also be required at North Geelong to facilitate the handling of additional standard-gauge grain trains.

But Mr Hearsch said RFI was confident Rail Projects Victoria had a detailed understanding of the necessary works that still needed to be completed.

"We presume it has advised the government regarding the costs involved," Mr Hearsch said.

"We strongly support the views of the grain industry and that of the Rail Freight Alliance, representing local government, that the project is completed as soon as possible."

Sources claim construction companies who were asked to tender for the project were given only three weeks to put in bids.

In that time, they had to inspect 1200km of rail tracks, to see what work was required.

One insider said that appeared to be unrealistic for a lump sum tender, which involves a single price for all works, agreed before they start.

But experienced engineers said work involving such contracts involving large geographies, and unknown conditions, did not address those issues.

Instead, an "alliance" arrangement would permit the contractor to assess the conditions accurately, while transparently providing a realistic tender.

"Typically, as more is known about the job, and local conditions are brought to bear, the scope changes and in an alliance contract both parties can deal with the matter by agreeing to scope changes, unit costs and total costs," the source said.

The project timing also coincided with an unprecedented focus on rail projects and undoubtedly that led to cost pressures, dilution of staff and under-performing management.

It's believed two of the largest contractors, who were capable of completing the work, pulled out or gave non-complying bids.

It was claimed they didn't feel confident enough to gather the information required, in the allocated time.

A Department of Transport spokeswoman said significant progress had been made on delivering the project, with Stage 1 complete and Stage 2 largely complete.

The few remaining speed restrictions would be lifted following the completion of a list of level crossing works.

"Rail Projects Victoria is delivering the remainder of the Murray Basin Rail Project," the spokeswoman said.

"In the meantime, V/Line will undertake urgent maintenance works on the Manangatang line to keep the line operational for the upcoming grain season."

Stage 2 was now mostly complete, with freight trains running between Yelta and Maryborough, Murrayville and Ouyen and between Maryborough and Ararat.

The 87km long Maryborough to Ararat line involved combining and reducing 108 level crossings to 34, while upgrading them to feature boom gates, bells and flashing lights to boost safety for motorists and freight train drivers.

A new junction near Ararat Station meant freight trains travelling from the recently-opened Maryborough-Ararat line were now able to connect to the interstate network.

An Infrastructure Australia spokeswoman said the original business case considered how both capital and operating costs had been estimated and reviewed.

"The proponent's business case for the proposed Murray Basin Rail upgrade used capital cost estimates, prepared by an independent advisory firm," the spokeswoman said.

"These were reviewed by agencies within the Victorian government and by an independent peer reviewer, which found that the capital cost estimates were reasonable for the design maturity of the project at that time."

Infrastructure Australia undertook sensitivity testing on the costs and benefits of the project as presented in the business case, to understand their impacts under a wide range of scenarios, including increases in capital costs.

"These assurances were taken into consideration in our decision to identify the proposal as a Priority Project on the Infrastructure Priority List," she said.

A spokeswoman for the Minister for Transport Infrastructure, Jacinta Allan, said when the government came to power, it signed up to a "desktop business case", which was also endorsed by the Federal Government.

When Rail Projects Victoria staff walked the Sea Lake and Manangatang lines, they found the track condition was much worse than what the business case stated.

An Engineers Australia spokesperson said infrastructure projects usually utilised a "dilapidation survey" to determine the state of the existing infrastructure.

"There can also be information sourced from the previous railway operator's asset management system, provided that condition information was accurately recorded," she said.

"With a comprehensive dilapidation survey and access to accurate asset condition records, a desktop business case can be undertaken."

The spokesperson said the team undertaking the business case needed to understand the consequences of the asset deterioration and undertake detailed quantity surveys of the rectification work to be conducted.

"There also needs to be no scope creep with regard to the track build standard that was assumed in the business case," she said.

And the Victorian Farmers Federation has called on Victorian and federal governments to commit to fully funding the project, as initially outlined in the 2015 business case.

"Farmers are not interested in political point-scoring from either side," VFF president David Jochinke said.

"A commitment was made over four years ago to build the Murray Basin Rail Project, and we are still waiting for it to be completed.

"V/Line was the lead agency responsible for the project, and they completely mismanaged it."

He said it was unacceptable they had allowed the lines to fall into such disrepair.

"V/Line must be held accountable for their mistakes and delays," he said.

The international competitiveness of the state's $1.5 billion grain industry relied on the productivity and efficiency of the supply chain.

"Failing to convert the Sea Lake and Manangatang rail lines to standard gauge effectively isolates these lines from the rest of the Victorian and interstate network and undermines the efficiency gains of the entire network upgrade project," he said.

"For every year this project is delayed, Victorian farmers lose $12 million in additional freight costs."