Basin rail claims rejected

Leading logistics consultant rejects government's freight claims

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DILAPIDATED RAIL: The Victorian Auditor-General found the Department of Transport and V/Line had a limited understanding of the dilapidated nature of the rail network's assets.

DILAPIDATED RAIL: The Victorian Auditor-General found the Department of Transport and V/Line had a limited understanding of the dilapidated nature of the rail network's assets.

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Damning report finds MBRP scope, cost and timing expectations unrealistic.

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A leading logistics consultant has flatly rejected the Victorian government's claims of greater freight efficiency, due to upgrades to the Murray Basin rail network.

Transport Infrastructure Minister Jacinta Allan said as a result of the work done on the stalled $440 million Murray Basin Rail Project, more freight was being moved more efficiently, to various Victorian ports.

But consultant Ken Wakefield, the former managing director of the Merbein based Wakefield Transport, flatly rejected the claim.

"None of that is correct, the only thing the Murray Basin Rail Project has done so far is to convert broad gauge rail to standard gauge," Mr Wakefield said.

"That's the only tick, at this stage."

Read more: Auditor-General releases damning report on Murray Basin Rail

Wakefield offers warehousing, road and rail transport and grain packing at its Merbein depot.

The MBRP was intended to standardise gauges, and increase axle loading on the Mildura, Sea Lake and Manangatang lines and standardise the Murrayville - Ouyen line.

As a result of the project, authorities estimated an increase of up to 500,000 tonnes of grain would be carried on rail, each year, resulting in 20,000 fewer truck trips to ports.

Transit times

Mr Wakefield said there was no increase in axle loading, as operators were still using 840millimetre wheels on their wagons, instead of larger 920mm wheels.

"I don't know if there are any sets on the current networks that run the 920mm wheels that can take advantage of this additional tonnage that is supposed to be available to us."

Under the MRBP Wakefield was supposed to get a connection between Gheringhap and Maryborough, which would have resulted in a sub-12 hour transit time, between Merbein and Melbourne.

"What operators are after, with Gheringhap to Maryborough, was to reduce that transit time, even further.

"Currently, they have to go through Ararat, and the time is significantly longer than before the project started."

It was now taking 15.5 hours to make the one-way trip, adding seven hours to a return journey.

"You can only run one train through that corridor.

"As grain comes back, they will be competing for space along that corridor, and it will be a significant bottleneck."

He said nothing was happening with the Gheringhap to Maryborough section.

"All the attention has turned to the passenger terminal, in Ballarat," he said.

Mr Wakefield said there were undoubtedly more, and bigger, trucks on the roads

"Categorically there are more trucks on the road, the road trains have made that sector more competitive.

"What the MBRP was supposed to do was make rail more competitive, but what they've done is allowed road transport to increase its productivity."

Rail fail

In October last year, the Rail Freight Alliance (RFA) released a Report Card on the Victorian Government's delivery of the project.

"For years we had been calling on the Government to address the concerns we had with the lack of progress and poor quality of works undertaken on the MBRP," RFA chair Cr Anita Rank said.

"At the time we stated it was abundantly clear the Basin rail region was worse now than before the project started."

With the release of the Auditor-General's report, RFA's concerns had been justified.

"With the truth released and facts on the table, the government can stop the denials and focus on getting the Murray Basin Rail Project back on track," Cr Rank said.

"It's time to fix the errors of the past and build what was promised."

"What this report highlights are the complete systemic failings, mismanagement and neglect by the people responsible for delivering this project; incomplete engagement with key stakeholders, limited analysis of current and future freight stakeholder needs, limited understanding of dilapidated nature of the network's assets and lack of detailed knowledge of the rail freight network.

"How these people were put in charge of delivering this project beggars belief. "

The report highlighted that even though the MBRP was subjected to a gateway review process, the authorities did not adequately mitigate problems identified at the vital review points.

At each of the gateway review points, the MBRP received an overall red rating (a red rating means the gateway review team believed the issues they have identified were critical and urgent - to achieve success the project should take action immediately).

"The Murray Basin Rail Project cannot be left in the state it is in," she said.

The report clearly shows the failings sit solely and squarely with the government.

"With Victoria's freight task estimated to treble by 2051, the government owed it to Industry and Victorians to fix and complete the Murray Basin Rail Project to its original scope, as promised.".

FAULTY BUSINESS CASE

The Auditor-General found the original business case had included over optimistic expectations about the level of demand from rail freight users.

It also included untested assumptions about the project's complexity, affecting the time required to complete it and the likely cost.

That was a result of:

  • incomplete engagement with key stakeholders
  • limited analysis of current and future rail freight stakeholder needs
  • Department of Transport and V/Line's limited understanding of the dilapidated nature of the network's assets.

"The DoT and V/Line's lack of detailed knowledge about the condition of the rail freight network that the MBRP would upgrade also led to engineering and construction difficulties during the renewal works," the report found..

"V/Line's early contractor procurement process demonstrated that the market could not deliver the desired project scope within the approved time and cost allocations.

"As a result of the tender outcome, V/Line sought to reallocate more funding to the early MBRP stages"

That response should have prompted DoT to undertake more due diligence on the MRBP's scope and to query the assumptions and expectations in the business case.

"However, this did not occur," the Auditor-General found.

" Because of tight project time frames, reinforced by the government's public announcements on expected time and cost, V/Line selected a contractor-with approval from Public Transport Victoria (PTV) and DoT-and signed an agreement."

The contractor lodged many variations, notices of delay and extensions of time requests.

"During the MBRP delivery period, V/Line assessed 81 contractor claims and variations, and accepted 32 of them," the Auditor-General found.

"The reasons for these claims and variations included project design changes, additional works required as a result of scope changes, and delayed delivery of materials supplied by V/Line.

"These claims heavily impacted V/Line's time, cost, and risk contingency baselines for the MBRP works."

Some of the disputes and delay claims were because V/Line did not deliver its obligations under the contract.

For example, V/Line was late supplying rail and delivered track turnouts to the contractor without the information needed to assemble them.

"The contractor lodged variation claims amounting to 24 per cent above the originally agreed contract price," the Auditor-General found.

" Following consideration of the claims, negotiation, and verification of the value of delivered works, V/Line settled the claims with the contractor for 11.6 per cent more than the original contact price.

"This indicates that the contract's original scope, cost and timing expectations were unrealistic."

Budget funding

In State Parliament, Ms Allan refused to commit to additional funding for the project, in this year's budget.

National Party leader Peter Walsh said the Victorian Auditor-General reported the government had used nearly 90 per cent of the funding for the project, yet completed less than half of the works.

"Given the Auditor-General said that the expected benefits from the Murray Basin rail project will not occur without more funding, will the minister commit to funding the remainder of the project in the 2020-21 budget?," Mr Walsh said.

Ms Allan said the government would need to complete the business case before considering any budget allocations.

"This work is being done by Rail Projects Victoria, where we get our expert engineering advice for our rail infrastructure projects from," she said.

"Once that business case is finalised, it needs to go through the relevant internal processes, cabinet processes, but also it will need to be shared with the federal government.

"In direct response to his question about the 2020-21 budget, I cannot answer that question today because it needs to go through those relevant processes."

She said that was the responsible approach to both managing the project and respecting the processes of the federal government.

Ms Allan rejected the Auditor-General's claims the provision of information to the commonwealth was not forthright, or timely.

"In terms of the way the department has responded to the report, that is not a correct position for the Auditor-General to take," she said.

The minister also dismissed claims the business case was supposed to be forwarded to the commonwealth, by December.

"There may be informal discussions, but there is no real business case," Mr Walsh said.

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