West Gate Tunnel facing huge cost overrun

9 August 2021


International toll roads operator and investor Transurban has confirmed that Melbourne’s West Gate Tunnel Project on which tunnelling has yet to begin is facing a potential US$2.42bn construction cost overrun.

The final overrun could be higher, with some sources close to the project claiming it to be as high as US$3.82bn.

With an original contracted cost of US$4.92bn, the project will link Yarraville with the CityLink in Docklands and is designed to be a vital alternative to Melbourne’s heavily congested West Gate Bridge. Originally slated to have opened last year, it is now at least two years behind schedule.

Much of the delay centres around disputes between the Victorian government, Transurban and the CPB Contractors/John Holland joint venture over changes in the requirements for the disposal of three million tonnes of potentially toxic tunnel spoil and the costs involved. The contaminants – per- and polyfluoroalkyls (PFAS) – are known to be potential carcinogens. But other aggravating factors have included the relocation of utilities and the impacts associated with Covid-19 restrictions. Furthermore, a project which had started at a preferred waste disposal site for tunnel spoil has also been severely delayed.

Preparations for tunnelling – which could commence in early 2022 – are well underway, with all major precast elements installed to form the southern citybound and westbound tunnel portals ready for the arrival of the tunnel boring machines.

Commenting in a recent investor presentation on the project's current state, Transurban conceded: “Completion of this project in 2023 is no longer considered achievable,” adding that it was “unable to put a reliable timeframe on when the project will be complete.”