With a booming pipeline for rail in Australia and New Zealand, quality end-to-end project management is critical to avoid cost blowouts. Rail Express speaks with Peter Gill from Donald Cant Watts Corke about the importance of an integrated design and cost approach.
Peter Gill is the Managing Director of Infrastructure for cost and project consultancy Donald Cant Watts Corke (DCWC). Just over a year after coming onboard in April 2018 to revitalise the Infrastructure division, Gill tells Rail Express his team has made great strides in the transportation space – particularly in rail.
“We’ve had great success,” he reports, “getting into the market on suburban road upgrade projects, the Melbourne Metro Tunnel project, Sydney Light Rail … we’ve had a very, very successful year.”
For the Metro Tunnel project, DCWC’s Infrastructure team is providing cost planning assurance in the form of the measurement and cost estimation of around 400 design packages for the five new underground stations. The design packages are passing through two levels of design – concept and detailed – before being issued for construction.
Gill says in its year of growth, the DCWC Infrastructure team has looked to the importance of end-to-end support from an integrated project management team to a successful and under-budget project.
“Fully integrated project teams – rather than a separate design and a separate cost team – we think are the answer to saving time and cost blowouts in the future,” Gill says. “We advocate that our clients focus very heavily on the constructability and operational requirements prior to projects going to the market. We’re trying to encourage governments now to do that work upfront, before they go to market.
“In addition to that, organisations are too often ignoring the Treasury and Finance guidelines for high risk, high value projects, missing governance issues, and so on.”
As a platform for this advocacy, Gill in May presented a White Paper to the Victorian Transport Infrastructure Conference. The paper suggests if the best talent resources aren’t present and flexible cost options aren’t provided and continuously benchmarked and tested against the market, “the Total Outturn Cost for major transport-related infrastructure projects could be underestimated by 15 per cent to 20 per cent”.
“There are often various factors that can lead to an inaccurate business case cost estimate being developed for a project,” the paper explains. “Some of the more common issues that have been identified on transportrelated projects have included a lack of accurate site condition information, particularly below ground, and experience in the requirements of government authorities.”
As a prime example of this, the paper points to the Sydney CBD and South East Light Rail, which after the settling of legal disputes is nudging towards a final project cost of around $2.7 billion – over $1 billion higher than the forecast made at the end of 2014.
“Initial requirements on the Sydney Light Rail were grossly underestimated,” Gill tells Rail Express, quoting the Audit Office of NSW report from 2016, which suggested the full scope of the work was not properly understood when the State Government approved the business case for the project. “The scope and costs were uncertain when the business case was approved,” the Audit Office report stated. “By October 2014, TfNSW reported that mispricing and omissions in the business case had caused $517 million of the $549 million capital cost increase. The remaining increase ($32 million) was due to scope changes and planning modifications, some of which TfNSW knew about before submitting the business case for approval.”
A way forward
Gill encourages governments and organisations to take a close look at the mistakes of the past, particularly given the size of Australia’s pipeline for rail projects.
“With projects like Inland Rail, the Melbourne Airport Rail Link, Metronet in Western Australia and a rail link to Western Sydney Airport, the portion of rail projects in infrastructure will probably be more significant in coming years than any other sector,” he says. “As a nation therefore, we cannot afford to perpetuate the mistakes of the past where scope and cost is uncertain at Business Case, and project cost blow outs become the norm, rather than the exception.
“Unfortunately, specific infrastructure projects have been used in the past for political debates at both state and federal government levels and in some instances the requirements and budget details have been rushed as part of the process.
“We’re very concerned about that, and it’s why we’re advocating these projects use these integrated teams, to enhance those requirements upfront. Governments can then present a scope and budget which is more accurate, and that’s where we need to focus.”
Gill says it is imperative that greater emphasis be placed on both the constructability and operational requirements long before major projects reach business case, and/or the market.
“No procurement model or form of contract can save a project if inadequate information and cost advice is uncertain prior to delivery,” he says. “Legal disputes, loss of confidence, customer and stakeholder reparation and further compensation claims are all undesirable collateral of such an outcome.”
An integrated approach
Gill says his team frequently looks to leverage the wide range of disciplines available within the DCWC talent pool when working in the rail sector. Outside of transportation, DCWC has eight other divisions, operating across sectors like civil, commercial, residential and retail.
“Using a major rail project like Melbourne’s Metro Tunnel project as one example, the right advice cannot be given without the integration of at least five of our divisions,” Gill says. “Mechanical and electrical, processes advice, contract advice, quantity surveying support, project management support; these are all very important. We can’t claim all of the success on these major projects for our division, we share that success with the other divisions. In our experience, such integrated project teams can provide improvement in the assurance of information and cost impact by up to 20 per cent.”
Across the whole DCWC team, Gill says personnel have experience working on a wide range of rail projects, from next generation regional rail developments, underground projects using high capacity metro trains, intermodal freight terminals, the conversion of existing rollingstock to meet innovative operations procedures.
“Our Methodology in each case is underpinned by three core principles,” he says. “Director involvement for the duration of the engagement; an integrated team approach and collaborative work with transparent project governance; and systems and process with client-centric method.
“With our integrated team approach we can offer design advice, contract and procurement advice construction and scheduling advice; Project Management advice, CAPEX and OPEX cost planning and risk management services.
“With our long and extensive experience in the delivery of landside and airside projects in a complex airport operating environment, we would like to transfer this valuable experience and lessons learnt to the delivery of rail projects in the future.”