Major Projects Performance Reporting 2023

Planned spending in 2023–24

DTF reports on capital projects in Budget Paper 4: State Capital Program (BP4). 

The 2023–24 BP4 reported that the Victorian Government plans to spend $200.6 billion on capital projects. This: 

• is $16.1 billion more than $184.5 billion in 2022–23
• includes $27.5 billion on new projects compared to $13.1 billion on new projects in 2022–23.

Over the last 9 years the government has committed to spend $161 billion on new projects. The government did not report its budget for capital projects in 2020-21.

Number of major projects

In this report we focus on major projects, which are capital projects or program of works worth more than $100 million. 

As Figure 1 shows, the government has committed to deliver 128 major projects. This is up from 47 in 2015–16. 

Figure 1: Total estimated investment (TEI) and number of major projects in DTF's Capital Investment Dashboard from 2015–16 to 2023–24

Note: The government did not report its budget for capital projects in 2020–21.
This figure excludes projects less than $100m.
Source: VAGO based on DTF's Capital Investment Dashboard.

TEI increases

According to DTF, the total TEI of these 128 major projects is $99.5 billion. This is a 206 per cent increase from $32.5 billion in 2015–16. Both these figures do not include the full cost of some projects.

For example, the government has committed to a TEI of $11.8 billion to fund the Suburban Rail Loop East – Development, Initial and Early Works. This covers the project's initial development and planning costs. But it expects the project will cost between $30.0 and $34.5 billion by the time it is finished. 

The average TEI of projects

The government is investing a significant amount in major projects. So it is important that it thoroughly plans them to reduce the risk of time and cost overruns.

The average TEI across major projects has increased by 41 per cent in the last 9 years. This does not include 26 projects without a confirmed TEI.

The average TEI of major projects with a confirmed TEI in 2023–24 is $976 million compared to $691 million in 2015–16. We have not analysed the cause of this increase because this is a limited assurance engagement.

Big budget projects

In the last 9 years the number of major projects worth over $1 billion has increased from 4 (including 2 projects worth over $5 billion) to 21 (including 7 projects worth over $5 billion).

General government sector spending

The general government sector is delivering $70.9 billion of capital projects.

In the general government sector, the Department of Transport and Planning (DTP) spends the most on capital projects, followed by the Department of Health, (DH), the Department of Education (DE) and the Department of Justice and Community Safety (DJCS). 

As Figure 2 shows, spending on transport capital projects ($43.0 billion) is almost 3 times higher than spending on health capital projects ($14.5 billion). 

Figure 2: 2023–24 general government spending on capital projects by department 

Note: DTP and its portfolio agencies are responsible for delivering transport projects. DTP transfers the value of these projects to VicTrack each year. 
Source: VAGO based on DTF.

Spending by public non-financial corporations 

Public non-financial corporations (PNFCs) account for $129.8 billion of capital projects.

PNFCs include water, cemetery, housing, port, road, and rail entities and other authorities.

Note: DTP and its portfolio agencies are responsible for delivering transport projects. DTP transfers the value of these projects to VicTrack each year.

Major Projects Performance dashboard 

This is the third year we have updated our Major Projects Performance dashboard. We analyse data from this dashboard in Section 2.

We intend to keep checking and annually reporting changes in major projects’ TEI, completion dates, scope and red, amber and green ratings until this information exists in another central location.

Our dashboard focuses on major infrastructure projects. It does not include:

• land acquisition
• maintenance, upgrade and compliance projects
• programs of smaller capital works, such as new schools
• infrastructure delivery funds
• road safety and maintenance
• information technology projects.

DTF's reporting on major projects

DTF publishes BP4 to report on: 

• new capital investments 
• progress and spending on existing and completed projects.

DTF published its Capital Investment Dashboard in June 2022.

Our Major Projects Performance Reporting 2022 report explained some limitations with DTF's dashboard. These limitations included a lack of information about projects':

• statuses and expected benefits
• scope changes, such as time and cost changes.

Since our 2022 report DTF has:

• updated its dashboard following the 2023–24 Budget
• given users access to download BP4 data for all years from 1998–99.

But DTF has not added information about scope or expected performance (benefits) changes that could affect a project's outcomes. 

TEI changes

The TEI of 89 existing and complete major projects increased by a total of $11 billion, or 11 per cent, since they were first included in BP4. 

This includes the TEI of: 

• 41 projects (46.1 per cent) increasing by a total of $13.5 billion 
• 12 projects (13.5 per cent) decreasing by a total of $2.6 billion
• 36 projects (40.4 per cent) not changing. 

TEI by sector 

The 101 major projects we looked at this year are in 4 sectors: 

• transport
• justice and community safety
• health and human services
• culture, sport and community.

Over half of these projects (60.4 per cent) are in the transport sector, compared to 53.0 per cent last year. 

Transport projects also account for 82.6 per cent of the total TEI, compared to 79.0 per cent last year. 

As Figure 4 shows, transport projects have the highest average TEI ($1.7 billion) and the highest median TEI ($446.6 million). 

Figure 4: Average and median TEI by sector 2023–24

Note: We have included median TEI because big projects can distort the average TEI.
Source: VAGO.

TEI changes of more than 10 per cent

Of the 101 projects we reviewed:

• 28 had a TEI increase of more than 10 per cent compared to their original TEI
• 4 had a TEI decrease of more than 10 per cent compared to their original TEI.

These numbers are not significantly different to last year.

TEI increases of more than 50 per cent

This year there are 12 projects with a TEI increase of more than 50 per cent compared to their original TEI. Figure 5 lists these projects and reasons for the changes, based on BP4 footnotes or our survey.

Note: See Appendix E Figure E2 for agencies. See Appendix G for survey data, including funding sources.
Source: VAGO. *Reasons given for variance based on our 2023 survey and our **Major Projects Performance Reporting 2022 report. 

We listed 14 projects in our 2022 report. Figure 5 includes the same projects as 2022 except for 2 projects that have since been completed.

Changes to estimated completion dates 

Of the 89 existing and completed projects we looked at, 40 had different completion dates to when they were first included in BP4. 

Of these projects, 17 (42.5 per cent) are in the transport sector. 

These numbers are not significantly different to previous years.

Length of delays

Figure 6 shows projects delayed by more than 18 months since they were first included in the BP4. There are 14 projects in 2023 compared to 24 projects in 2022. 

Of the 24 projects from 2022: 

• 6 currently have 'TBC' listed as their estimated completion date 
• 5 are now complete.

Not explaining completion date changes

DTF gives agencies guidance on how to prepare information about major projects for BP4. 

The guidance says that if a project has a TEI or completion date change since the last BP4 the agency should include a footnote to explain why. 

In 2023–24 DTF updated its guidance to encourage agencies to provide accurate, complete and well-structured footnotes for capital projects. The guidance gives examples to help agencies draft their footnotes, including an example for completion date changes.

Despite this, none of the footnotes for the projects in Figure 6 explain why the completion date changed in the 2023–24 BP4. Four of the 14 projects had a footnote that referred to a 'revised project schedule'. But this not a sufficient reason because it does not explain why the project schedule was revised. This type of context is important to include in the BP4 footnote for transparency.

Of the 14 projects, the remaining 10 were delayed before the 2023–24 BP4. Some agencies have explained projects changes in prior year BP4 footnotes, but they are not clearly stated in the current BP4. We have included reasons given for variance in Figure 6 to highlight context agencies provided in their survey response or in our report last year.

When agencies do not clearly explain completion date changes each year it makes it harder for Parliament and the community to hold them accountable.

Scope changes

In our survey agencies reported 43 government-approved scope changes across 30 projects. 

Figure 7 shows the number of scope changes by sector. The transport sector had the most changes. 

Transport projects had 23 scope changes over the life of a project. 

Figure 7: Number of scope changes by sector 2023–24

Note: Three of the 8 agencies surveyed are in the transport sector – DTP, Major Transport Infrastructure Authority (MTIA) and the Suburban Rail Loop Authority. None of the scope changes relate to the Suburban Rail Loop Authority.
Source: VAGO.

Progress ratings

DTF uses red, amber and green ratings to track the progress of high-value high-risk (HVHR) projects against their estimated, cost, time and scope.

Note: DTF uses these definitions for HVHR projects. See Appendix E for the definitions we used in our survey for non-HVHR projects.

Agencies self-assess their projects and give the ratings to the Office of Projects Victoria. The Office of Projects Victoria consults with DTF and the Department of Premier and Cabinet to decide an overall risk rating for each project. 

DTF reports the ratings to the government and agencies for feedback. But these reports are not available to the community.

Agencies’ cost and time ratings

We asked the agencies we surveyed to give us their red, amber and green ratings for 62 HVHR projects they reported to DTF at the end of March 2023. 

Some new HVHR projects already have ratings. But we only included existing and completed projects in this section (see the full list in Appendix E).

Overall, agencies assessed 38, or 61 per cent, of their HVHR projects as on track against their estimated cost, time and scope.

Figure 8 shows the agencies' combined ratings for their projects’ cost, time and scope.

More projects have amber and red ratings for cost and time. This indicates that cost and time changes do not necessarily relate to changes in a project's scope.

Figure 8: Agencies' 2023 self-assessment ratings for projects' cost, time and scope

Note: This figure excludes the Suburban Rail Loop – Airport project's rating because MTIA listed it as 'N/A' in our survey.
Appendix E shows the agencies' self-assessments for 2023–24. Our dashboard shows the ratings and comments from the agencies that the explain amber and red ratings. Refer to Appendix G for the agencies comments to explain their ratings.
Source: VAGO.

Cost and time challenges

DTF monitors the risk of major projects, particularly HVHR projects, running over time and over budget.

The main reasons that major projects run over time and budget are: 

• the cost of materials increasing
• limited access to some materials
• skill shortages
• rising labour costs.

Land acquisition also delays some projects from progressing (see Appendix D for more detail). 

Investment Lifecycle and High Value High Risk Guidelines

DTF's 2019 Investment Lifecycle and High Value High Risk Guidelines (HVHR guidelines) explains how to successfully deliver an investment’s intended benefits on time, within budget and with the maximum benefit for Victorians. 

The HVHR guidelines apply to all: 

• government departments, corporations, authorities and other bodies under the Financial Management Act 1994
• government investment proposals. 

The HVHR guidelines also help agencies develop business cases, which are mandatory for capital investments with a TEI of $10 million or more.

Under the HVHR guidelines, DTF requires responsible agencies to have the following key documents for each of their major projects: 

• a business case
• an investment logic map
• a benefits management plan.

Key planning documents

As Figure 9 shows, of the 101 projects we looked at: 

• 85 projects (84.2 per cent) have an investment logic map
• 91 projects (90.1 per cent) have a business case 
• 82 projects (81.2 per cent) have a benefits management plan.

Figure 9: Number of major projects with a benefits management plan, business case and investment logic map (2023–24)

Source: VAGO.

Business cases

The HVHR guidelines see business cases as an opportunity for an agency to conceptualise a project and prove that it is worth doing. Preparing a business case is the first stage of planning a project.

If an agency goes ahead without a business case it has not assured the government, Parliament and community that the project is worthy of public funds.

We looked at 12 new projects that commenced this year. Four of these projects do not have a business case. For 3 of these projects, the responsible agency intends to complete one. The other sits under another business case that has been approved for a larger program of work (or 'work program'). These 4 projects have a total TEI of $1.8 billion.

We also looked at 18 completed projects. Two of these projects did not have a business case:

The gateway review process

When an agency completes a major project it should review it to assess if it delivered the planned benefits on time and within budget.

DTF introduced the gateway review process in 2003. The process is mandatory for all HVHR projects. It has 6 stages, or 'gates'.

An agency must do a Gate 6 review when it completes a project. This review typically happens 6 to 18 months after the project finishes. A Gate 6 review examines if a project has delivered its benefits as defined in its business case.

Since our 2013 Planning, Delivery and Benefits Realisation of Major Asset Investment: The Gateway Review Process report we have found that agencies inconsistently apply the gateway review process.

Gate 6 reviews

In our survey we asked agencies if they have done a Gate 6 review for 25* HVHR projects that were completed more than 18 months ago (see the full list in Appendix F). 

Only 2 of these projects had a completed Gate 6 review. 

Agencies told us they would not do a Gate 6 review for 3 projects because:

• 2 did not have sufficient budget allocated for the review 
• gateway reviews were not required for one project.

This means agencies have not assessed if the other 20 projects delivered their intended benefits.

*We excluded 11 projects that finished very recently because agencies have 18 months to complete a Gate 6 review.