Melbourne Metro Tunnel Project—Phase 1: Early Works

Tabled: 6 June 2019

4 Progress of the early works phase

The Melbourne Metro Tunnel Project is a large, expensive, risky and complex transport infrastructure program.

The state decided to accelerate the overall program schedule by starting some components of the project early. These activities are known as early works and are designed to prepare the Melbourne Metro Tunnel Project for the main tunnel and stations works.

For this component of the audit we assessed whether the four early works packages have been delivered within expected scope, cost, time, quality and environmental performance parameters.

4.1 Conclusion

Overall, the early works phase of the project has successfully completed nearly all expected activities and has allowed the main works phase to get underway.

However, the state's desire to accelerate the overall project's delivery date has come at an unanticipated extra cost. The final forecast cost of the early works phase, in its entirety, is now $1.353 billion, an increase of $95.8 million over the budgeted amount, or 7.62 per cent. In addition, RPV paid $68.3 million to a member of the PPP consortium for an EWSA, which it funded from the main works budget.

Contingency is the extra money or time incorporated into project plans in case the project is more expensive or takes longer than expected.

The construction activities in the early works phase have exceeded the original budget of $476.6 million and, as of March 2019, have a final forecast cost of $625.5 million. This is a $148.9 million, or 31.2 per cent, increase.

RPV used project-wide contingency funds to meet this extra cost. Overall, due to unexpected expenditures from the early works phase, as well as other unexpected program expenditures outside the early works, there has been a substantial decrease in the amount of project-wide contingency available until project completion.

With at least five years of complex and risky construction to go, this raises some risk that the project may exceed the publicly announced $11 billion budget. The wider public sector can learn from the interface risks that have realised in this project.

The early works were delayed in some precincts, but RPV effectively mitigated the risk of overall project delay through a member of the PPP consortium agreeing to accept the risk of early works delays on their works.

Based on our analysis of the recent construction schedules provided by RPV, we consider that these delays have not impacted the critical path for main works.

The early works approach has also effectively 'de-risked' some key elements of the overall project. In particular, DoT, RPV and contractors effectively delivered land acquisitions, site clearance and demolition, and utility relocations.

RPV and the early works contractors set up effective quality control processes, and we have found no concerns about the quality of works. RPV has also been effective in monitoring contractor compliance with environmental requirements.

4.2 Background on early works

Acceleration of early works

The 2016 Melbourne Metro Business Case identified that the tunnels would be completed by 2026.

In late 2015, RPV proposed to bring forward the completion date for the Melbourne Metro Tunnel Project. It projected that up to 29 months in time savings could be gained through a range of initiatives. RPV proposed to achieve this through accelerating some design work, planning approvals, and components of early and main works. RPV estimated the potential cost savings associated with the time savings to be approximately $770 million.

RPV did not implement all these measures. However, the proposed PPP interface works and accelerated design works did proceed as part of the early works phase. The PPP interface works were included in the state's early works scope, and the PPP consortium started the accelerated design works.

Consultancy advice commissioned by RPV in August 2018 showed that using an early works package has helped reduce the overall project schedule by 11 to 17 months, compared to a scenario where RPV did not undertake early works ahead of the main works packages.

Prolongation costs are the additional costs that a contractor has incurred because the completion of the works has been delayed.

The advice also calculated potential savings ranging from $1.2 billion to $1.9 billion from an 11 to 17 month reduction of the overall project schedule, mainly due to:

  • savings—estimated at between $187million and $289 million—associated with the early delivery of benefits by alleviating congestion sooner and providing economic benefits for Victoria
  • prolongation and finance cost savings—estimated to be worth between $660 million and $1.2 billion—by reducing the duration of the PPP consortium's construction time and therefore financing needs
  • other potential cost savings—estimated to be worth approximately $401 million—including reduced risk and overheads in delivery.

The state's decision to have an early works package, and include the PPP interface works in them, gave the PPP bidders an opportunity to offer an earlier completion date than a date arising from a more linear approach to a construction schedule.

In February 2018, based on the contracted delivery dates agreed by the PPP consortium, the government announced that it expects the Melbourne Metro Tunnel Project to be complete and open by the end of 2025, which is one year earlier than the 2026 date in the business case.

4.3 Results of our review of progress

The early works approach has effectively 'de-risked' some key elements of the overall construction program. In particular, DoT, RPV and contractors effectively delivered land acquisitions, site clearance and demolition, and utility relocations.

Taking on the early risk of utility relocations helped to manage a major cost and schedule risk to the overall project by avoiding the potential that a PPP would overprice this risk.

Notwithstanding these positive results, the early works phase has taken longer than originally planned and has cost more than originally budgeted.

The 'iron triangle' of project management

Good project management practices focus on delivering a project within intended scope, time, cost and quality parameters. These success factors are all related to each other and a project manager may need to prioritise one over another to deliver the best possible outcome.

The 'iron triangle' shown in Figure 4A is a conceptual tool for project managers to consider how changes in one project domain can lead to changes in another.

Figure 4A
The 'iron triangle' of project management

The 'iron triangle' shown in Figure 4A is a conceptual tool for project managers to consider how changes in one project domain can lead to changes in another.

Source: VAGO, derived from the Project Management Institute's Project Management Body of Knowledge.

Based on this conceptual diagram, if a project must be delivered at a low cost in a short time frame, then quality might be compromised. If quality must be maintained, then the project would either need to increase time or cost, or both.

Any change to scope can also affect time, cost or quality because their relationships are linked and dynamic.

Scope assessment

Land acquisitions

Planning for land acquisitions began in December 2015. Figure 4B shows the estimated number of properties that RPV expected to acquire for the Melbourne Metro Tunnel Project. RPV refined this number as it confirmed and approved the land needed at each station and the station designs.

Figure 4B
Number of properties to be acquired

Date

Estimated number of properties

December 2015

114

January 2017

131

September 2018

91

Source: VAGO, based on DoT information.

DEDJTR (now DoT), assisted by RPV, negotiated and managed the land acquisitions on behalf of the state.

DEDJTR and RPV's negotiations in the Town Hall precinct, specifically regarding The Westin Melbourne hotel and City Square, resulted in a mutually agreed outcome for all parties, and effectively managed a potential delay risk to the state.

Early Works Managing Contractor

The EWMC has had the most changes out of all the early works packages. There have been 24 scope variations, which, as of December 2018, have resulted in 102 target budget adjustments valued at $267.1 million. The largest variations, based on increased cost, related to the State Library access shafts, utility relocations and NEPs. In addition to this, on 16 December 2017, RPV signed the EWSA, valued at $68.3 million, which is described in Figure 4C.

Figure 4C
Early Works Services Agreement

The EWMC experienced delays, which were most acute at the two deep access shafts at the State Library station precinct. These delays stemmed from planning approval times, adverse ground conditions, slower than anticipated production rates, and the PPP shortlisted bidders requesting design changes to the access shafts and acoustic shed size.

The state was aware of these delays and knew the EWMC was going to be late in finishing the contracted early works. Finishing early works late would expose the state to a risk that the PPP consortium may claim damages for affecting its ability to start and finish main works on time. To avoid this risk, the state negotiated with the PPP consortium to accept the risks that early works would run late.

The state and a member of the PPP consortium negotiated an EWSA, which included the Delegation Agreement. The Minister for Public Transport and members of the PPP consortium signed these agreements on 16 December 2017.

The key terms of the EWSA are that the PPP consortium:

  • accepts any costs or delay risks to the main works caused by late completion of any of the early works
  • can appoint a delegate to actively control and manage the EWMC and its works, including the ability to direct variations agreed to by the state
  • receives $68.3 million (early services fee of $10 million and early works risk fee of $58.3 million)
  • has an extra 48 days to complete the main works, which were factored into the contracted date.

The delegate's role is to minimise and avoid any further delays to the EWMC works and the main works by directing the EWMC works. The delegate can also direct the EWMC to undertake works that were originally PPP consortium works.

Under the EWSA, the state pays for the extra costs of early works, and the PPP consortium must reimburse the state for any PPP main works done by the EWMC.

The delegate has issued a number of unexpected variations/instructions, which are mainly design changes to the State Library access shafts, and have increased EWMC costs for the state.

Of the $267.1 million in adjustments to the EWMC, the delegate-directed $191.9 million (71.8 per cent) and the state-directed $75.2 million (28.2 per cent). A number of the delegate-directed variations relate to works that are at the PPP consortium's cost. RPV expects to recoup costs for works identified as related to the PPP consortium's contracted responsibilities.

Source: VAGO, based on RPV information.

The state may choose to retain risk by managing and mitigating the risk itself.

The state can also choose to transfer risk, where a third party accepts it, usually at a cost.

RPV believes that the EWSA has allowed it to transfer the state's risk of delays to the PPP consortium and mitigate the state's exposure to delay risks and potential compensation claims from the PPP consortium. We agree with RPV's view.

Although it is too early to definitively know whether the $68.3 million is value for money, the delays experienced in early works since the EWSA was signed are a strong indication that the PPP consortium may have been eligible to claim delay payments without this arrangement.

RPV also advised us that the 48-day extension the government gave the PPP consortium will not impact the announced opening date of 2025.

State Library shafts

Strutting provides temporary structural support to retaining walls to keep them stable and to resist movement around a large open space.

The State Library precinct has experienced the most scope changes in all the precincts and packages. The design, type of strutting supports and depth of the shafts have all changed since contracts were signed.

RPV originally budgeted the State Library PPP interface works at $75.7 million. As at March 2019, the final forecast cost was $201 million. This is an increase of $125.3 million, or 165.5 per cent.

The access shafts at the State Library precinct originally used concrete and tubular struts (seen at the top of the photo) but this was later replaced with the orange modular steel struts requested by the PPP consortium. Photograph courtesy of RPV.

The access shafts at the State Library precinct originally used concrete and tubular struts (seen at the top of the photo) but this was later replaced with the orange modular steel struts requested by the PPP consortium. Photograph courtesy of RPV.

Figure 4D outlines the scope changes to the State Library access shafts.

Figure 4D
State Library strutting redesign

In 2015, RPV explored opportunities to bring forward the final completion date for the Melbourne Metro Tunnel Project. One option was to have the EWMC design and build two access shafts for the State Library Station under Swanston Street. The PPP consortium is using the access shafts to transport machinery, equipment and workers underground, and remove spoil and excavation materials.

RPV found that this option would create an additional interface with the PPP works and there was a risk that the EWMC's shaft design would not be suitable for the PPP consortium. However, RPV decided to include the access shafts as part of the EWMC scope (described as PPP interface works) given the time savings that RPV projected it would deliver.

The EWMC had to design and build the access shafts at State Library to the following depths by December 2017:

  • A'Beckett Street to the depth of 31.35 metres
  • Franklin Street to the depth of 33.0 metres.

To build the access shafts, the EWMC dug out two large shafts, one on A'Beckett Street and another on Franklin Street. To support the shafts while they were being dug, the EWMC installed a concrete beam along the edge, and tubular steel struts across the shafts. The struts stop the shaft walls from collapsing in on the shaft while it is being used. The PPP consortium will remove the strutting as it builds out the permanent structures that will fill the shafts when the station opens.

The PPP consortium later advised RPV that it wanted to use modular steel strutting because it would be faster to install and remove. In August 2017, RPV agreed to install modular steel, rather than concrete beams and steel tubular strutting, for the remaining six levels of the shaft.

The PPP consortium's design changes, which started in October 2017, increased the cost of building the access shafts. This means that the PPP interface risk that RPV had previously identified has now realised.

Delays at the access shafts were a key driver for the state to enter into the EWSA (see Figure 4C). However, even after the EWSA was in place, delays have still arisen.

Due to these ongoing delays, the PPP consortium and the state agreed to hand over the shafts at a shallower depth than originally planned. The State Library access shafts were handed over at the following dates and depths:

  • A'Beckett Street on 24 October 2018 at a depth of 24.2 metres (decrease of 7.15metres)
  • Franklin Street on 10 December 2018 at a depth of 26.6 metres (decrease of 6.4metres).

The PPP consortium is responsible for completing both shafts to the required depths needed for their design.

Source: VAGO, based on RPV information.

Utility service relocations

Utility service relocations were originally included in the EWMC for all station and portal precincts and included:

  • water pipes
  • sewerage system
  • stormwater drains
  • telecommunications conduits and cables
  • electricity cables, including high-voltage cables and associated supervisory cables
  • gas pipes.

RPV originally budgeted utility service relocations at $182.5 million. This includes the cost associated with preparing the sites, moving monuments and public artworks, as well as other related costs. As of March 2019, utility relocations showed a final forecast cost of $189.5 million, an increase of $60.1 million, or 43 per cent. Initially, RPV identified 86 utilities for relocation. However, at the end of early works, it had relocated 93 utility services.

Due to changing station box designs, the exact number of utility services that RPV needed to relocate changed as the designs were refined and approved.

Unknown or undocumented utility services can be a large risk to projects. This risk has eventuated for the Sydney Light Rail project. In February 2019, the New South Wales Government and the contractor were negotiating to settle their legal dispute over undeclared and undocumented utility services, with some media reports citing a compensation claim of up to $1.5 billion.

The inclusion of utility service relocations at the station precincts has helped to manage a major risk to the overall project, which has avoided the potential for overpricing of this risk by a PPP.

Network enhancement projects

RPV added the NEPs to the EWMC after the EES process (see Figure 3D). The EMF specifies the requirement for NEPs at the Parkville and Anzac station precincts, and in Kensington.

At first, RPV included NEPs in the main works phase, but moved it to the early works phase after the project started. At this time, RPV approved budget transfers worth $39 million to cover this scope; however, initially only a budget of $8.7 million was reported in internal budget reports. RPV advised us that these reports did not reflect the full budget transfer due to an administrative oversight. As of March 2019, NEPs have a final forecast cost of $34.9 million.

NEPs include various changes to road infrastructure, such as road augmentation, changes to signal timing or parking rules, and the installation of clearways. RPV proposed 578 NEPs across 251 locations.

NEPs are not critical to the delivery of main works. However, they help reduce disruption and assist transport routes to flow better during the project's long construction period.

In October 2018, RPV published an infographic of the locations and types of NEPs (Figure 4E).

Figure 4E
Location and type of NEPs

Figure 4E shows the location and type of NEPs

Source: RPV (Metro Tunnel website). Station names edited by VAGO.

By December 2018, RPV completed 336 NEPs. RPV also descoped 198 proposed NEPs and transferred 44 to VicRoads to complete.

Cost assessment

Overall project

Figure 4F shows how the budget for the whole project has changed to the March 2019 final forecast cost since the business case. The business case budget was $10.9 billion, and the current approved budget is $11.06 billion.

Figure 4F
Change in Melbourne Metro Tunnel Project budget

Figure 4F shows how the budget for the whole project has changed to the March 2019 final forecast cost since the business case.

(a) The discrepancy between the early works amount in this chart and reported elsewhere in this report is due to $9 million of forecast income from other entities.
Note: The other works packages (for example, Rail Systems Alliance) are explained in Figure 1E in Part 1.
Source: VAGO, based on RPV data.

As of March 2019, RPV spent $511.1 million in project management costs. These costs are not directly allocated to any of the works packages, but are related to resources that work across all aspects of the Melbourne Metro Tunnel Project. A small portion of this amount funds general oversight of RPV projects.

As Figure 4F shows, some package budgets are forecast to be different from their original budgets. RPV funded these unanticipated increases from risk and contingency funds.

We found a significant decrease between the overall project contingency funds allocated when the government approved the business case, compared to when we conducted this audit. As of March 2019, RPV forecasts a relatively small amount of contingency will be available at the project's announced completion date of 2025.

Early works phase budget outcomes

The cost for the early works phase of the Melbourne Metro Tunnel Project has increased from the original budget of $1.257 billion ($781.2 million of land acquisition costs and $476.6 million of early construction works costs) to a March 2019 forecast final cost of $1.353 billion ($728.1 million of land acquisition costs and $625.5 million of early construction costs).

The savings from land acquisition costs ($53.1 million, or 6.8 per cent decrease) have been offset against the increase in the other early works packages ($148.9 million, or a 31.2 per cent increase). Overall, there has been a cost increase of $95.8 million or 7.6 per cent.

In addition, RPV paid $68.3 million to the PPP consortium for the EWSA, which was funded from the main works budget. Under the EWSA, $172.8 million of the total $267.1 million in EWMC variations were raised. RPV paid for these variations, triggered by a member of the PPP consortium while acting as the state's delegate, from wider project contingency funds.

Figure 4G shows the overall budget changes for the early works phase of the Melbourne Metro Tunnel Project.

Figure 4G
Original and revised budget and forecast final cost of the total early works phase

Figure 4G shows the overall budget changes for the early works phase of the Melbourne Metro Tunnel Project.

(a) RPV funded the EWSA ($68.3 million) in the main works budget. However, we believe it is a cost associated with early works, so we have shown it here.
(b) $53.1 million in unspent land contingency has been reallocated across the Melbourne Metro Tunnel Project.
Note: Income is shown as a negative.
Source: VAGO, based on RPV data.

RPV's commissioned consultancy advice from August 2018 estimated the savings from undertaking early works at between $660 million and $1.275 billion. We note, however, that these are not actual bankable savings, but avoided costs related to a hypothetical course of action that did not proceed (the PPP to do all works, including early works). These savings were also contingent on achieving a time saving of 11 to 17 months.

From RPV's perspective, enabling the early completion of the whole project makes the early works phase cost increases reasonable if considered against the overall project outcomes. If the Melbourne Metro Tunnel opens in 2025 and without further cost increases, the time delays and increased expenditure that RPV incurred in the early works phase will be offset.

Land acquisitions

Land acquisitions have been effective and delivered within expected budget parameters. Originally budgeted at $781.2 million, as of March 2019 RPV forecasts that land acquisitions will cost $728.3 million. This is a decrease of $53.1 million, or 6.8 per cent.

The unspent contingency funds that were budgeted for land acquisition have been reallocated to wider program contingency funds.

Early Works Managing Contractor

DEDJTR (now DoT) contracted the EWMC for $324.1 million. RPV is now responsible for managing the contract. As of December 2018, RPV made 102 target budget adjustments to the EWMC valued at $267.1 million, of which $91.6 million was funded from the original allocated contingency. The final forecast cost of the EWMC, as at March 2019, is $580.4 million.

Figure 4H shows the EWMC budget changes. The largest increases have been for the PPP interface works ($157 million increase), utility service relocations ($45.1 million increase) and NEPs ($34.9 million increase). Combined, these three components cost $237 million more than anticipated, which is 88.7 per cent of the adjustments.

Figure 4H
Budget changes to EWMC agreement

Figure 4H shows budget changes to EWMC agreement

Note: The NEPs are currently included in 'contract variation to be allocated'.
Note: 'variations to be allocated' will be reversed when variations are allocated to their respective categories.
Source: VAGO, based on RPV data.

Tram infrastructure works

Yarra Trams delivered tram infrastructure works within budget. The original budget was $23.3 million (Figure 4I) for the Toorak Road West works.

One variation of $8.6 million added the Park Street platform stop to early works ($6.7 million) and provided additional funding for the Toorak Road West works ($1.1 million). The remainder of this variation ($0.8 million) was contingency, which was used for the Park Street stop. An unexpected cost of $200 000 was paid to PTV for services associated with these works.

Figure 4I shows the budget changes to the tram infrastructure works package, and the final forecast cost of $32.1 million.

Figure 4I
Budget changes to the tram infrastructure works

Figure 4I shows the budget changes to the tram infrastructure works package, and the final forecast cost of $32.1 million.

Source: VAGO, based on RPV data.

Construction power

The contractor delivered construction power works within the contracted budget of $10.3 million.

One variation, valued at around $190 000, was added for the installation of protective firewalls at the Anzac precinct and some extra substation design costs.

Time assessment

The critical path is the longest sequence of tasks that must be finished for a project to be completed on time.

Nearly all the early works packages have experienced some time delays. RPV reports we reviewed showed, however, that these delays have not affected the critical path for the main tunnel and stations works.

Early works time achievement

Almost all the elements of the early works packages are now complete.

As Figure 4J shows, when compared to the original contracted completion date, some early works experienced delays that ranged from 35 days to 10.5 months.

RPV extended the EWMC completion date, originally set for 25 January 2018, by 11 months to 22 December 2018. RPV advise that the time extensions were due to alterations to the scope of works, and/or a change in delivery method.

The State Library station precinct experienced the greatest delay, at 10.5 months. The delays primarily related to the redesign of the access shafts (see the State Library case study in Figure 4D). Under the EWSA, RPV effectively transferred the risks associated with the delay of the EWMC works to the PPP consortium.

Figure 4J
Completion dates of early works construction packages

Package

Original contracted completion date

Revised contracted completion date

Practical completion date (a)

Approximate time from original contract date to practical completion

EWMC

  • North Melbourne

25/1/2018

22/12/2018

1/3/2018 (c)

35 days

  • Parkville

25/1/2018

22/12/2018

19/1/2018 (c)

–7 days

  • State Library

25/1/2018

22/12/2018

10/12/2018

10.5 months

  • Town Hall

25/1/2018

22/12/2018

18/6/2018 (c)

5 months

  • Anzac

25/1/2018

22/12/2018

5/4/2018 (c)

2 months

  • NEPs

N/A (b)

22/12/2018

27/8/2018 (c)

7 months

Tram infrastructure works

  • Toorak Road West

30/4/2017

N/A

17/9/2017

4 months

  • Park Street

17/2/2018

N/A

16/2/2018

–1 day

Construction power

31/3/2018

N/A

29/5/2018

2 months

(a) Practical completion means when the work is sufficiently complete to hand over but may not be complete in all respects. A small number of items may still need to be rectified.
(b) NEPs were not originally contracted in early works—instead, they were identified during the EES process (see Section 3.5). The variations that added NEPs to the EWMC did not provide a schedule (time) extension, therefore making the completion date the same as the contract—25 January 2018.
(c) This date is from the practical completion certificate that is still in draft.
Note: Land acquisitions had varying dates depending on the precinct. All properties were acquired and available when needed. Utility service relocations were linked to the station precinct and have the same start and completion dates as the precinct.
Note: N/A = not applicable.
Source: VAGO, based on RPV data.

Quality assessment

We have identified no concerns about the quality of works. We found the approach taken by RPV to assess quality to be sound; however, due to the system's focus on self-assessment, this ultimately relies on the contractor's own quality systems.

Quality processes

Quality processes are in place at RPV and the early works contractors. We found that RPV's quality processes, documentation and approach to managing quality are effective.

RPV's quality assurance mechanisms include obtaining and reviewing all relevant documentation and attending site inspections and pre-handover inspections with the contractor's staff.

RPV also maintains an audit and inspection tracking register for all EWMC and construction power works. The register details the contract, type and date of attendance (audit or inspection), focus of the audit/inspection, status (open or closed), a link to the relevant report or documentation and a list of attendees. Our review of this tracking register found that it was simple but effective for keeping track of the inspections and audits attended by RPV and the outstanding items for each of these works.

In each agreement for the EWMC, tram infrastructure works and construction power, RPV included the requirement that the contractor draft and submit a Quality Management Plan to RPV for approval. This is the key document that facilitates management of the quality of works and describes how the contractor will ensure that performed works conform to contractual obligations. The Quality Management Plan also outlines the processes that contractors must have, such as planning, inspections and reporting of non-conformances. When the early works contractors or RPV identify a non-conformance, the Quality Management Plan outlines the procedure the contractor must follow, such as notifying RPV within 24 hours. RPV and contractors also use a defect register to list any outstanding items at practical completion.

RPV's quality team has been involved in reviewing and accepting quality-related documentation and processes for all the contractors' work. RPV ensures that its quality team has the proper knowledge and expertise through recruitment processes and appointing individuals with the requisite competencies. We found this approach to be reasonable.

Land acquisitions

Under the Victorian Government Land Transactions Policy and Guidelines, the Valuer-General Victoria and the Victorian Government Land Monitor have mandated roles in the compulsory land acquisition process to ensure a fair price is reached during negotiations.

Our review of a sample of land acquisitions found that RPV obtained all required valuations and approvals. During our review, we also found that other requirements of the Land Acquisition and Compensation Act 1986, such as the publication of mandatory notices, and correspondence with affected parties taking the correct form, were correct and well documented.

Completion certificates

Practical completion certificates certify that RPV is satisfied that relevant works are complete.

Early Works Managing Contractor

As Figure 4K shows, completion certificates have been issued for some of the EWMC stages.

Figure 4K
Completion certificates for EWMC stages

Stage

Summary of scope of works

Date RPV issued completion certificate

Stage 1

Utility service relocations at station and portal precincts and some demolitions

Not yet issued

Stage 2

State Library and Town Hall property demolitions and some NEPs

Not yet issued

Stage 3

Remaining NEPs and additional works at North Melbourne and Anzac

Not yet issued

Stage 4A

PPP interface works at A'Beckett Street shaft

25 October 2018

Stage 4B

PPP interface works at Franklin Street shaft

11 December 2018

Stage 4C

State Library recharge system

Not yet issued

Stage 4D

Town Hall Property Demolition

Not yet issued

Source: VAGO, based on RPV information.

The PPP consortium's acceptance of a site is an informal indicator that early works have been completed to standard. As of January 2019, the PPP consortium has accepted handover of the sites and is proceeding with main works.

Tram infrastructure works

Yarra Trams is responsible for the quality of the tram infrastructure works. It achieved practical completion for the Toorak Road West works on 17 September 2017 and issued the completion certificate on 22 September 2017.

Yarra Trams completed the Park Street works on 16 February 2018 and issued the certificate on 25 October 2018.

Construction power

The contractor achieved practical completion of construction power works on 29 May 2018, and RPV issued the completion certificate on 9 August 2018.

Environmental performance assessment

For environmental outcomes, we found that RPV and early works contractors met applicable EPRs and environmental monitoring processes. RPV has identified instances where there is a potential non-conformance or exceedance of guideline targets based on the data provided by contractors.

RPV actively monitors this and has responded to opportunities to reduce the occurrences, which is a positive action. We found RPV's approach to monitoring and managing EPR compliance to be sound.

Environmental Performance Requirements

We examined contractors' monitoring of and adherence to the EPRs set under the EES process (described in Section 3.5).

The EMF, developed by RPV as part of the EES process, specifies the EPRs for the project.

The EPRs cover 19 areas, such as air quality, noise and vibration, and groundwater. Across these areas, there are 125 EPRs. The EPRs cover the whole Melbourne Metro Tunnel Project, not just the early works. Additionally, not all EPRs apply to each contractor or every site. As an example, the EPRs related to EMI were not identified as relevant to any of the early works. An RPV-commissioned report found that EMI is more likely to have an impact during operations, rather than early works.

Some EPRs outline a specific administrative process that contractors must follow to comply with the EPR. Other EPRs draw on established guidelines and targets, such as those set by the Environment Protection Authority, as the reference level for the EPR. For example, there is a noise and vibration EPR (NV1) that requires construction noise to be managed in accordance with the Environment Protection Authority's Noise Control Guidelines (Publication 1254). These EPRs provide guidance on what the acceptable levels are for certain environmental factors.

Figure 4L shows the number of EPRs applicable to each early works contract.

Figure 4L
Number of Environmental Performance Requirements applicable to each early works contract

Category

Number of EPRs in category

Number of EPRs applicable to each contract

EWMC Agreement

Tram infrastructure works

Construction power

Environmental Management Framework

4

4

4

4

Aquatic Ecology and River Health

7

7

2

5

Aboriginal Cultural Heritage

1

1

1

1

Air Quality

3

3

3

3

Arboriculture

5

5

5

2

Business

6

6

3

2

Contaminated Land and Soil Management

4

4

2

4

Cultural Heritage—Historical

24

24

12

7

Electromagnetic interference

2

0

0

0

Flora and Fauna—Terrestrial

3

3

3

1

Greenhouse Gas

2

2

1

2

Ground Movement and Land Stability

6

6

2

0

Groundwater

5

5

0

5

Land Use Planning

4

4

3

3

Landscape and Visual

4

4

3

3

Noise and Vibration

21

21

12

13

Social and Community

12

12

8

6

Surface Water

2

2

1

2

Transport

10

10

8

6

Total

125

123

73

69

Note: EPRs are not applicable to land acquisitions.
Source: VAGO, based on RPV information.

Compliance with, and monitoring of, the Environmental Performance Requirements

Early works contractors are responsible for compliance with, and monitoring of, EPRs. RPV is involved in monitoring the compliance of EPRs.

Each early works contractor must implement an Environmental Management System that is certified to AS/NZ ISO 14001:2015—Environmental Management Systems to ensure consistency with relevant legislation, policy and guidelines, and RPV's environmental policy.

Contractors must also:

  • develop an EWP that demonstrates how works will be carried out in accordance with the EPRs
  • develop a Construction Environmental Management Plan that details how it will manage environmental impacts
  • comply with the EMF, legislative and approval requirements
  • undertake environmental audits to confirm compliance with the EMF and EPRs
  • appoint an Independent Environmental Auditor, who must verify compliance with EPRs, conduct audits to assess compliance with the Construction Environmental Management Plan, and prepare audit reports on findings against the EPRs and Construction Environmental Management Plan.

Our review of the contractors' environmental audit reports and Independent Environmental Auditor reports found that EPRs are being adhered to. There have been five EPR non-conformances by the EWMC. This is when the EWMC has not followed a process outlined by an EPR, rather than when it has exceeded a guideline target. One non-conformance was when the EWMC did not obtain an out-of-hours work permit prior to the commencement of 24-hours-a-day, seven-days-a-week works. Once the EWMC was aware of this, it obtained the correct permit.

The other four non-conformances related to modelling and project documentation to manage groundwater movements. RPV advised us that these non-conformances have had no material impact on the delivery of the project.

RPV receives a weekly summary report of the contractor's environmental monitoring (type of monitoring and location) and measured outcomes (such as noise levels). These reports include instances of when contractors exceed standards or targets in EPRs—for example, when the measured noise level exceeds the target.

Our review of these reports found instances when contractors had exceeded targets. However, it was often for a short time period and was not a recurring issue at the same location.

Figure 4M
Response to noise guidelines exceeded by contractors

Contractors must manage the noise from their works as it impacts nearby residents and businesses. The EPRs for the Melbourne Metro Tunnel Project provide recommended and target noise levels for contractors to consider and follow. For example, at night, residents should not hear any construction noise.

Acoustic sheds, such as those used at the State Library station precinct, are one way to contain construction noise. Noise monitors are located around and next to construction sites to measure and track whether noise levels are within the acceptable range. One challenge for both contractors and RPV is that it is difficult to separate the noise from construction activities from background noises, such as traffic and residential activity.

Acoustic sheds have been built on Franklin Street and A'Beckett Street to minimise construction noise impacts. Photo courtesy of RPV.

Acoustic sheds have been built on Franklin Street and A'Beckett Street to minimise construction noise impacts. Photo courtesy of RPV.

The EWMC measures and reports noise levels to RPV every week. In May 2018, the EWMC reported excessive noise at the State Library station precinct. In response, RPV asked the EWMC to demonstrate how it complied with the noise EPRs.

The EWMC advised RPV that it had adopted measures to address the issue, including automating the closure of acoustic shed doors during the day and planning work around mandatory door closure hours of 6 pm to 7 am each night. The EWMC also reported to RPV that noise-monitoring results during the day and evening were generally within the EPR guideline noise targets.

Source: VAGO, based on RPV information.

RPV's role in monitoring the compliance of EPRs includes reviewing and approving environmental management and monitoring plans and attending project meetings with contractors to understand the environmental issues for each site. Where an issue is identified, RPV works with the contractor to ensure that appropriate actions are taken to address it.

In the example in Figure 4M, RPV's review of target exceedances led to a practice improvement that reduced the noise impact on residents near the station precincts where overnight works take place.

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