Modernising myki

Delivery schedule issues 

DTP accepted an overly optimistic delivery schedule from CVTS, which contributed to early contract disputes.

Before awarding the project contract, DTP received expert advice that the project’s expected delivery timeline was 'significantly more ambitious than for comparable implementations elsewhere in Australia and internationally and should be reviewed'. 

The advice recommended that DTP:

• redefine the project’s completion date
• seek agreement and approval for revised dates from the government.

In April 2023, DTP's tender evaluation panel selected CVTS as the preferred supplier for the project tender. It noted CVTS’s master schedule needed to be refined. But DTP did not agree revisions with CVTS before awarding the contract.

This meant a draft master schedule was in place when CVTS and DTP signed the contract in May 2023. The contract then required CVTS to: 

• revise the master schedule 
• submit a final version to DTP. 

But shortly after contract signing, disputes began and DTP rejected multiple versions of the revised master schedule. 

DTP said CVTS’s revised timeline would cause a 'delay in realising customer benefits'. DTP also claimed that CVTS had performance issues and was slow to respond. It also issued CVTS with contract penalties for failing to meet the original schedule’s timeline.

Transition risks and subcontract disputes

In the early development stage of the project, DTP received advice about potential risks transitioning from the current myki system’s supplier to a new one. This included its subcontractor arrangements and intellectual property.

Many subcontractors were used to deliver and support the original myki system. DTP needed to transfer some of the subcontractors to CVTS, which it outlined in the project contract. DTP also had separate agreements with subcontractors and could exercise its power to support the handover if required.

To transfer the current myki system to CVTS, DTP also needed full access to myki proprietary products and intellectual property. This included some software from old system devices that was needed to run the new myki reader devices. Known as ‘source code’, this was developed as part of the original system.

DTP received advice when developing the strategy that there may be issues with intellectual property rights. The advice recommended DTP review its subcontracting agreements before awarding the contract. Although DTP used its advisors to do a review, the department did not adequately understand and address risks in some of these subcontracting agreements.

This led to disputes between CVTS and DTP about additional costs in the subcontracts after they were transferred to CVTS.

Dispute management

The disputes between DTP and CVTS caused unplanned legal and commercial advisor costs for both parties. It also led to a loss of trust and project cohesion.

DTP's initial approach to the disputes was adversarial and transactional. It focused on enforcing contractual rights, rather than resolving the underlying reasons for needing to revise the master schedule.

DTP did not collaborate to resolve unforeseen risks and issues, despite sharing some responsibility for delays.

Delay providing source code

During this period, DTP did not fully meet its contract obligations to deliver ‘state-supplied items’. 

DTP did not provide CVTS with the old myki system’s reader device source code in a timely way. CVTS could not run the current myki system or deliver new reader devices that would work with the old myki cards without the source code. This is because of the period where the current and new devices would be working side by side.

Partly due to not receiving the source code, CVTS revised master schedule proposal asked to delay milestones in Phase 1 and Phase 2 by an average of 6.5 months.

Project reset

The disputes between DTP and CVTS led to a contract standstill and a project reset.

The agreed contract standstill started in June 2024 and:

• suspended contract penalties from DTP to CVTS
• allowed DTP and CVTS to continue critical work while negotiations took place. 

This negotiation process lasted around 6 months. During this time, DTP and CVTS agreed to a project reset. This involved amending the project timeline and revising some parts of CVTS’s contract. It also settled CVTS's commercial claims, which are costs it asked DTP to cover for variations and other expenses.

The contract standstill and project reset extended the project’s original timeline by 18 months to the end of 2028. As detailed in the 2025–26 state Budget, the project cost was increased by the government so DTP could settle CVTS's claims and cover other prolongation and project related costs.

To fund this increase, the government authorised DTP to offset these new costs against:

• savings from other DTP projects
• some categories of unclaimed myki card balances and interest from those balances. 

Revised master schedule

The project is on track based on its new timeline and master schedule, which has a more logical flow of tasks.

DTP and CVTS agreed on the new master schedule as part of the project reset. Dated 19 December 2024, the new schedule has a more detailed and logical flow of tasks than the original contract’s master schedule. 

This includes a staged testing approach that allows DTP and CVTS to fully test devices and systems before releasing them. This approach helps to reduce risks when rolling out complex technology.

The new master schedule outlines 'ready by' dates, as Figure 6 shows. ‘Ready by’ means DTP and CVTS have fully tested the devices and software, and they are ready to launch. The actual launch dates are subject to the government decision and public announcement.

Figure 6: Key milestones according to the revised master schedule

Note: *Card-flipping is where all myki card balances will be converted into digital ‘travel tokens' and transferred to the new system. Once the cards are flipped, there will be no fare money or travel products processed or stored on the card.
Source: VAGO, based on information from DTP. 

No time contingency

While the new master schedule has a more logical approach than the original schedule, it does not include time contingency. This means any delays in early phases are like to affect future phases. 

DTP and CVTS know about this risk. They will need to closely monitor project delivery to make sure they are meeting the schedule.

But the delivery of future phases is still uncertain. DTP has not started planning for several critical activities in detail. These activities will mainly occur in Phases 3 and 4, over the next 6–18 months.

Planning for Phase 3 and Phase 4

DTP does not have detailed plans for Phase 3 and Phase 4, so it is not clear how it will manage upcoming tasks and challenges.

Phase 3 will:

• launch the concession platform in phases for different types of concessions
• expand the new system into regional areas that do not currently use myki. The new system will replace paper tickets on:
  • some V/Line trains
  • V/Line coach services
  • regional town buses.

Phase 4 will:

• connect the new system with V/Line’s seat booking system, V/Net, which is 20 years old 
• migrate all myki card data and stored values to the new account-based system
• retire the current myki system
• introduce other future payment methods (such as QR codes) and Bluetooth technology.

These phases are due to be ready by mid to late 2027. But they are more technically complex than earlier phases. DTP and CVTS have not started detailed planning for these phases. This includes planning with V/Line to expand the new system to regional areas.

As this work hasn't started, the department cannot be reliably assured that these future phases will be delivered on time and with expected functionality.

Passenger challenges

Phase 3 will deliver tap-and-go payments for concession passengers, who make up at least 30 per cent of public transport passengers. 

The new system introduces additional steps for passengers to verify their concession entitlements.

When the concession validation system launches, concession passengers will need to:

• create a ticketing account on a new customer portal, which DTP is developing
• use the customer portal to verify their concession entitlement. 

The customer portal will be linked to the concession platform, which then communicates with a Concession Entitlement Management Authority (concession authority) database. This relies on all systems functioning as expected.

Steep learning curve for concession passengers

A high percentage of regional passengers are concession holders. As Phase 3 will also expand the new system across parts of regional Victoria, passengers currently using paper tickets will also need to switch to tap-and-go payments.

DTP's user research says the technology and process learning curve for concession passengers may be steep and require targeted support. 

But DTP has not planned any targeted communications for Phase 3. The evidence is also not clear about whether DTP has formally briefed V/Line on user research that is relevant to regional concession passengers.

The concession platform

HCLTech is delivering a concession platform that will link to the new ticketing system to manage concession entitlements and rates. 

DTP is responsible for making sure HCLTech and CVTS work together and achieve a seamless, integrated solution. 

The concession platform is an online portal that allows passengers to verify their concession entitlements. 

As Figure 7 shows, the platform will verify a passenger's entitlement with the relevant concession authority. It will then communicate with the account-based ticketing system, which will generate a travel concession certificate. 

The concession entitlement is stored in the account-based ticketing system and linked to a registered account, so future fares are calculated at the concession rate.

Figure 7: Overview of the concession validation process in the new system

Source: VAGO, based on information from DTP.

Concessions system is the first of its kind 

DTP’s external advice and our own research shows that no other jurisdiction worldwide has delivered an automated concession validation system built into an account-based ticketing system. 

Because this integration is unprecedented, it increases the risks of unforeseen technical, operational and user-adoption challenges. 

DTP, CVTS and HCLTech will need to carefully monitor and manage these risks. 

Technical and operational challenges

Setting up the concession platform comes with significant technical and operational challenges.

For the concession platform to automatically verify entitlements, DTP needs to access concession authorities’ databases.

To do this, DTP must sign agreements with each authority to get an application programming interface (API). APIs make it possible for the concession platform and the concession authority’s databases to exchange data with each other. 

DTP needs to sign at least 150 agreements with concession authorities and seek details on their APIs. Each concession authority may use different systems and data standards to allow for this. 

If the concession authority does not have an API, it can manually verify concession entitlements as passengers request it. But this manual process will require human involvement and will not work in real time. It is not yet clear how many concession authorities will need to use this approach.

This is a significant coordination and technical challenge that DTP needs to manage to make sure it can deliver Phase 3 smoothly.

Privacy challenges

Many Victorians will interact with the new concession platform and customer portal, which introduces privacy and data security challenges.

HCLTech is building the concession platform on third-party software, which is housed on a cloud platform. Passengers’ concessions status and type of concession will be stored on the concession platform. 

The concession platform does not store the passenger’s name, date of birth or email address, these are stored in the account-based system when passengers register for an account. The platform will use the customer’s account ID from the new system in the verification process. Because HCLTech will develop, test and manage the concession platform, it is able to access personal data held within the system. 

DTP has developed a privacy impact assessment for the project. It says the concession platform will only handle passengers’ personal information when the customer applies for a concession via the customer portal. 

DTP has also committed to annual reviews of its privacy impact assessment and plans to develop further assessments before it launches several features of the new system.

DTP is aware that it must report any information security event to the Office of the Victorian Information Commissioner. But DTP has not engaged with the Office of the Victorian Information Commissioner more generally about this wide-scale system. 

DTP has outsourced most of the technical work for the new system. But DTP is accountable for privacy and data security aspects of the concession platform, the new system and the customer portal.

State-supplied items and other challenges

DTP is contracted to deliver 55 state-supplied items to CVTS. It must deliver them on time to meet the project timeline. Items include:

• card-based system specifications and source code
• the customer portal (app and website) designed and delivered by DTP
• software interface specifications
• payment service gateway specifications
• banking interface specifications.

DTP also needs to provide planning documents and other data items related to future phases.

As at November 2025, DTP has delivered 23 of the 55 state-supplied items. If any of the remaining items are delayed, CVTS may not be able to deliver the project on time.

During the project reset, DTP and CVTS redefined many required items so that DTP could deliver them with support from its suppliers. 

Policy changes for the new system

DTP advises the government on key decisions or changes to legislation needed for it to deliver the project.

As of October 2025, DTP received approval from the Minister for Public and Active Transport for a regional fare structure and rules, as well as a decision from the government on payment of merchant fees (which DTP incurs when processing tap-and-go payments). This timeframe is in line with the master project schedule.

As of December 2025, legislation is in place to:

• recognise digital ‘travel tokens’ and credit cards as valid tickets (which is needed for tap and go functionality)
• allow new devices to be used for authorised officers to check valid tickets
• allow a computer system to verify concessions.

The government is yet to approve decisions on:

• the role of authorised officers, including how they can check digital 'tickets' and concession entitlements
• the role of cash on the network
• locations of myki card vending machines and enhancements of the retailer network.

Delivery to date 

DTP and CVTS have efficiently rolled out new card reader devices on train station platforms and gates. This work is nearing completion within existing myki areas.

Reader device rollout on buses is underway. CVTS has technical crews working in various bus depots overnight to install the new devices. This work is due to finish in March 2026.

By the end of September 2025, there was a one-month delay in starting reader device installation on trams. This was because of: 

• software and system integration issues 
• delays in getting engineering change approvals for the tram fleet. 

In late October 2025, DTP resolved these system issues and received engineering approvals from Yarra Trams. CVTS then started installing reader devices on trams.

DTP and CVTS do not expect this delay to impact the delivery of Phase 2. They have created an accelerated installation schedule so they can meet the March 2026 target completion date.

DTP is also working with public transport operators to coordinate passenger communication activities and prepare for the launch of Phase 2.

We cannot provide assurance on the timeliness of Phase 2 delivery. This is because the new device rollout is still underway and the government has not yet approved DTP's plan to trial and launch the phase.

Expected benefits from the new system

DTP developed a benefits management framework for the project in 2021. This includes:

• an economic benefits assessment, which DTP uses in its benefit-cost analysis for the project
• a benefit management plan, which includes all of the project’s expected (cost and non cost) benefits.

The economic benefits assessment defined 8 benefits for the project across 2 categories that can be quantified. 

DTP has a separate benefit management plan that defines 6 benefits for this project:

• improve customer experience
• reduce operating costs
• support agile decision making
• future proof the solution for new technologies
• attract new customers to the network
• improve transport data analytics.

DTP is required to track these benefits in line with the Department of Treasury and Finance's Gateway Review Process and High Value High Risk Framework requirements. These processes help the government to understand if a project is achieving its intended outcomes.

Using the benefit management plan

DTP is not adequately measuring and managing the project’s benefits. 

In its benefits work to date, DTP has not sufficiently engaged with its operational teams that will manage the project over the long term. This has led to these teams not taking ownership of ongoing benefits assessments and relying on the project team and consultants to develop the benefit framework.

The Victorian Government Purchasing Board defines value for money as achieving a balance between a project’s costs and benefits through its lifecycle. But DTP received advice from an expert project assurance team that the benefits listed in its benefit management plan do not demonstrate value for money for the investment.

Reporting on the benefit management plan

DTP drafted the benefit management plan in 2021 and updated it in March 2023.

Since then, DTP has not officially updated it or reported on any measures since the project started.

DTP says it expects to review the benefit management plan and refresh the measures in the next 3 to 6 months as part of delivering Phase 2.

Benefit-cost ratio

DTP’s economic benefits assessment initially estimated the new system would deliver a benefit cost ratio between 1.0 and 1.48.

DTP’s latest assessment from 2023 shows the project’s benefit-cost ratio is at 1.45. This means DTP expects the project to deliver moderately positive net economic benefits over the 15-year life of the project.

Economic assessment data

DTP’s economic benefits assessment outlines the expected costs and benefits of the new system. But the data DTP uses in these calculations is not fit for purpose. 

As Figure 8 shows, DTP’s economic benefits assessment forecasts that over 15 years the project will generate: 

• $218.50 million in fares benefits
• $137.04 million in customer benefits.

Figure 8: Expected benefits in DTP’s economic benefits assessment (2023)

Note: These figures are from the economic benefits assessment's ‘likely’ scenario. 
Source: VAGO, based on information from DTP.

DTP used some data and benchmarks from other jurisdictions to calculate these economic benefits. 

For example, the economic benefits assessment assumed that the project will reduce fare evasion by 35 per cent and reduce concession fraud by 50 per cent. But it uses fare evasion data and anecdotal evidence from New South Wales. More relevant and recent data from Victoria shows very low fare evasion rates and very limited cases of concession fraud. 

It is important that DTP uses relevant and recent data in its economic benefits calculations. This is because economic benefits have a significant impact on the benefit-cost ratio DTP reports to the government.

Total cost of ownership

Our analysis of DTP’s available data shows that the total cost of ownership for the new system is around $2.8 billion in nominal dollars over 15 years. Nominal dollars are not adjusted for forecast future inflation. 

Our estimate includes costs related to the project’s:

• strategy development
• tender process
• new software build
• reader device rollout
• oversight and operation of the new system (including all supporting work such as customer support), as well as costs related to keeping the old myki system running while the new system is delivered.

Cost of fare collection

A cost of fare collection ratio measures how much a transport provider spends to collect each dollar of fare revenue. It helps to show a ticketing system’s efficiency and value for money over time.

We calculated that the new system’s cost of fare collection is around 26 cents for every one dollar collected from passenger fares. 

Because every jurisdiction’s transport network is different, it is difficult to compare global ticketing systems. But in 2021 DTP received advice that, based on other global ticketing implementations, the cost of fare collection for a modern account-based system could be less than 10 cents per dollar collected.

To calculate the myki cost of fare collection, we compared the new system’s estimated total cost of ownership ($2.8 billion) with the actual fare revenue the system collects, as Figure 9 shows. 

Figure 9: Cost of fare collection calculations

Note: Figures have been rounded in this calculation.
Source: VAGO.

DTP does not currently monitor or report the cost of fare collection. 

Victoria's policy settings about fares and access to public transport can have a direct impact on fare revenue. This has a flow-on effect to the cost of fare collection.

For example, DTP developed its economic benefits assessment before fare caps and exemptions for certain passengers (such as young people or seniors) were introduced in late 2025. DTP has not reviewed how these exemptions affect the project’s fare benefits. 

Operating costs versus fare revenue

Victoria's public transport system is heavily subsidised. Our analysis shows that public funding covers about 80 per cent of actual costs. 

In the 2024–25 financial year, DTP paid $3.2 billion to bus, tram and train public transport services operators to deliver the system. Passengers paid $736 million in fares. Public transport operators directly received $383 million from fares.

Based on our analysis of available DTP data, we estimate that at an indicative level, around 26 per cent of an $11.40 daily adult fare will go to the cost of running the new myki system. The remaining 74 per cent from fare revenue contributes to the cost of running the overall transport system, as Figure 10 shows.

Figure 10: Indicative explanation of how the public transport system is funded

Note: *This includes all funds for operators plus estimated annualised total cost of ownership for the modernised myki system.
Source: VAGO calculations and estimates, using DTP data.

Market research 

DTP’s strategy and procurement plan, which the government approved in late 2021, helped the government to be an informed buyer. 

DTP ran a thorough market research process to understand options for a new ticketing system. This included researching other jurisdictions’ systems as reference cases for the project. 

It developed its strategy and procurement plan with extensive consultant support and advice. This helped the government to decide which technology to buy and how to engage a supplier.

DTP also ran stakeholder engagement and commissioned market research. This helped DTP to understand the specific needs of passengers from regional areas, as well as those living with disability or experiencing mobility and accessibility challenges.

Understanding ticketing systems 

In 2021, DTP hired consultants to help it engage with global ticketing and financial services suppliers. It wanted to understand the market's capacity and capability to deliver public transport ticketing systems.

DTP learned that:

• the market has moved towards 'off-the-shelf' products for its ticketing systems
• transport systems have moved away from using 'transport-only' cards to tap-and-go payments (such as credit cards, mobile phones and smart watches) with examples in Singapore, London and Sydney
• account-based technology is maturing and more suppliers are emerging
• jurisdictions with recent ticketing renewal projects have chosen account-based technology as it delivers more long-term customer benefits and flexibility. 

This market research gave DTP confidence that an account-based solution could align with government objectives, market capability and supplier availability.

User research and consultation

DTP consulted with internal stakeholders to check that its strategy aligned with department and government objectives. 

This included: 

• DTP's accessibility and inclusion team
• DTP’s Chief Accessibility Advocate
• the Minister for Public and Active Transport’s Accessible Transport Advisory Committee.

DTP engaged these stakeholders early in the project to get insights about passengers with accessibility needs. 

DTP also commissioned 3 sets of user research to understand:

• current customer experiences for metro and regional myki passengers, and best practice case studies in ticketing
• the specific needs of regional public transport passengers
• needs of public transport passengers living with accessibility and mobility challenges.

Each user research set involved a diverse selection of participants relevant to the research objectives. This included passengers from regional Victoria, concessions holders and people with accessibility needs.

Options offered to the government

Based on government priorities, available technologies, global trends and expert advice, DTP developed 3 options for the new system:

1. keep current system: a 'do minimum' option to continue providing the same services with basic upgrades
2. augment current system: improve the existing myki card technology with new applications or functionality within the limits of the existing reader devices
3. account-based ticketing: a new-build system to introduce tap-and-go payments and move transactions to a cloud-based system away from card-based microchips.

DTP advised the government in June 2021 that account-based ticketing was its preferred solution.

DTP said it preferred this option because it:

• is a modern ticketing solution that aligns with global trends
• provides a better passenger experience and improves data insights
• offers flexibility to provide new payment options
• makes it easier to introduce fare changes and products (as the calculations are managed in a cloud-based IT system).

Multi-stage tender process

From late 2021 to May 2023 DTP ran a multi-stage tender process to find a supplier for the new system, as Figure 11 shows. 

Figure 11: Tender stages

Source: VAGO, based on information from DTP.

This tender approach gave DTP's evaluation team several opportunities to understand and confirm whether potential suppliers could deliver the new system. 

This included DTP running a product demonstration stage where suppliers demonstrated their reader devices in test scenarios. This allowed DTP’s evaluation team to see the potential devices in action to support their assessment.

In late April 2023, DTP selected CVTS as the preferred supplier. Before awarding the contract in May 2023, DTP ran an alignment phase for a few days. During this phase, DTP and CVTS discussed contractual matters identified by the evaluation panel. 

This tender process assured DTP that CVTS could deliver a solution that would meet the government's objectives and deliver expected benefits. But as discussed in Section 3, DTP did not resolve some issues prior to awarding the contract, leading to disputes, delays and cost increases.

Probity best practice

Buying for Victoria has best practice guidance for complex and high-value procurement of specialised goods and services. 

In these circumstances it recommends appointing a separate probity auditor to make sure public entities run a project’s procurement process in line with legal, regulatory and ethical standards. 

Probity advisor and probity auditor roles are distinct. Both aim to support integrity in a procurement process. But an advisor works closely with the project team during procurement. 

An auditor is separate from the team and provides an independent opinion on whether the procurement process complied with probity principles and rules. A probity auditor should not provide advice on any probity issues that arise during the procurement process.

Probity advisor and probity auditor

DTP did not follow Buying for Victoria’s guidance. It appointed a probity advisor for the project, but not a probity auditor.

DTP developed a probity plan for the project’s procurement. It required all relevant Buying for Victoria guidance to be followed.

But DTP did not appoint a separate probity auditor. Instead, it hired a specialist lawyer as the project's probity advisor. 

This probity advisor attended all key meetings and managed potential conflicts of interest and other probity issues throughout the procurement process. Because they gave advice on aspects of the procurement they were not independent and did not perform the same role as a probity auditor. 

DTP said it considered its other governance and probity review structures to be sufficient and so did not appoint a probity auditor.

The evidence we saw confirms that DTP adhered to all other procurement process requirements and guidance.