Audit questions if $6b Metro rail contract represents value for money
The Victorian government doesn’t have a full picture of how well its private contractor is maintaining Melbourne’s metropolitan rail assets under its existing $6.2 billion agreement, or whether it represents value for money in the long term.
A report by the state’s auditor general has found the government is failing to properly assess whether work done by Metro Trains Melbourne is good enough to support long term demands on the network, which in 2019 carried 240 million passengers.
The audit found Metro’s maintenance of railway infrastructure and technology is enough to support punctuality and reliability, and minimise passenger injuries, Auditor General Andrew Greaves says.
“However, the department does not have an overarching performance measurement and reporting framework for the $6.2 billion agreement,” he concludes.
“As a result, it does not effectively monitor Metro’s performance in maintaining and renewing these assets.
The department … cannot gauge whether Metro is working cost-efficiently and delivering value for
“The department also does not check if Metro’s asset maintenance and renewal works will support train service performance into the future. This makes it hard to know how cost effective Metro’s maintenance is over time.”
Tech renewal budget underspent
The Department of Transport and Planning is paying Metro $2.7 billion to maintain technology, tracks, bridges, signals, information displays and computer systems under the current agreement, which spans seven years until November 2024 with an option for a three-year extension.
The report says while Metro has spent 98 per cent of its maintenance budget, it is delivering works at lower than planned costs for some items. Meanwhile, it’s underspent on renewals, with just 68 per cent of the technology renewal budget spent.
Despite having renewed 95 per cent of infrastructure assets as planned since the start of the agreement, Metro faces a backlog of operational control and management systems, and there’s no assurance that work will be done by the end of the agreement, Mr Greaves says.
“Metro has a backlog of assets it needs to fix or replace,” the report says. “The department hasn’t checked if Metro can clear this backlog before the contract ends. This could effect train services and funding needs in the future.”
No long term asset management plan
Metro aims to have at least 92 per cent of trains arrive and depart on time each month. It only achieved that target two-thirds of the time to December 2022, but the auditor said external factors like trespassers and weather events were to blame rather than asset failures.
When it came to reliability, train services also fell short of the monthly target of 98.5 per cent of scheduled services being run. The target was only hit half of the time, but once again maintenance issues weren’t the main reason.
But the report says the 78 KPIs and targets in the agreement are failing to comprehensively monitor how well Metro is maintaining and renewing the assets.
Vago say the absence of a long term asset management plan is making it hard for the department to strategically influence Metro’s work, and the lack of important information about the contractor’s performance is making it difficult to assess vale for money .
Because it doesn’t have an overarching framework for measuring performance it can’t be sure that metro is maintaining and renewing the assets according to the contract.
“Because it doesn’t have an overarching framework for measuring performance it can’t be sure that metro is maintaining and renewing the assets according to the contract,” it says.
Opportunities for improvement
DPT secretary Paul Younis said the department recognised that future rail franchises provided a ‘significant opportunity’ to improve planning and information around the maintenance and renewal of the transport network.
“DPT is currently in the process of developing these requirements further,” Mr Younis said in a letter to Mr Greaves.
Metro CEO Raymond O’Flaherty said the company looked forward to partnering with the transport department to support the ten recommendations for improvement made in the report.
Melbourne has the largest metropolitan railway network in Australia with 15 lines spread from the CBD to Frankston in the south, Lilydale in the east, Craigieburn in the north and Werribee in the west.
It runs 2,500 services each weekday and has thousands of assets including 998km of tracks, 2,750 signals, 11,800 passenger information units.
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