A DEAKIN infrastructure expert has warned that governments must do more to prevent cost blowouts before any new major public infrastructure projects begin in Australia, in the wake of Infrastructure Australia’s new report.
Dr Dominic Ahiaga-Dagbui specialises in capital expenditure and cost overruns associated with delivering major infrastructure projects and says that history shows a large number of infrastructure projects routinely end up costing a lot more than predicted.
His caution comes following the release of Infrastructure Australia’s report which suggests that in order for the nation to cope with a forecast population of 31.4m people in 15 years’ time, governments must spend $600bn on major infrastructure projects during the coming decade and a half.
Dr Ahiaga-Dagbui says research shows that pressure to start projects quickly often results in too much residual risk being carried through to the project finishing stage.
“Capital-intensive projects are notorious for being delivered late and over budget. In fact, the odds of successfully completing these projects to their predicted cost and time targets are only slightly better than a coin toss,” Dr Ahiaga-Dagbui said.
“Transport infrastructure projects, for example, routinely exceed their initial cost estimates leaving asset owners, financiers, contractors and taxpayers dissatisfied. The ongoing Sydney Light Rail project is a perfect example.
“Despite the prevalence of cost overrun on mega projects, predicting and preventing these remain very challenging. In fact, a lot of the research in this area is superficial and largely ineffective in dealing with risks and uncertainty involved in major projects,” he said.
Dr Ahiaga-Dagbui is currently modelling transport infrastructure cost performance, as well as the impact of delivering megaprojects in Australia simultaneously.
“Empirical research is needed to address the possible impact of concurrently delivered large infrastructure on the resource-constrained Australian construction sector,” Dr Ahiaga-Dagbui said.
“Concurrently delivered high-value projects may have the tendency to outstrip the capacity of the supply chain to meet the demand for materials and labour.