The Environmental Impact Statement (EIS) for the Bus and Train (BaT) Tunnel from Dutton Park to Spring Hill is out for comment, and I’m rather unimpressed by the benefit-cost ratio, estimated by Deloitte at 1.16. That is, benefits are estimated to be only 16% higher than costs over the life of the project. That’s pretty concerning for a $5 billion project that is likely to be subject to the same risks of cost blowouts and demand shortfalls as other mega-projects.
Given the possibility of large forecast errors in costs and demand, you’d probably want a much higher benefit-cost ratio (i.e. definitely higher than, say, 1.5) to be confident it’s worth committing $5 billion – or over $1,000 for every Queenslander – to this project. Indeed, Deloitte’s own sensitivity analysis shows that, under some scenarios, the benefit-cost ratio is less than 1 and costs exceed benefits over the life of the project (see Table 14-16 in Chapter 14 of the EIS).
The risks of mega-projects are well known. As mega-projects expert Bent Flyvbjerg observed in his book Megaprojects and Risk:
At the same time as many more and much larger infrastructure projects are being proposed and built around the world, it is becoming clear that many such projects have strikingly poor performance records in terms of economy, environment and public support. Cost overruns and lower-than-predicted revenues frequently place project viability at risk and redefine projects that were initially promoted as effective vehicles to economic growth as possible obstacles to such growth.
There is a risk that the BaT project will turn out to be another poorly performing mega-project, and hence the EIS warrants close scrutiny over the six week consultation period that commenced today.