Victoria ignored risks before $137m blow-out, delayed transport overhaul
Victoria’s transport department failed to resolve early contract disputes and agreed to an unrealistic timeline for the rollout of the new myki system before the program suffered a $136.8 million blowout and an 18-month delay, an audit has found.
A report published by Victoria’s Auditor General’s Office on Wednesday also highlights the high cost of running the new public transport ticketing scheme; it estimates this would account for 26 cents of every $1 it collects in fee revenue.
In response, the Department of Transport and Planning (DTP) received advice that in 2021 “the cost of fare collection for the modern account-based system could be less than 10 cents per dollar collected, relative to other global ticketing practices.”
The report comes two days after Transport Victoria launched a trial of new ticketing technology on several V/Line and Metro train lines, allowing passengers to connect with debit cards and iPhones for the first time.
In 2023, Victoria signed a contract with US company Conduent to install and operate the new statewide ticketing system for 15 years, currently valued at $1.96 billion.
But as this byline reveals, the transport department and Conduent were at odds over the contract and rollout schedule as of June 2024, and a “standstill” agreement was in place for six months. They eventually decided to reset the project, with a $136.8 million budget increase and an 18-month delay.
“Before awarding the project tender, DTP received the following advice: [Conduent’s] The delivery plan was overly optimistic and did not include enough detail. According to the VAGO report, the program ultimately turned out to be unrealistic.
“DTP did not address these known issues before signing the contract. Instead, it delayed this work… which led to disputes.”
VAGO found that DTP was slow to transfer the source code from existing myki software that Conduent needed so it could continue to run the old and new systems side by side during rollout, contributing to delays.
The audit finds that the program’s current timeline sets a target for tap-and-go payments to be enabled statewide by mid-2027, with the entire system available by mid-2028.
This will include the installation of 23,000 reader devices and the introduction of “account-based ticketing”, which will link customers’ cards and devices to accounts, apply discounts and automatically calculate the lowest possible fare based on their travel patterns.
The audit says the program is on track with this revised timeline, but warns there are looming challenges that could cause further delays.
HCLTech, the contractor responsible for developing a system that allows passengers to use tap-and-go payments and concession fares, told the auditor that DTP had recently paused its work, which “directly impacted” the rollout timeline.
Transport department secretary Jeroen Weimar told the auditor that HCLTech had paused its work in response to policy changes, including the introduction of free travel for under-18s through the new youth myki.
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Patrick Hatch is a transport correspondent for The Age and a former business correspondent.Connect with: X or email.
