Making the case for vital upgrades to Victoria’s rail freight network to create the conditions for industry investment and improved export competitiveness.
The Murray Basin is a nationally significant region for grain, mineral sands, fruit, vegetables and wine production. Much of this product is exported via the Ports of Portland, Geelong and Melbourne and is transported using the region’s road and rail network. Although rail has a natural advantage over road for bulk freight products over long distances, a lack of rail investment has diminished this advantage despite increasing volumes of freight.
Advisian was appointed by the Department of Economic Development, Transport, Jobs and Resources (DEDJTR) to help build a cogent case for significant rail freight investment in the Murray Basin Region. The project is designated a High-Value High-Risk (HVHR) project by Victorian Treasury, which means the business case attracts a high degree of scrutiny and review.
In addition to overseeing the overall business case, Advisian’s particular roles included:
Articulating and assessing the problems to be solved
Canvassing strategic interventions to address these problems
Preparing the benefits management framework including the higher-level outcomes to be achieved
Preparing risk-adjusted cost plans for each of the proposed project options.
Working with the client team and project stakeholders, and engaging directly with key industry groups, Advisian identified and documented comprehensive evidence and case studies of key export supply chain issues in the region.
These issues included declining performance of the rail network, lack of competition between rail operators and a lack of port contestability due to the different rail gauges across the region. Advisian identified the significance of these issues to the economy.
Advisian elicited, tested and articulated the benefits to be delivered by the project, including critical quantitative measures and key performance indicators for each investment benefit. Advisian linked these benefits to the project’s governance to ensure they will be realised as intended.
Advisian’s depth of understanding of the problems and benefits in the region enabled a convincing analysis of a broad range of supply, demand and productivity interventions. This led to an optimal strategic option which took a holistic approach to addressing freight inefficiencies and barriers to export competitiveness by focusing on improving rail infrastructure and connectivity.
The Advisian team developed a clear framework for defining and evaluating the core project scope, including that relating directly to State investment, as well as enabling and supporting infrastructure and industry co-investment. This proved important in communicating and agreeing the project’s assumptions and scope to stakeholders.
A detailed appraisal of costs and risks was undertaken in accordance with Commonwealth’s and Victorian Treasury’s best practice guidelines. Despite limited availability of information, Advisian’s substantial experience and understanding of cost drivers and risks was crucial in DEDJTR obtaining agreement to these costs from the deliverer (V/Line) and from Treasury via its HVHR independent review.