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IntroductionIn 2015, Australian, state and territory governments cooperated to produce the first national pilotbenchmarking of infrastructure procurement processes and road construction costs (Transportand Infrastructure Council 2015). In addition to presenting benchmarks, the pilot study outlinedplans for continued and improved future monitoring. This report presents updated benchmarkresults derived from project cost and procurement performance data for projects completedsince January 2015.The Bureau of Infrastructure,Transport and Regional Economics (BITRE), undertook the analysisunder the direction of the Infrastructure Working Group Benchmarking sub-group (IWG subgroup). Jurisdictions provided data related to a selection of their infrastructure procurement androad construction projects. This report also benefits from state and territory agency advice onthe specifics of their projects.Consistent with the Productivity Commission’s recommendation and the 2015 pilot study,the benchmarks are strategic in nature (Productivity Commission 2014). Since the pilot studywas completed, BITRE and the IWG subgroup have reviewed the suitability of the cost andprocurement benchmarks.That review recommended removal of some superfluous benchmarkinformation and collection of more information regarding the causes of cost differences andprocurement delays.Given the distinct nature of infrastructure procurement and road construction cost benchmarks,this report has two parts. Part R presents the road construction cost benchmark results and PartI presents benchmark measures for infrastructure procurement processes. Each part describesthe selected benchmarks, the data provided by jurisdictions and results of the benchmarkingprocess. The 2017 sample benchmarks are compared with the 2015 sample benchmarks andvariability between projects is also explained. Part R also includes two appendices that providemore explanatory material. Appendix R.A presents the Austroads’ road class definitions andAppendix R.B presents benchmarks for the combined 2015 and 2017 data sets. 1

PART RRoad construction cost performanceRoad construction cost benchmarksThe road construction cost benchmarks presented in this report largely replicate those in the2015 pilot study (Transport and Infrastructure Council 2015).They also accord with similar UKGovernment indicators (for example, UK Government 2014).The whole-of-project benchmark is the cost per lane kilometre by road class. Additionally, thereport separately presents costs for project management, design and investigation, propertyacquisition and construction cost components. Client-supplied design costs were excluded fromconstruction costs. Contractor-supplied design costs were excluded from construction costsand included in design and investigation costs.Within the sample returns, road construction costs are disaggregated further into the followingcomponents: environmental works client-supplied materials and constructionservices traffic management and temporary works public utilities adjustments pavements traffic signage, signals and controls finishing works retaining walls bulk earthworks drainage supplementary items tunnels bridgesThis report benchmarks pavement, bridge and bulk earthworks costs together with public utilitiesadjustments and supplementary items as a share of construction costs.Some jurisdictions provided additional information on local climatic conditions and project terrainfor some projects as recommended in Transport and Infrastructure Council (2015).The study sample covers motorways, freeways and ar terial roads. There were no localroads included in the project sample. The relevant Austroads’ roads classes are rural roadclasses 1 to 3 and urban road classes 6 and 7. Appendix R.A provides Austroads’ definitions ofthese road classes. 3

BITRE Road Construction Cost and Infrastructure Procurement Benchmarking: 2017 updateRoad construction project data setFor the 2017 benchmarking update, seven jurisdictions provided data for a combined 32 projects.BITRE omitted two additional projects from the sample because one project return was incompleteand the other project was out of scope for this analysis.The majority of road projects were locatedin rural areas (classes 1 to 3). Around two-thirds of the projects involved major rural arterial roads(class 1) or urban freeways or motorways (class 6), see Table R.1.Table R.1Road construction projects by road class and jurisdictionRoad classJurisdictionab1234567AustraliaClass 1231410011Class 201010035Class 301300004Class 6101412110Class 700001102All classes355933432a.BITRE has randomly assigned responding jurisdictions a number between 1 and 7.b.Austroads’ road classes (see Appendix A for details).Source: BITRE based on data provided by jurisdictions.The 2017 project sample featured five different procurement methods. Sixteen project wereunder taken using construct-only contracts (see Table R.2), and a fur ther 12 projects wereundertaken under design and construct (D&C) contracts. Other procurement methods usedacross the sample projects included managing contractor contracts (1 project), early contractorinvolvement (1) and alliances (2). There were no Public–Private Partnership (PPP) projectsincluded in the 2017 cost benchmarking project sample.Table R.2Road construction projects by procurement methodContract typeNumber of projectsConstruct only16Design and construct12Managing contractor1Early contractor involvement1Alliance2PPP0Source: BITRE based on data provided by jurisdictions.Both project size (in terms of lane kilometres) and total project costs vary significantly acrossthe sample. (See Table R.3 for the average project size and cost together with other statisticalmeasures.) Half of the sample projects cost less than 53m and three-quarters cost less than 142m. A small number of very large projects, including one costing 928m, raise the meanproject cost to almost three-times the median. Similarly, for project size, the majority of projectsin the sample are relatively short. Three-quarters of projects are less than 47 lane kilometreswhereas the largest is 263 lane kilometres. 4

Part R Road construction cost performanceTable R.3Statistical summary of road construction projects costs and sizeStatistical measureProject costLane kilometres mkmMean15744Standard Deviation23657MinimumFirst quartileMedian9222105524Third quartile15847Maximum928263Source: BITRE based on data provided by jurisdictions.Road construction cost performanceNational outcomesPer lane kilometre average costsTable R.4 demonstrates that higher-grade roads have higher average per lane kilometre coststhan lower grade roads. At 5.4m per lane kilometre, the average cost of class 1 rural roads ismore than four times the average cost of class 3 rural roads. Similarly, the average cost of class6 urban roads is 0.5m per lane kilometre higher than the average costs of class 7 urban roads.Table R.4Average per unit project cost by road classCostClass 1Class 2Average total cost5.4(4.0)3.8(2.1)Standardised average cost a5.0(4.0)3.3(1.8)Class 3Class 6Class 71.0(1.2)6.8(8.2)6.3(4.3)0.9(1.1)6.2(7.4)6.0(4.1)( per lane kilometre)a.Average total cost less property acquisition and supplementary costs.Note:Standard deviations are presented in parentheses.Source: BITRE based on data provided by jurisdictions.While road class is an important determinant of road construction costs, the variability in costswithin each road class, seen in the standard deviations in Table R.4 and in Figure R.1, indicatesthat it is not the only factor.Median road costs are generally lower than average project costs meaning that a small numberof high cost projects are driving up the sample average. 5

BITRE Road Construction Cost and Infrastructure Procurement Benchmarking: 2017 updateFigure R.1 Statistical measures of per lane kilometre project cost by road classAverage project cost ( million/lane kilometre)3020100Class 1Class 2Class 3Class 6Class 7Road classNote:The line represents the median of the data, the edges of the box the 1st and 3rd quartiles, the whiskers are furthestmost data point within 1.5 times the length of the box, the dots are outliers.Source: BITRE based on data provided by jurisdictions.Property acquisition costs may vary significantly between and within jurisdictions because ofvariability in land values. Excluding these costs, allows for the comparison of those costs that areless likely to vary across jurisdictions. Many projects do not incur any property acquisition costs.In the 2017 sample, 12 projects have no property acquisition costs. Four projects have propertyacquisition costs that comprise more than 10 per cent of costs and for one project they comprisemore than 20 per cent of total costs. Average property acquisition and supplementary item costsrange between 0.1m and 0.6m and between 5 and 15 per cent of total costs.Project cost breakdownThe project cost breakdown, shown in Figure R.2, separates construction costs from othercosts: project management, property acquisition and design and investigation.These data enablesjurisdictions to identify an average proportion of costs attributable to overheads. At a nationallevel, construction costs for class 3 rural roads comprise a significantly higher share of total coststhan all other road classes.This result may be a function of low land prices in rural Australia andless complex design requirements for these roads, relative to higher-standard roads. 6

Part R Road construction cost performanceFigure R.2 Average cost shares by road class100908070Per cent6050403020100Class 1Class 2Class 3Class 6Class 7Road classConstructionDesign and investigationProject managementProperty acquisitionSource: BITRE based on data provided by jurisdictions.Construction costs breakdownDifferences between road classes in construction costs and per unit pavement and bulkearthworks component costs follow a similar pattern to total project costs. As Table R.5 shows,class 1 road projects have the highest average component construction costs across all therural road classes and class 6 projects have higher costs than class 7 projects among urbanroad projects.Table R.5Average construction cost benchmarks, by component and road classCost BenchmarkUnitsClass 1Class 2Class 3Class 6Class 7 m/lane km4.6(3.6)3.1(1.7)0.9(1.1)5.3(6.4)5.1(3.9)Pavement /sq. m114(74)69(64)32(9)233(42)126(.)Bridge /sq. m6 444(3 588)6 106(4 975)4 177(.)5 531(1 972)naBulk earthworks /cu. m129(21)44(34)15(30)72(47)29(21)Utilitiesper ementary itemsper structionnaNot available – no projects in this category.Not applicable – only one project in this category.Note:Standard deviations appear in parentheses.Source: BITRE based on data provided by jurisdictions. 7

BITRE Road Construction Cost and Infrastructure Procurement Benchmarking: 2017 updateThe cost of bridge construction declines between road classes 1 and 3, potentially reflectingless complex construction. Within road class costs vary substantially. For example, the sampleincludes only two class 2 projects with bridges: one had unit bridge costs of 9634 per squaremetre and the other 2588 per square metre.The average costs of moving utilities differ from other components in that they represent a far highershare of urban road construction than of rural road construction, between 6.7 and 11.2 per centcompared with less than 2 per cent. The result arises from the need for additional services inurban environments.In contrast to utilities, the average costs of supplementary items comprise a far higher share ofconstruction costs for rural roads than urban roads: between 9 and 12.5 per cent across thethree rural road classes and less than 5 per cent for the two urban road classes. No obviousreason exists for this difference and the sample returns do not identify the nature of thesesupplementary costs.The variability within each of the components of construction costs is reflected in the variabilityof per lane kilometre construction costs, see Figure R.3.Figure R.3 Statistical measures of per lane kilometre construction costs by road classAverage project cost ( million/lane kilometre)2520151050Class 1Class 2Class 3Road classSource: BITRE based on data provided by jurisdictions. 8 Class 6Class 7

Part R Road construction cost performanceBenchmarks by jurisdictionSeven jurisdictions provided data for the 2017 update: New South Wales,Victoria, Queensland,South Australia, Western Australia, Northern Territory and the Australian Capital Territory. Eachjurisdiction was allocated a number between 1 and 7 (in no particular order) for reporting resultsin the remainder of this paper, to maintain confidentiality.Average per unit costsBeginning with the total costs shown in Table R.6, the data shows noticeable differences betweensome jurisdictions. In particular, average project costs in jurisdictions 1 and 4 are below theAustralian average across all road classes, whereas, jurisdictions 2 and 7 exhibit project costsabove the Australian average across all road classes.Table R.6Average project costs by jurisdiction and road classRoad classJurisdictiona1234567Australia( m per lane kilometre)Class Class 2na4.4(.)na0.3(.)nana4.8(1.0)3.8(2.1)Class 3na2.8(.)0.4(0.1)nananana1.0(1.2)Class .2)Class 7nananana9.3(.)3.3(.)na6.3(4.3)naNot applicable – no projects in this category.Not available – only one project in this category.a.BITRE has randomly assigned responding jurisdictions a number between 1 and 7.Note:Standard deviations appear in parentneses.Source: BITRE based on data provided by jurisdictions.Omitting property acquisition costs and supplementary items changes the relative performanceof jurisdictions only marginally (see Table R.7). The major exception being the one class 6 roadlocated in jurisdiction 7. Its property acquisition costs are sufficiently high that total costs arewell above the Australian average, but after excluding property acquisition costs, its cost arearound the Australian average.Interpreting the results by jurisdiction requires some caution because sample sizes are small.Jurisdictions may benefit from comparing the results presented here with other road constructionprojects they have recently undertaken. 9

BITRE Road Construction Cost and Infrastructure Procurement Benchmarking: 2017 updateTable R.7Standardised average project costs by jurisdiction and road classRoad classJurisdictionb123Class 11.8(0.7)9.4(2.7)9.8(.)Class 2na4.3(.)Class 3naClass 6Class anana8.9(.)3.1(.)na6.0(4.1) m per lane kilometrenaNot available - no projects in this category.Not applicable – only one project in this category.a.Average project costs excluding property acquisition and supplementary items.b.BITRE has randomly assigned responding jurisdictions a number between 1 and 7.Note:Standard deviations appear in parentheses.So

Road construction cost performance Road construction cost benchmarks The road construction cost benchmarks presented in this report largely replicate those in the 2015 pilot study (Transport and Infrastructure Council 201 5). They also accord with similar UK