Over the past fifteen years, Australian governments have spent $28 billion more on transport infrastructure than they told taxpayers they would. The cost overruns amounted to nearly a quarter of total project budgets. Western Australia’s Forrest Highway between Perth and Bunbury cost nearly five times, and New South Wales’ Hunter Expressway cost over four times, the amounts initially promised. Yet despite their sometimes staggering size, cost overruns attract little public attention. There is little interest in understanding and fixing the underlying causes.

For the first time in Australia, this report investigates the cost outcomes of all 836 projects valued at $20 million or more and planned or built since 2001. It finds that most problems are caused by a relatively small number of projects. Ninety per cent of Australia’s cost overrun problem is explained by 17 per cent of projects that exceed their promised cost by more than half.

Premature announcement – when a politician promises to build a road or rail line at a particular cost, often in the lead-up to an election – is the biggest culprit. Although only 32 per cent of projects were announced early, these projects led to 74 per cent of the value of cost overruns over the past 15 years. Prematurely announced projects need larger cost upgrades not just early on, but throughout their funding approval and construction phases.

Analysing cost overruns from the first funding promise is not common practice, but it should be. Once politicians have announced a project, they and the public treat that announcement as a commitment. They are right to do so: two thirds of these projects end up being built.

Promising to build infrastructure for less than it finally costs makes infrastructure projects seem more attractive than they really are. Under- stating costs also makes it impossible for decision-makers to differentiate good projects from bad ones. With more accurate numbers, we would often spend the money on other priorities.

All main political parties have committed to sound analysis and planning of infrastructure, to avoiding waste, and to making decisions with broad social benefit. But in practice they continue to announce projects before they have been properly assessed.

Governments should have to table business cases in parliament when committing to projects. Stand-alone legislation should be used for big projects to encourage bipartisanship when risk and complexity are high. Once a project is completed, governments should report to the public on how it performed against the cost-benefit estimates behind the original investment decision.

Producing more reliable cost estimates is vital. Current cost estimation guidance is inconsistent, omits valuable tools, and can’t draw on previ- ous projects because we don’t collect the data. Governments set aside large contingency funds for every project, and on many projects this is ultimately spent on add-ons that are poor value for money.

Even today, multi-billion dollar projects such as Melbourne’s Western Distributor, Sydney’s WestConnex and the Inland Rail between Mel- bourne and Brisbane have much less provision for the worst case than experience would lead us to expect. We must start to learn from history. Our infrastructure systems should promise what is worth having, and then deliver what is promised.