How much did the City Loop cost to build?

One might think that finding out how much Melbourne’s City Loop cost to build would be a simple task, but with so much conflicting information out there, it was much harder than I expected. So where did I have to look?
Comeng arriving into Melbourne Central platform 4

I started off at Wikipedia, and they put the final cost as $500 million, citing a Metropolitan Transit Authority publication from 1985.

I then stumbled upon the annual reports of the Melbourne Underground Rail Loop Authority, the government body responsible for planning, financing and constructing the Melbourne underground rail loop. Their 1971-72 annual report had the following to say on the cost:

The engineering consortium of John Connell- Mott, Hay & Anderson, Hatch Associates Inc., and Jacobs Associates was commissioned in August 1971 to prepare a pre-design report for the construction of the Loop.

The Consultants presented their report in February 1972. The report was comprehensive and confirmed the basic concept of a four tunnel, three station system. It also included a conceptual design of the Loop and detailed cost estimates therefore, possible variations of the plan (the cost of which does not materially alter the total cost estimate) and detailed proposals for project management under the Authority’s direction.

The construction cost estimate of the basic plan adopted by the Authority is $117.23 million excluding land acquisition which may be separately financed, signalling and communications (which will largely be Victorian Railways’ matters), and administrative and service costs including consultancy fees and interest on monies borrowed. This estimate is based on prices current in the last quarter of 1971.

As early as 1974 concerns had been raised about the completion date being delayed.

In its initial 1971 planning the Authority scheduled the completion of the Loop for mid-1978 to accord with the expectation indicated by the Minister of Transport when the Authority was formed. That completion date was dependent upon the Authority’s loan allocation in each year being sufficient for its planned works programme. Limitations on the Authority’s loan allocation for 1972/3 and 1973/4 have resulted in the date for completion of the Loop being re-scheduled for the end of 1980 – with provision for the first trains to run through it by December, 1978.

The cost of the project had also started to climb.

Due largely to the increases in price of materials and labour that figure has now increased to $162.78 million based on April 1974 prices.

In each of the years that followed, the estimated cost increased and the opening date was moved further back – by mid 1977 the authority was now aiming for the first train to run in late 1979.

The Authority experienced a year of vigorous progress in all sections of the loop. The program was maintained providing for the opening of the Burnley loop and Museum Station in December 1979 and completion of all works in 1982. The estimated cost of the project rose 9% to $328 million reflecting the overall inflationary trend.

As for the cost increases, these were attributed to an increase in project scope, as the 1977-78 MURLA annual report details:

The revised construction cost estimate of the basic plan adopted by the Authority in 1972 (then estimated as $117.23 million at last quarter 1971 prices) is $252.7 million updated to June 1978, prices. The revised basic construction cost includes the cost of technical improvements including a high quality track support system to minimise vibrations transmitted through the ground to nearby buildings.

Within the provisions of the Melbourne Underground Rail Loop Act 1970, as amended, various changes have been made progressively to the scope of the project which was adopted in 1972. The cost of these items, together with the cost of land acquisition, signalling and communications and administrative and service costs including consultancy fees, updated to June 1978, prices, is estimated to be $114.3 million.

Both construction and other costs continued to increase in the following years – with the 1979-80 MURLA annual report pushing back the first train even further.

The loops scheduled to be ready for operation in 1980 concurrently with Museum Station are the Burnley and the Caulfield-Sandringham. The Clifton Hill loop / City Circle and Parliament Station are planned to be available for operation by the end of 1981 and the North Melbourne loop and Flagstaff Station by the end of 1982.

In their 1980-81 annual report the authority celebrated the opening of the first part of the loop, but also pushed out the completion date of the remainder of the project.

The west booking hall of Museum Station is planned to be operational in the second quarter of 1982, followed by the south booking hall of Parliament Station in the third quarter. Flagstaff Station and the north booking hall of Parliament Station are planned to be transferred to VicRail during the first quarter of 1983, and the remaining loop for the lines through North Melbourne is planned to be transferred by mid 1983.

In 1983 the new Transport Act was passed and the Melbourne Underground Rail Loop Authority was merged into the newly created Metropolitan Transit Authority, so the 1981-1982 MURLA annual report was their last – construction cost estimates being as follows:

The revised construction cost estimate of the basic plan for the construction of the Loop adopted by the Authority in 1972 (then estimated as $117.23 million at last quarter 1971 prices) is $287.20 million updated to June 1982 prices. This estimate and the earlier estimate exclude land acquisition, signalling and communications, and administrative and service costs including consultancy fees.

Within the provisions of the Melbourne Underground Rail Loop Act, as amended, various changes have been made progressively (as previously reported) to the scope of the project which was adopted in 1972. The cost of these changes and the exclusions stated above (but not including the cost of land acquired specifically for redevelopment) is currently estimated a $178.90 million. On this basis the total estimate as updated to June 1982, prices is $466.10 million.

The previous completion date of mid 1983 came and went, so it was the Metropolitan Transit Authority that took the credit in their 1984-85 annual report for the opening of the final stage of the City Loop – only seven years behind the initial estimates made in 1971!

Highlights this year included the opening in May 1985 of Flagstaff, the final station to be completed in the 18km of rail track in the underground Loop. The $650 million Loop project, one of the largest undertakings in Melbourne’s history,carries more than 600 trains per day.

So in the end I’ve got something resembling an answer – the City Loop cost between $500 and $650 million to build at 1985 prices, the exact figure varying if land acquisition, signalling and communications costs (funded by the Victorian Railways) and administrative and service costs (such as consultancy fees and interest on monies borrowed) are included.

A comparison

Run the construction cost figures through the Reserve Bank’s inflation calculator and the City Loop cost $1.3 to $1.7 billion to build at 2013 prices – about the same as adding a lane to the Monash – CityLink – West Gate Freeway corridor between 2007 and 2010.

However a simple indexation won’t tell us how much it would cost to build the City Loop today – construction expenses have risen much faster than inflation in the past decade, which would put the final dollar figure far higher. Alan Davies delves deeper into the issue in his blog posts “Why is infrastructure so bloody expensive?” and “Why do subways cost so much more here than elsewhere?“.

Tracking the cost increases

I have tabulated the “construction” and “total minus interest” figures from each Melbourne Underground Rail Loop Authority annual report – all figures are in $ millions, and have not been adjusted for inflation.

Year Construction only Total, minus interest
1972 117.23 ?
1974 162.78 ?
1975 192.6 255.6
1976 226 301
1977 244 328
1978 252.7 367
1979 260.7 398.4
1980 273.7 426.82
1981 279.4 446.08
1982 287.2 466.1


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16 Responses to “How much did the City Loop cost to build?”

  1. Llib says:

    Its probably very difficult to compare the cost of construction of a subway 30-40 years ago to today.
    It is not only construction costs but all sorts of other requirements today that you did not have in the 1970’s and early 1980’s. Requirements for a major project were much less detailed as compared to today, things such as planning permission, environmental effects statements, access and amenity requirements, mitigation of impact of construction, public consultation, etc.

    Additionally that area of the CBD wasn’t as developed as today it was much lower density and semi industrial. The size of Victoria’s economy has also risen significantly since then and the $500 million cost of the project would have been quite expensive (although worth it) versus the size of the Victorian economy at the time.

    • Marcus Wong says:

      Evaluating the costs that modern day requirements place on major construction projects would be quite the exercise!

    • J A says:

      “The CBD wasn’t as developed” Doesn’t explain SRL costing so damn much though. I did the math comparing that financially to Sydney Metro and Perth’s Airport Rail and it would cost 5B$ to build in Perth and 7-8B$ to build in Sydney. I think there’s something genuinely shady going on there… if anything, it should be cheaper to build because it’s a new line (Use round-roof, Ground-Level Third-Rail trains for smaller tunnels) and because the topography would allow for mostly cut-and-cover construction, but the government ignores those opportunities.

  2. Bobman says:

    Just imagine what it would have cost had Labor built the project.

    Labor themselves sold off the remaining Doncaster railway reserve and then bankrupted the state of Victoria under Cain and Kirner.

    Put simply, if this project were to be needed today, it would never have happened. Like or hate Liberal, they were the ones who moved the city into modern times under Hamer and then decades later Kennett.

    • Marcus Wong says:

      In Victoria we had Liberal premiers between 1955 until 1982 – when I think of the ‘cost had Labor built the project’, industrial action is what comes to mind.

      The 1976 annual report for the MURLA had the following to say on the topic:

      The Authority’s contractors experienced their worst year of industrial disruption on Loop work and about 21% of the total work time available was lost because of union action.

      And from their 1980 annual report:

      Strikes and other industrial action resulted in loss of about 3.2% of total work time available, compared with 3.3% in the financial year 1977/78.

      Any attempt at determining if a different party being in government would have changed the overall cost would be an rather partisan exercise.

  3. Andrew S says:

    You get a similar cost creep for electrification extensions – the whole upgrade of the 130km of Gippsland Line in the 1950’s with duplication and regrading of sections and electrification to Traralgon has conflicting figures between

    • Marcus Wong says:

      Thanks for those examples Andrew – they show quite clearly how only adjusting for inflation will give a misleading result when comparing projects completed during different periods.

  4. Llib says:

    I wonder if anybody here knows if a TBM was used for the construction of the city loop.

  5. mich says:

    Given the rampant inflation of the 1970’s, an increase from $117m to $650 seems quite moderate, and well-estimated, particularly as there were additions to the project.

    It is certainly a better prediction than many of the more recent projects, which don’t have inflation as an excuse.

  6. wxtre says:

    The inflation costs relating to underground railway lines in Australia could possibly be measured by using Sydneys underground train network as a comparison. Considering they have constructed underground raillines between the period from 1980 and today

    The City Circle (1920/30s)

  7. wxtre says:

    – The Eastern Suburbs Railway (1979) – $168 million. 10 km – 7 underground stations.

    – The Airport Line (2000) – $900 million. 9 Km – 4 underground stations.

    – The Epping to Chatswood rail link (2009) $2.3 billion. 13 km – 4 underground stations.

    – North West Rail Link (2019) – $8.3 billion. 23 km – 1 cutting, 4 underground and 2 above ground stations

  8. Jacob says:

    The cost should also be recorded in terms of the cost of platinum and gold. To give us a really good idea about cost over time.

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