Sydney CBD and South East Light Rail Project Audit and Governance Report

This report provides a comprehensive audit and governance analysis of the Sydney CBD and South East Light Rail Project (2015-2020). It examines key issues discovered in audit reports, including costing and planning problems, and identifies reasons for these issues. The report also provides recommendations for addressing these issues and describes how they affected the project's objectives. Additionally, it analyzes the project's governance structure, identifies governance failures, and outlines lessons learned from the project's experience.

PPMP 20010 - Assessment 2
Project Audit and Governance Reports
PROJECT AUDIT REPORT
Project name: Sydney CBD and south East Light Rail Project (2015-2020)
Date of report: 24/09/2020
Project ownership: Department of Transport
Senior User:
Prepared by:
Distribution list: Customers, shareholders

1 LIST 2 ISSUES DISCOVERED IN THE AUDIT REPORTS (200-300 WORDS)
Costing
Issue
There were costing issues in the CBD and South Eat Light Rail (CSELR) project
(Audit Office, 2018). Stakeholders of such government-based and big projects
are concerned with the outcome of the project. However, the stakeholders
were not given adequate insight information about the management and
execution of the project (Legislative Council, 2018).
The cost of the project has not been regularly updated and thus increased the
problems in meeting the set deadline of the project (Audit Office, 2020). The
estimated cost of the project has been changed which has further increased
the ambiguity regarding the financial management and accountability of the
whole project.
Plannin
g Issue
The project failed to meet its deadline which showed significant planning
issues in the CBD and South East Light Rail (CSELR) project. The New South
Wales rail transport plan has not properly planned and procured which has
put significant delays in the whole project (Audit Office, 2018). The planning
phase of the project neglected the importance of governance arrangements.
Consequently, the roles and responsibilities of the project were not clearly
defined and assigned. The Audit report highlighted that the project
deliverables were not effectively governed and managed in the planning and
execution stages of the project. The stakeholders of the project which
includes community has been consulted form the period 2006 to 2009 but in
the year 2012, the final decision has been made without taking the opinion of
the community (Audit Office, 2018).
2 IDENTIFY 2 REASONS FOR EACH ISSUE FROM AUDIT REPORTS (400-500 WORDS)
Costing
Issue
Reason 1 The CSELR project has went through budgeting issues because it
neglected and ignored the designed procedures. In 2019, the
total cost of the project is re-estimated and costed $2.9 billion
which is published by the contractor (Guardian, 2019). However,
as per the Audit report, the total cost of the project is expected
to exceed the previously estimated cost of 2.9 billion and is
predicted to reach $3.1 billion (Legislative Council, 2018). The
cost has been exceeded due to the omitted cost, limited business
support packages and substantial delays in the execution of
project deliverables (Audit Office, 2020).
Reason 2 The smooth delivery and execution of the project is difficult due
to the considerable increase in the cost of the project. CSELR’s
infrastructure requires huge financial support from the
government and sponsor of the project. However, the project

total cost exceeded due to the tight deadlines. This has led to
overestimation of project’s benefits and underestimation of total
cost. The project failed to consider the financial aspect and the
resultant project’s risk while drafting the plan.
The capital expenses of the project were not valued properly due
to the improper scheduling (Legislative Council, 2018).
Plannin
g Issue
Reason 1 The planning issues regarding the delivery of the project further
increased due to the confrontation between NSW and ALTRAC
(Guardian, 2018). As a result, the project which was expected to
be completed and closed by March 2019 has been delayed by at
least a year Inadequate information about the staffing and
resources has been provided by the ALTRAC (Legislative Council,
2018) which substantially increased the project management
issues.
The information regarding the delays and withdrawal from the
original plan has not been communicated between the two
important stakeholders of the project i.e. New South Wales
transport and ALTRAC (News, 2018).
Reason 2 The audit report reveals that the key assurance procedures have
been ignored in the audit planning. Absence of planning
protocols has also led to mismanagement of the time.
Furthermore, the third-party agreements have also not been
finalized in the planning stage which has put an adverse impact
on the project’s value for money (VFM) and has increased the
project risk.
The pre-planning phasing of the project requires independent
gateway assurance reviews and got its own investment gating
and investment system (Audit Office, 2018). As a result, the
planning procurement failed to get the best value for the state of
NSW transport (Audit Office, 2018).
The project due diligence process that is required to be
performed in the planning phase of the project has fulfilled the
requirements of the NSW government even though the state
transport for NSW has used wrong assumptions (Legislative
Council, 2018).

3 PROVIDE 2 RECOMMENDATIONS FOR EACH ISSUE (400-500 WORDS)
Issue 1 Recommendation
1 –
Stakeholders Requirements
Ambiguity regarding the expectations of the
stakeholders can create budgeting issues for the project.
Effective identification, evaluation and management of
stakeholders demands and requirements hold significant
importance (PMBOK, 2017) in a complex project like
CSELR. Therefore, in order to keep the project under
budget, the demands and expectations of stakeholders
should be carefully identified, documented and
established with the stakeholders and then
communicate among all stakeholders (CIO, 2017). It will
allow the project manager to have a strong grip on all
the stakeholders of the project.
Recommendation
2 –
Set KPIs
The cost of the project has exceeded its estimated
budget. To reduce the risk of the CSELR, the project
deliverables and activities should be monitored on a
regular basis (PMBOK, 2017). Key performance
indicators (KPIs) should be developed to manage the
budget of the project effectively (CIO, 2017). It will assist
the project manager to keep a constant check on the
spending and expenses of the project. Some of the key
KPIs that can assist in the effective management of the
project include
Actual Cost: This will enable the project manager to
know the actual money spent on the project.
Cost Variance: This will allow the project manager to
know that either the project is on the estimated budget
or not
Earned Value: It displays the agreed budget for delivered
project activities up to a specific time.
Planned Value: It shows the projected cost of the
planned activities as of the current date.

Return on Investments: This KPI displays the profitability
of the project and assists the project manager to analyse
the return on the investment.
Issue 2 Recommendation
1 -
Scope of the Project
The planning of the project has affected the time
schedule of the project. Therefore, it is important to set
and define the scope of the project (PMBOK, 2017). The
priorities of the project should be set as per the scope of
the project. The process of information collection along
with the functional management needs to be carefully
performed. The list of deliverables or project activities
and the acceptance criteria regarding the activities
should be clear and carefully drafted (PMI, 2008). It will
enable the project manager to control the project
activities and hence meets the requirements of CSLER.
Recommendation
2 -
Work Breakdown Structure
The work breakdown structure (WBS) should be carefully
designed and ensure that the scope of the project is
decentralized by elaborating the WBS (PMS, 2008). It will
assist in managing the team members of the project.
4 DESCRIBE HOW THE ABOVE ISSUES AFFECTED MEETING THE SPECIFIED OBJECTIVES
OF THE PROJECT (400-500 WORDS)
The objective of the project is to reduce the traffic issues and expand the capacity of the
public transport in Sydney which is putting a huge financial dent on the state every year
(Legislative Council, 2018). Constructing a large rail project was projected to provide
benefit not only the public that will use the transport but also to the surrounding
community. The stakeholder and Community team have worked with a large number of
stakeholders (Acciona, 2020).
Issues of significant nature have raised problems regarding the project schedule and cost
which has put a burden on the overall project and restricted it to achieve its key
objectives. The project is already a year behind its actual scheduled and projected to be
closed by 2019 but the over costing and time mismanagement issues has delayed it for
the additional two months and official completion date is now March 2020 (Legislative
Council, 2018). The costing issues has forced the company to modify the contract with
the ALTRAC and Acciona which has badly affected the related stakeholders of the project.
Due to the poor planning, the project failed to establish an effective communication
between the stakeholders for instance contractors, engineers, supply chain
management, and other stakeholders. As a result, conflict arises between the main

contractor and the state. As per Guardian (2019), increasing costs on the NSW’s $2.9
billion rail project have affected the relationship between the NSW government and the
Acciona which is the leading contractor of the project. According to the audit committee
findings, an increase in cost has not been recommended by Acciona (Legislative Council,
2018). As per the audit committee, Acciona has filed a law suit of 2.1 billion against the
Transport for NSW (Guradian, 2018).
The project is supposed to be completed under the time frame and within its 2.1 bn
budget. However, due to the unsettled claims regarding the alteration of the contract,
delaying penalty and litigation claim between the state of NSW and Acciona, the cost of
the project will exceed the budget of $2.1 billion (Legislative Council, 2018). Therefore, in
order to avoid further litigation claims and to restrict the project under its budget
Transport for NSW should be improvised.
The purpose of the project was to provide financial, economic and social support to the
community (Acciona, 2020). However, the construction of the rail route has an adverse
impact on the residents and businesses due to the recurring delays in the project. Large
number of residents have suffered damages to their houses and have gotten disturbed
due to large construction noises and dust (Guardian, 2018). The state of NSW has offered
an alternate accommodation to the residents but the issue of stakeholder’s
mismanagement still exits. As, the funds that are supposed to be saved will now spend
on the rehabilitation of the houses or on settling the litigation claims.
5 ACTUAL PERFORMANCE: STATE WHETHER FOLLOWING CRITERIA HAVE BEEN MET /
NOT MET/ PARTIALLY MET FOR THIS PROJECT AND PROVIDE REASONS OF NOT
MET OR PARTIALLY MET (200-300 WORDS)
Criteria Met /
Not Met /
Partially
Met
Reasons (Not Met / Partially Met) Criteria
Scope Partially
Met
The scope of the project was quite narrow as the cost was
underestimated and overestimated. Constant changes in the
established procedures regarding the CSELR project which
needed to be set prior to the commencement of the project.
A large amount of the project’s budget has been spent on the
modification of the scope of the project (Legislative Council,
2018).
As per the Audit report of 2014, the benefit of the project
decreased from the $4 billion to a projected benefit of $3
billion as the scope of the project changes constantly due to
the increases in the assumptions regarding the travel time
assumptions (Legislative Council, 2018).
Cost Not Met The cost of the CSELR project exceeded its set budget and
increased by $549 million to $2.1 (Audit report, 2019). The
conflict between the main contractor and NSW transport has

also increased the cost of the project.
Schedule Not Met The schedule of the project has been affected due to the
changes in the scope of the project and delayed it for two
years and four weeks (Legislative Council, 2018). Moreover,
the changes in the infrastructure including additional spare
conduits and increased pits for cables, relocation cost have
also affected the schedule (Guardian, 2018).
Quality Partialy
Met
As per PMBOK (2017), the inherent characteristics need to
meet the requirements of the project. However, the project
has affected the quality of the surronding environment due to
the construction noise, dust and visibility (Legislative Council,
2018).

PROJECT GOVERNANCE REPORT
1 GOVERNANCE STRACTURE & RESPONSBILITIES
2
GOVERNANCE (APX 500 WORDS)
Chosen governance domain:
How were they handled What could have been done
differently to avoid/mitigate
the problems encountered
Function 1: Alignment The project did not meet
the expectation of the
majority of the related
stakeholders.
The project can draft a
detailed benefit
management plan and
evaluate the benefits in
order to align the objectives
of the project with the
expectations of the
stakeholders. A benefit
management plan needs to
incorporate clarity in
relation to the delivery,
measurement and reporting
of individual expected
benefit (Audit Office, 2018).
It will allow each team
leader to assign
responsibilities as the roles
of the staff and will also
bring clarity in the
anticipated benefits of each
project activity. The project
The PMI Practice Guide on the Governance of Portfolios, Programs and Projects describes 4
Governance domains: alignment, risk, performance, and communications. Each domain has the
following functions: oversight, control, integration, and decision making.
Based on the case study provided, discuss two (2) of the above functions of your choice in one of
the governance domains, how they were handled and how they could have been done
differently to avoid the problems encountered during the life of the project, e.g. performance
PRINCE2 states that the project board should have the overall responsibility for governance of
the projects.
Please provide the governance structure and describe the responsibilities of at least three
project board members in a tabular format in the context of the case study provided.

director needs to gather
sufficient data regarding the
expectation of the relevant
stakeholders. This data
should then be compared
with the actual or delivered
service in order to assess
the benefits of the project.
(Audit Office, 2018).
According to Audit Office
(2018), the projected
benefits needs to be
measured and aligned to as
per the needs of the
stakeholders which includes
agencies and public. Any
delays and changes in the
project should be
communicated timely to the
stakeholders in order to
meet their expectations.
Function 2: Communication The communication
between stakeholders
were not handled
properly
Communication is necessary
in the effective
management of such
complex projects as it
allows the company to
understand the
requirements of the
stakeholders which in turn
helps in improving the
performance of the project.
With regards to government
projects, interaction and
consultation with all the
stakeholders is important.
An effective integrated
communication channels
should be developed to
ensure smooth flow of
information from the
initiation phase to the
completion phase of the
project (PMBOK, 2017).
Stakeholders of the CSLER

project requires effective
communication from the
concerned departments. To
improve the governance of
the project, the
stakeholders should be
engaged through all the
stages of the project in
order to understand their
requirements and
expectations.
All necessary information
regarding the cancellation,
modification or changes in
the project scope, cost,
schedule or deliverables
need to be communicated
regularly to all the relevant
stakeholders.
The information needs to be
communicated by the state
departments in order to
improve the transparency
of the project. The
framework of the project
should incorporate the key
principles of the
communication and should
be given priority in all the
activities.
Risk management
procedures and decision-
making processes should be
communicated in order to
ensure that the project is
complying with the rules
and regulations. This will
help in mitigating or
resolving any potential
conflicts. Any discrepancies
regarding the project should
be discussed by conducting
regular meetings with the
contractors and
government agencies.

Additionally, the project can
include the participation of
the public via different
forums and advisory
meeting in order to improve
the overall transparency of
the project (Audit Office,
2018).
3 DESCRIBE 3 GOVERNANCE FAILURES AND REASONS (400-500 WORDS)
Failure 1-
OverIsght
Oversight
The project failed to meet the expectations of the stakeholders. There were
gaps in the overview of the outsourced and third-party agreement which
includes commissioning and partnership which is a key governance failure of
the project (Audit Office, 2018). The project did not measure and evaluate
the outsourced activities of the project and relied solely on the contractors.
This ultimately increased the conflict between the Accion and NSW
transport. The Minister for Transport has given the responsibility to the
Sydney Light Rail Advisory board to oversee the project and provide
independent assurance (Audit office, 2018). The TfNSW has to report to the
secretary for TfsnW but it followed at the start of the project but in the later
years it reported to the Deputy Secretary Infrastructure and Place (Audit
office, 2018). This displays inconsistency in the governance of the project
which affects the project oversight
Failure 2 Transparency
Transparency is crucial as it enables learning and leads to accountability and
improves the performance of the company (Reich, 2018).
The stakeholders of the project require transparency from the public govern
project. However, the project failed to meet the transparency requirement
of the project. As per the audit report, the information provided by the
transport for NSW was inconsistent and has not provided the regular update
regarding the cost of the project and thus limits the transparency of the
whole project (Audit Office, 2019).
Failure 3 Control
The CSELR project did not put adequate controls and as a result failed to
meet the requirements of the project by delaying the project and increasing
the total cost of the project. Even though, it has been assumed that delay is
part and parcel of the project but it has affected large number of
stakeholders including residents and businesses as the governance of the

project has not been carried out effectively. It is the responsibility of the
CSELR Project Control Group to monitor the funds of the project and revise
the projections however Transport for NSW did not deliver regular FPR
report (Audit Office, 2018).
There was also lack of clarity and control on the strategic decision-making
process of the project which has increased the ambiguity regarding the
meeting of the project’s deliverables.
Record keeping should which is key legal requirement and is essential for the
good governance will increase the accountability of the CSELR project (Audit
Office, 2018) and hence allows the project manager to improve the control
system. However, it showed that the project failed to provide necessary
domination to the contractors which in turn increased the total cost of
project.
4 DESCRIBE 3 LESSONS LEARNT AND REASONS (400-500 WORDS)
Lesson 1 Comprehensive Strategic Analysis
A detailed strategic analysis is essential in the business case as it helps the
project director to manage complex project effectively. Analysing the
disruption cost at the planning phase of the project can help in limiting any
interruption in the project (SMH, 2019). A comprehensive strategic analysis
will enable in identifying the most suitable options and allows in qualifying
the economic, financial, social environmental benefits of the railway project
and helps in evaluating its value for money. An independent assurance
through receiving the critical review of the management of the project can
also be part of strategic analysis as it helps in overseeing the procurement
and delivery stages of the project (Legislative Council, 2019). The
expectations and requirements of the community and businesses that are
located near the constructions area should be identified prior to the
commencement of the project as it will save the disruption cost and will help
in mitigating the project risks. For instance, when to shift, where to relocate
and how much compensation should be required.
Lesson 2 Adequate Flow of Information
Information regarding the project activities, deliverables and cost should be
communicated to the relevant parties especially with the outsourced ad
small businesses on a regular basis. The commination government with the
outsourced and small businesses need to be focused on. The government
which is carrying out a $90 billion infrastructure project could improve its
communication with the small businesses (SMH, 2019). Communicating the
project information can improve the transparency of the project and can help
in removing any ambiguity regarding the execution of the project.
Communication strategy should be developed after taking into concerns of all

the main stakeholders in order to implement the changes in the project as
per their expectations.
Lesson 3 Decision Making
Complex projects are difficult to manage as the success of the project is
dependent on large number of stakeholders. Therefore, small decisions can
have a large impact on the performance of the project. Analysing the benefits
of the project through all the stages of the project helps in taking right
decisions at the right time even when the decisions are not currently
commercially feasible. Decisions regarding how will the project will be
delivered, who will deliver the tasks and when will it be delivered is crucial.
Therefore, carrying out benefit management plan throughout the life of the
project will helps in making effective decision making and allows the project
director to deliver the project successfully. Furthermore, it is essential to take
the decision as per the legal requirements in order to avoid any litigation
claims as it can affect the reputation of the government project.

References
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light-rail/
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<https://www.news.com.au/technology/innovation/sydney-light-rail-extension-a-
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