Auckland Rail Link Cost Could Have Been Halved, Former Boss Claims

Key facts

• City Rail Link final cost expected to reach $5.5 billion.
• Original City Rail Link budget was $3.4 billion.
• Sean Sweeney previously led the City Rail Link project for six years.
• Sweeney now oversees Dublin's MetroLink rail project.
• Unemployment for 24-29 year olds is at its highest since 2013.
• 400,000 New Zealanders are underemployed or under-utilised.

Cost Overruns Plague New Zealand's Infrastructure

New Zealand's most ambitious infrastructure projects are succumbing to significant cost blowouts, a trend that must be halted, according to a leading figure in the sector. Sean Sweeney, an infrastructure heavyweight and former chief executive of Auckland's City Rail Link (CRL), asserts that the nation's tendency to over-specify projects is making them prohibitively expensive, thereby limiting the number of initiatives that can be undertaken. Sweeney's candid assessment comes as the final price tag for the CRL is projected to hit $5.5 billion. This figure represents a substantial escalation from the project's initial budget of $3.4 billion. Inflation, shifts in project scope, and the global pandemic have all been cited as contributing factors to this dramatic increase. His critique suggests that decisions made early in the planning stages, such as the design of stations, could have yielded substantial savings. Sweeney posits that approximately $2 billion might have been saved on the CRL alone had different specifications been adopted.

A Former CEO's Blunt Assessment

Dr. Sean Sweeney, who led the CRL project for six years before departing for Dublin's MetroLink rail project, admits his outspoken views might alienate some colleagues. Yet, he stands by his assessment that New Zealand's approach to project specification is fundamentally flawed. "I do believe we’re not very good at specifying the scope, and I do believe in New Zealand we’re over-specifying jobs, and it’s making them too expensive, which means we do less of them," Sweeney told the Herald in an exclusive interview. When directly asked if the City Rail Link was an example of this over-specification and excessive cost, his response was unequivocal: "I’m not going to make any friends for saying this, but in a nutshell, yes." Sweeney acknowledged that with the benefit of hindsight, he would have approached certain aspects of the CRL differently. His tenure saw him navigate the escalating costs and associated challenges of the massive urban transit undertaking.

International Perspective on Project Management

Sweeney's time leading Dublin's MetroLink project has provided him with a valuable international perspective on infrastructure development. Initially, upon his move to Ireland two years ago, he harboured the view that European projects were executed with superior efficiency. However, his experiences abroad have led him to a more nuanced conclusion. "When I left to go to Ireland, I had a view that they were doing a whole lot of things better than New Zealand. I’d probably say that’s not as clearcut as I thought it was, and I think New Zealand is doing some things better than Ireland, particularly in planning and speed to getting things built," he stated. This comparative analysis, informed by visits to cities like Copenhagen, has sharpened his critique of domestic practices. The insights gained abroad have reinforced his belief that New Zealand's own planning processes, despite the perceived issues with scope, possess certain strengths.

Broader Economic Concerns in New Zealand

Sweeney's commentary on infrastructure spending unfolds against a backdrop of wider economic challenges facing New Zealand. The nation is grappling with significant underemployment, with 400,000 individuals currently under-utilised in the workforce. Furthermore, specific demographic groups are experiencing heightened economic insecurity. The unemployment rate among those aged 24 to 29 has reached its highest point since 2013, signalling a particularly difficult period for younger New Zealanders entering or navigating the job market. These economic indicators underscore the critical importance of efficient and cost-effective public spending. The debate over project specifications and cost blowouts, therefore, extends beyond mere construction budgets to encompass broader societal and economic well-being.

The Trade-offs of Cost-Saving

While Sweeney's assertion that the CRL could have been built for half its current projected cost is striking, he cautions that such savings would have fundamentally altered the project's final form. A less expensive version would inevitably have looked very different, implying a compromise on certain features or scale. The former CEO's critique is not solely focused on the CRL, but on a systemic issue within New Zealand's approach to major infrastructure. The tendency to "gold-plate" projects, adding features and specifications beyond essential requirements, inflates costs and can deter investment in other vital areas. This approach has led to a situation where fewer projects can be funded, potentially hindering national development. The Treasury's implementation of a series of rules designed to slow public spending appears to be a direct response to such concerns, aiming to impose greater fiscal discipline on government expenditure.

The bottom line

• The final cost of Auckland's City Rail Link is now estimated at $5.5 billion, a significant increase from its original $3.4 billion budget.
• Former CRL CEO Sean Sweeney argues that New Zealand's tendency to over-specify projects leads to excessive costs.
• Sweeney believes that different design choices for the CRL could have saved approximately $2 billion.
• His international experience suggests that while New Zealand has planning strengths, its project specifications are often too costly.
• The country faces broader economic issues, including 400,000 underemployed citizens and high youth unemployment.
• A cheaper version of the CRL would have necessitated significant compromises on its design and features.