- Sep 10, 2010
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The auditor-general's office detailed it:For those playing at home, here is the operative quote from the sbs article:
I wonder what other projects have included the undefined (in the article) "wider economic benefits" in their BCRs.
Wider economic benefits
The EWL business case relied heavily on the inclusion of estimated WEBs to support the assertion that the project was of net benefit. Without these WEBs, which were unusually high as a proportion of total benefits, the project cost was clearly higher than the expected benefits.
WEBs relate to economic benefits that are not typically captured in traditional cost-benefit analysis. Commonly considered WEBs include:
The DTF guidelines indicate that WEBs are most relevant to transport and other large infrastructure projects. However, guidance materials from DTF and Infrastructure Australia indicate caution should be exercised when estimating and considering WEBs as part of the economic assessment of projects.
- 'agglomeration' impact (an increase in productivity due to improved proximity to suppliers and labour markets)
- the impact of transport on increasing competition
- competition related user benefits.
DTF's guidelines note that the extent to which WEBs exist over and above benefits counted in the standard economic evaluation is not yet clear, and will depend on the nature of the project under consideration.
The June 2013 business case does not provide sufficient information to explain the basis for the significant change in WEBs from the March 2013 business case.
This was important, because an external peer review of the March 2013 business case raised significant issues with the plausibility of the level of WEBs claimed for the project in terms of their ratio to total benefits. Specifically it stated:
The peer review concluded that the relationship between the standard user benefits and the WEBs was so highly unusual that they warranted a detailed discussion and explanation if they were not to be discounted as implausible.
- 'initial observations are that the ratio between core travel benefits and WEBs is very atypical with the latter being much higher as a proportion of overall benefits than would normally be expected
- a thorough review of the literature has confirmed our knowledge and experience that WEBs...typically represent around 10–40 per cent of the traditional benefits
- the higher values are for CrossRail in London where WEBs have been estimated 40–50 per cent...mainly [due] to the ability of CrossRail to allow tens of thousands of additional workers to access high value jobs in more productive areas that would otherwise simply not have been possible. This is an extreme situation that is certainly not replicated in Melbourne with the East West Link'.
The final business case did not satisfactorily address this issue. It only provides a high‑level discussion of the approach used to calculate the WEBs and does not specifically address the issues identified by the peer review. As a result, the information included in the business case offered insufficient assurance about the robustness and reliability of the estimated WEBs for EWL.
East West Link Project | Victorian Auditor-General's Office
This audit examined whether the state effectively managed the East West Link project and the related costs by assessing the total costs of the project, the appropriateness of the advice supporting key project decisions and the lessons for future major projects.



