What Predicts a Cost Blowout?
Analysis of 576 Victorian infrastructure projects to identify which factors correlate with cost overruns.
Projects Analysed
576
Over Budget
202
35.1% of all projects
Average Overrun
20.1%
across all projects
Key Findings
- Water has the highest average cost overrun at 56.1% across 91 projects.
- Projects in the > $5b band have 32.6% average overrun — 7 of 15 over budget.
- 202 of 576 projects (35.1%) are over their original budget.
Factor 1: Sector
Average Overrun by Sector
Sectors with 3+ projects
| Sector | Projects | Avg Overrun | Over Budget | Original TEI | Current TEI | Total Overrun |
|---|---|---|---|---|---|---|
| Water | 91 | 56.1% | 39 (43%) | $22.6b | $35.4b | $12.8b |
| Information Technology | 124 | 18.5% | 49 (40%) | $1.1b | $1.3b | $0.2b |
| Justice & Emergency | 46 | 16.7% | 19 (41%) | $4.6b | $5.0b | $0.3b |
| Transport | 136 | 15.5% | 40 (29%) | $191.1b | $244.4b | $53.3b |
| Education & Training | 39 | 12.8% | 11 (28%) | $9.7b | $9.8b | $0.1b |
| Health & Human Services | 119 | 6.3% | 37 (31%) | $26.9b | $27.2b | $0.3b |
| Housing | 9 | 4.5% | 4 (44%) | $10.6b | $9.9b | $-0.7b |
| Culture, Sport & Community | 3 | 2.1% | 1 (33%) | $3.5b | $3.6b | $0.1b |
| Other | 9 | -0.0% | 2 (22%) | $3.3b | $3.3b | $0.0b |
Factor 2: Project Size
Average Overrun by Original TEI Band
Does bigger mean more risk?
| Size Band | Projects | Avg Overrun | Over Budget |
|---|---|---|---|
| < $100m | 272 | 19.4% | 105 (39%) |
| $100–500m | 218 | 25.0% | 65 (30%) |
| $500m–1b | 40 | 5.4% | 16 (40%) |
| $1–5b | 31 | 4.3% | 9 (29%) |
| > $5b | 15 | 32.6% | 7 (47%) |
Factor 3: Size vs Overrun Correlation
Original TEI vs Cost Overrun %
Each dot is a project. Colour = sector.
Top 15 Worst Cost Blowouts
| # | Project | Sector | Original TEI | Current TEI | Overrun % | Overrun $m |
|---|---|---|---|---|---|---|
| 1 | Land development projects (statewide) | Water | $219m | $2,872m | +1212.4% | +$2,653m |
| 2 | Eastern treatment plant projects (Bangholme) | Water | $286m | $2,534m | +787.2% | +$2,248m |
| 3 | [IT] Victorian Transport Digital Engineering Transform… | Transport | $5m | $45m | +777.2% | +$40m |
| 4 | Western treatment plant projects (Werribee) | Water | $215m | $1,687m | +683.6% | +$1,472m |
| 5 | Drainage and flood projects (statewide) | Water | $116m | $692m | +496.0% | +$576m |
| 6 | [IT] Digital Utility Core Capability | Information Technology | $5m | $23m | +349.1% | +$18m |
| 7 | Sewer collection – main sewers (regional various) | Water | $248m | $1,031m | +315.9% | +$783m |
| 8 | [IT] Regional Community Care Coordination Platform | Health & Human Services | $1m | $5m | +240.6% | +$3m |
| 9 | Suburban Rail Loop East — Development & Early Works | Transport | $11,800m | $35,000m | +196.6% | +$23,200m |
| 10 | [IT] Network Architecture Improvements SDWAN | Information Technology | $1m | $3m | +191.6% | +$2m |
| 11 | [IT] Better Technology Tools Enabling Responsibility (… | Justice & Emergency | $19m | $54m | +183.4% | +$35m |
| 12 | [IT] Integrated supervised contact and access solution | Information Technology | $1m | $3m | +168.9% | +$2m |
| 13 | Homes Victoria Ground Lease Model Project 2 (metropoli… | Transport | $260m | $687m | +164.3% | +$427m |
| 14 | [IT] C1062 - Works and Asset Management | Information Technology | $1m | $2m | +163.4% | +$1m |
| 15 | [IT] Trusted and Secure Program | Transport | $7m | $17m | +155.3% | +$11m |
Methodology: Overrun % = (Current TEI - Original TEI) / Original TEI × 100.
Original TEI is from the earliest available Budget Paper 4 snapshot. Current TEI is from BP4 2025-26.
Only projects with TEI > $0 are included. Data source: Victorian Budget Paper 4 (State Capital Program) and IT Dashboard.