Sign in

Ballarat Line Upgrade | Cost Benefit Analysis

A Cost Benefit Analysis of implementing Eight IS credit groupings for the Ballarat Line Upgrade Project

By Steven Gauci-Williams, Shailja Chandra and Patrick Phelan

The Project

The Ballarat Line Upgrade (BLU) is being delivered by Rail Projects Victoria (RPV) on behalf of the Australian and Victorian governments. The BLU Project is being delivered as part of an Alliance between RPV, V/Line, Lendlease Engineering, Coleman Rail and SMEC. The line upgrade has delivered a new station at Cobblebank (image attached) and major station upgrades at Rockbank, Ballan, Bacchus Marsh and Wendouree. The addition of 18km of track duplication between Melton and Deer Park West and two passing loops at Ballan and Millbrook will enable extra services and improved reliability for the growing communities in Melbourne’s outer western suburbs, Bacchus Marsh, Ballan and Ballarat as part of the $1.75 billion Regional Rail Revival. The project is being rated using the Infrastructure Sustainability (IS) rating tool for both Design and As Built.

About the Cost Benefit Analysis 

A Cost Benefit Analysis (CBA) has been undertaken in a partnership between the BLU Project Alliance and Energy Water Environment (EWE) to evaluate the implementation of the IS As Built rating. Eight credit groupings were assessed in the CBA, namely: All Management credits (Man), Waste credits (Was-1 and Was-2), Energy and Carbon credits (Ene-1 and Ene-2), Climate Change Adaptation (Cli-2), Water credits (Wat-1 and Wat-2), Materials (Mat-1), Heritage credits (Her-1 and Her-2) and health and wellbeing credits (Hea-2). The following methodology for assessments and outputs were used for the Cost Benefit Analysis:


Key Findings

The focus of this article is to highlight and summarise the output of the CBA for each of the eight initiatives.  The calculation of the Benefit Cost Ratio (BCR) for these sustainability initiatives has been used to benchmark the return on investment for the owner-operator and external stakeholders. BCR is the expression in monetary terms of the ratio of the discounted benefits of a project relative to its discounted costs.

An initiative or project with a BCR greater than 1 provides a net benefit and can be considered economically justified. A BCR calculation/comparison assists in making decisions on efficient and effective allocation of investment into sustainability initiatives. For example, an initiative with a higher BCR provides a greater net benefit per dollar invested. The following table provides an indicative qualitative guideline for BCR calculated values.


The tables below present the BCR results for:

  •  The owner-operator plus externalities (triple bottom line incorporating economic, environmental and social costs and benefits). All BCR were in the order of above 1 except for the Man credits.
  •  Owner-operator only – government, rail operator and other immediate stakeholders, all BCR were in the order of above 1 for all initiatives except for the Man credits and for Her-1 and Her-2.



Refer to the ‘Cost and Distribution Mapping’ which summarises the boundaries and inclusions for the two CBA scopes that were assessed.

It should be noted that some initiatives included in the CBA stretch across a number of credits and categories in the IS Rating scheme. To simplify the BCR calculations, these initiatives were attributed to one credit only. For example, the CBA results indicate that the Man credit initiatives do not result in a high BCR for the project. However, if these Man credits were not undertaken, several interdependent credits with high BCRs would not have been implemented or would have been implemented less effectively.
In summary the key findings of the CBA are as follows:

  • Over the life of the asset every dollar invested in the eight sustainability initiatives is estimated to deliver a median of $5.1 in benefits for the triple bottom line and a median of $2.73 in benefits for owner-operator
  • Beyond using the BCR for benchmarking the eight sustainability initiatives, the most significant capital investment and returns were recycling construction waste initiatives in Was-1 and Was-2 and the substitution of more environmentally sustainable materials Mat-1 and Mat-2
  • The most significant ongoing benefit external to the owner-operator is to the social group, largely due to the avoided cost of climate damage due to adaptation measures in Cli-2
  • The CBA shows that the major beneficiaries of implementing the IS rating initiatives included in this CBA are the owner-operator. It also concludes that although there are only small construction phase benefits to the wider economy, social and environmental stakeholders, they are recipients of significant ongoing benefits due to the implementation of the IS rating initiatives

Note: The results presented in this article may be subject to slight changes following future stakeholder reviews and recommendations.

For more information on the Cost Benefit Analysis, please contact the Ballarat Line Upgrade Environment and Sustainability Manager at