A $1.7 billion contract for the 'Tunnels North' section of Melbourne's Suburban Rail Loop (SRL) East has been awarded to the Terra Verde consortium. This latest agreement adds to the significant financial commitments associated with the project, particularly for any future government considering its cancellation. The contract structure, operating on a cost-plus-profit model, means that in the event of a project halt, taxpayers would be liable for the value of work already completed, rather than the full contract amount.
The 'Tunnels North' contract specifically involves the construction of two parallel tunnels, each nearly 10 kilometers long, connecting the future stations of Box Hill and Glen Waverley. This segment also includes the creation of 39 cross passages, two station boxes, two tunnel access shafts, and a ventilation shaft. The Terra Verde consortium comprises Webuild, GS E&C of South Korea, and Bouygues Construction Australia.
Read More: Banganapalle: Minister Reddy Opens ₹12 Crore Roads and Drains on March 8, 2026
The SRL East project, part of a larger proposed 90-kilometer orbital line, has seen previous major contracts awarded, including one valued at $3.6 billion for another section of tunneling from Cheltenham. Boring for the first phase of the loop is anticipated to commence in 2026, with a projected completion date of 2035.
A Costly Proposition for Future Governments
The awarded contract's structure, where consortia are paid monthly for completed work, is presented by the government as a method to mitigate cost overruns associated with handover transitions between construction and operational phases. However, this model also means that any future government choosing to abandon the project would be obligated to cover the expenses incurred for the work undertaken to date. The precise final cost of operating the SRL infrastructure remains undetermined until the project's completion.
Read More: Melbourne Queen Street machete attack leaves two hurt Monday
Project Progress and Scope
The 'Tunnels North' contract is the second major construction agreement for SRL East, following the earlier award for the southern tunnel section. Early works are reportedly underway at all six station sites and a train stabling facility in Heatherton. Major construction is slated to begin shortly at the Clayton station site, intended to become a significant transport hub. The SRL network, envisioned as a 90-kilometer orbital route stretching from Cheltenham to Werribee via Melbourne Airport, is also linked to broader urban development plans, including the potential creation of new housing.
Project Details
Contract Value: $1.7 billion
Project Section: 'Tunnels North' for Suburban Rail Loop East
Scope: Approximately 10 kilometers of twin tunnels between Box Hill and Glen Waverley, including associated infrastructure.
Consortium: Terra Verde (Webuild, GS E&C, Bouygues Construction Australia)
Timeline: Tunneling expected to begin in 2026, with a target completion of 2035 for the first phase.
Overall SRL Network: Planned 90-kilometer orbital line.
Context and Background
The Suburban Rail Loop has been a subject of ongoing discussion and scrutiny. The government emphasizes its commitment to the project, framing it as a crucial step for public transport and urban development. Critics, however, raise concerns about the substantial financial commitments and the potential for taxpayer exposure should future governments alter or cancel the project. The operational costs of the rail loop, distinct from its construction expenses, are still subject to final confirmation upon project delivery.
Read More: Construction of Pottepalem Spillway Bridge in Nellore starts in January 2026 to finish in 18 months