Figure 16: Overall Budget Structure of the Sydney Metro Southwest Line

5.4. Cost Baseline and Cash-Flow Diagram

The overall budget structure of the Sydney Metro Southwest Line is depicted in the diagram below (figure 16).

Figure 16: Overall Budget Structure of the Sydney Metro Southwest Line

The total cost baseline of budget is determined by using Monte Carlo Simulation and the specific calculation is referred to Appendix G

5.4.1. Management Reserve

The Management Reserve is estimated as 10% of the cost Baseline, which is $255.2m (Lee, 2020).

5.4.2. Cost Baseline

The Cost Baseline is a time-phased project cost estimate that has been approved and can only be amended through formal change control procedures. It serves as a benchmark against which actual results can be compared. The Cost Baseline is created by aggregating all of the approved budgets for the various scheduled activities, which includes direct cost, indirect cost, escalation and contingency reserve. Their respective proportions among the Cost Baseline are listed in figure 16.

5.4.2.1 Cost Escalation

The causes of cost escalation analysed in this project are the fluctuation of interest rate, inflation rate and exchange rate. From figure 17, it is noticeable that from 2017 to nowadays, the interest rate dropped rapidly and inched ever closer to 0%.