The TT-Line Spirits Project, initially launched in 2017 to replace Tasmania’s aging ferry fleet, has evolved into a case study of how well-intentioned infrastructure projects can spiral out of control when faced with unforeseen challenges. A series of delays, rising costs, and strained stakeholder relationships led to a parliamentary inquiry by the Tasmanian Standing Committee of Public Accounts. The inquiry exposed not only the complexities of managing large-scale projects but also highlighted critical lessons for government, corporations, and the public on managing risk, accountability, and communication.

Background of the TT-Line Spirits Project

The project began with the objective of replacing TT-Line’s two aging Spirit of Tasmania ferries, vital transport links between Tasmania and mainland Australia. Initially, Flensburger Schiffbau-Gesellschaft (FSG) in Germany was contracted for the job. However, after FSG experienced financial difficulties and failed to deliver, TT-Line was forced to cancel the contract. In 2021, Rauma Marine Constructions (RMC) in Finland was chosen as the new shipbuilder.

The project soon encountered additional external hurdles. The COVID-19 pandemic severely disrupted global supply chains, and the Ukraine war led to skyrocketing material costs, notably steel. As a result, TT-Line faced rising financial pressures, with the total project budget inflating from $700 million to $990 million, including port infrastructure upgrades at Devonport. Throughout the process, tensions arose between key stakeholders—TT-Line, TasPorts, and the Tasmanian Government—which further complicated the delivery of the project.

Key Findings from the Inquiry

The inquiry delved into several issues that contributed to the project’s setbacks, revealing important insights into project management, financial oversight, and stakeholder engagement.

Unanticipated Financial Strain and Cost Overruns - The inquiry revealed that RMC encountered financial troubles, leading to an additional €50 million in costs, which TT-Line had to cover from its reserves. Additionally, TT-Line was hit with a €8 million contract variation due to rising material costs. The escalation of costs was exacerbated by external factors, including the global pandemic and the war in Ukraine, demonstrating the vulnerability of projects to global disruptions.

Port Infrastructure Delays - A major contributing factor to project delays was the slow progress in constructing the necessary infrastructure at Devonport’s Berth 3. TasPorts controlled the site, and delays in dredging and barge operations hindered TT-Line’s ability to conduct essential geotechnical work. This raised questions about whether TT-Line should have been responsible for infrastructure development, a role outside its traditional operations as a ferry company.

Leadership Resignations and Accountability - TT-Line’s CEO and Chair both resigned during the inquiry process, citing frustrations with the government’s lack of support and the complexities of navigating stakeholder relationships. Their departures highlighted the immense pressure on leadership in large-scale public projects, especially when accountability and transparency are questioned.

Government and Ministerial Oversight - The inquiry uncovered gaps in communication between TT-Line and the government, particularly during the caretaker period. The inquiry probed whether key decisions were appropriately escalated and whether ministers were kept fully informed of delays and financial issues. These gaps underscored the importance of clear communication channels and ministerial oversight in managing government-backed projects.

Lessons Learned from the Inquiry

Uncertain Berthing Solutions - The inquiry also revealed the troubling reality that, despite the imminent arrival of the new vessels, suitable berthing infrastructure was not yet ready. The possibility of having to dock the ships in Singapore or anchor them off Tasmania was discussed, raising concerns about project planning and preparedness for operational challenges.

The TT-Line Spirits Project inquiry provides a number of critical lessons for future infrastructure projects, particularly those involving complex stakeholder relationships and external risks.

Comprehensive Risk Management is Crucial - One of the key takeaways from the inquiry is the importance of having a robust risk management strategy in place from the outset. Both internal risks, such as leadership turnover and stakeholder conflict, and external risks like global supply chain disruptions need to be anticipated and mitigated. In the case of the TT-Line project, a more proactive approach to these risks might have prevented the spiraling costs and delays.

Contingency Planning for External Shocks - The global impacts of COVID-19 and the Ukraine war significantly affected the timeline and budget of the project. This emphasizes the need for contingency planning that accounts for external shocks. Having flexible budgets, supplier options, and alternative plans in place would have helped TT-Line better navigate the disruptions caused by these global events.

Leadership Stability and Government Support are Key - Strong leadership and clear government backing are vital for project success. The leadership challenges and lack of support from the government were cited as major reasons for the difficulties encountered by TT-Line. Ensuring that project leaders have the resources and backing they need, along with transparent lines of accountability, can help avoid major leadership shake-ups that stall progress.

Long-Term Infrastructure Planning - The delays in building suitable berthing facilities and port infrastructure underscored the importance of aligning vessel delivery schedules with infrastructure readiness. Governments and corporations must ensure that the physical infrastructure is in place well before the operational start of new transport projects.

Final Word

The TT-Line Spirits Project inquiry serves as a cautionary tale for managing large-scale infrastructure projects. Cost overruns, delays, and stakeholder miscommunication all contributed to the difficulties faced by TT-Line. However, by learning from these challenges—particularly the importance of robust risk management, clear accountability, and proactive government oversight—future projects can avoid similar pitfalls. The inquiry underscores that even well-intentioned projects require careful planning and execution to ensure that public funds are used efficiently and effectively.

References

• TT-Line’s Spirits Project - Public Accounts Committee, Parliament of Tasmania
• Images: Spirit of Tasmania