NB: This article is an excerpt taken from the Victorian Auditor-General’s Report and is in no way a reflection of Government News' opinion.

The Melbourne Wholesale Fruit and Vegetable Market is in the process of relocation, however the Victorian Auditor-General’s Report has shown that things haven’t gone according to plan

The Melbourne Wholesale Fruit and Vegetable Market incorporating the National Flower Centre is an important part of the state’s economic infrastructure, with an annual turnover of about $1.6 billion.

The market is being relocated from its current site in Footscray Road to a new site in Epping.

According to the Victorian Auditor-General’s Report, the intention was to establish “the new market within a modern, innovative and efficient fresh produce trading and distribution precinct”.

This is one of the largest infrastructure projects undertaken by Victoria in recent years.

The new market has three main components required for its effective operation; a trading floor, where produce is displayed, bought and sold; warehousing and cool storage used to store and distribute produce; and fit-out of leasehold areas to facilitate the business needs of each lessee.

In purchasing the site for the market, the government acquired additional land to develop a market precinct.

The initial project planning and governance arrangements for the relocation were sound.

However, poor project implementation has adversely affected the project.

Poor stakeholder management has significantly delayed the relocation of the market — it was originally planned to move in 2008, however, an operational market is still at least two years away; resulting in significant cost increases — the expected cost to government is more than double the $230 million included in the 2004 business case; which had an adverse impact on tenant investment in this industry.

The issues relevant to the tenants’ decision to relocate to Epping have not been resolved and they are still not committed to the move, so the relocation is not assured.

Management of market tenants contributed to a number of adverse events during the first five years of the project.

The subsequent decision to abandon the proposed Partnerships Victoria procurement approach and enter into a memorandum of understanding (MOU) with the market community to deliver significant parts of the project was made without proper assessment of the options and associated risks.

The Auditor General’s report also states, “Major Projects Victoria’s practices showed an inadequate understanding of the importance of demonstrating probity and transparency in public sector procurement”.

Also, the tender only attracted one fully costed, adequately supported, reasonably priced tender that met Major Projects Victoria’s contractual requirements.

Along with poorly considered decisions made during the procurement process, this is likely to result in the government paying more for the trading floor than it should.

The project was set a number of redevelopment and operational objectives.

Given delays in the project, only three of the redevelopment objectives can be assessed at this time.