The project is just over 70 per cent complete – costing more than $11 billion as of 31 March 2026. Photo: Snowy Hydro Facebook.
Snowy Hydro is on the hook for higher costs – just as an audit has revealed “significant” issues around its contractor management and documentation.
The Snowy Hydro 2.0 project involves linking Tantangara and Talbingo dams through 27 kilometres of tunnels, as well as the building of other infrastructure.
Its cost has blown out from initial estimates, while the finish date has also been repeatedly pushed back.
An Australian National Audit Office (ANAO) report examined whether a 2023 contract reset was informed by sound planning and advice, and whether Snowy Hydro Limited was effectively managing contract performance.
In its report, released on Thursday (18 June), the ANAO criticised elements of the project.
It found that while the 2023 reset was driven by a “largely sound approach”, project management had only been “partly effective” since.
“As a result of the reset, Snowy Hydro took on the cost risk for the project,” the report outlined.
“Since then, it has not effectively held the contractors to account for delivery, has not effectively implemented measures that were intended to manage project risks, and does not have access to quality data that would allow it to appropriately monitor the project.”
In its report, the ANAO raised multiple “significant deficiencies” in the project, including the lack of an agreed baseline schedule, issues with the incentive framework and its limited control to ensure contractor payments.
In 2023, the company announced a so-called ‘reset’ after the project’s cost reached a revised cost of $12 billion.
At the time, the completion date was also pushed out to 2028.
According to the ANAO report, Snowy Hydro decided not to renegotiate the contract in a competitive process to avoid delays.
“Snowy Hydro did not seek external verification of its own costs and underestimated the cost risk related to the renegotiation of an enterprise bargaining agreement,” the document outlined.
“While the board challenged information provided to it by management, sufficient board consideration of the project reset risks was not demonstrated.”
The audit labelled implementation of project governance arrangements as “partly effective”, but said delays in their development left a “significant period” without updated internal management plans.
After the reset, the project was moved to an incentivised target cost contract model.
Under the new framework, contractors are rewarded with additional payments when they meet or exceed minimum performance standards.
But the report found this approach was “not working as intended”, while there were concerns around how payments to secondary contractors were overseen.
“[Snowy Hydro Limited] has not implemented sufficient controls over its payments to contractors other than its primary contractor for civil works and subcontractor for engineering and mechanical works,” the report argued.
It also raised other issues with the project’s documentation, such as Snowy Hydro not having developed a reliable cost forecasting system.
The 2026 audit made five recommendations, four of which were accepted in full by Snowy Hydro Limited.
These recommendations will see improvements to how Snowy Hydro implements project management transitions, strengthens its project management against risks, and improve how it monitors payments to contractors.
But Snowy Hydro partially agreed to a recommendation that called for it to use regular public reporting, including information on how the project was progressing against published targets.
In its response, it labelled its current public reporting as being consistent with government recognised standards for infrastructure projects.
“While the recommendations do not propose fundamental changes to Snowy 2.0’s underlying delivery model, governance structure or management approach, we are committed to continually testing and improving our delivery oversight.”
Snowy Hydro is also waiting on the outcomes of a separate cost reassessment.
That process, launched in October 2025, is expected to be finished later this year.
“There is likely to be a further request to government for financial support [following this],” the ANAO report stated.
