The tunnel PPP contract is the single largest component of the A$ 10.9bn Metro Rail project, which is designed to increase capacity on Melbourne’s suburban rail network.

The shortlisted bidders are:

• Continuum Victoria – comprising Acciona Infrastructure, Ferrovial Agroman, Honeywell, Downer EDI and Plenary Origination

• Cross Yarra Partnership – comprising Lendlease Engineering, John Holland, Bouygues Construction and Capella Capital, and

• Moving Melbourne Together – comprising Pacific Partnerships, CPB Contractors, Ghella, Salini Impregilo, Serco and Macquarie Capital.

The successful bidder will build and fitout the twin 9km tunnels and five new underground stations at Arden, Parkville, CBD North, CBD South and Domain.

Up to six tunnel boring machines (TBMs) will be used during construction, excavating around two million cubic metres of soil and rock.

Passenger numbers at the existing five City Loop stations are projected to almost double from 580,000 passengers a day to 1.1 million by 2031. Once operational, metro tunnel's CBD North and CBD South stations will provide a more even passenger flow, with crowding across all City Loop stations expected to drop by about 20%.

The shortlisted bidders will be asked to submit a formal proposal by early 2017, with a contract expected to be awarded by the end of 2017 and work commencing in 2018.