Malaysian Insider, March 09, 2011
The Petaling Jaya Utara MP said that as McKinsey also works with Pemandu, its appointment as the MRT’s consultants raised doubt as to whether it would conduct a fair analysis of the multi-billion ringgit rail project.
“But all studies done — whether from before or in the future — must be in the open. After all, there is not issue of national security in the MRT so the studies should be made public,” he said.
The Star reported today that McKinsey had been hired to carry out a value management study (VMS) on the proposed MRT project, which is presently undergoing a public scrutiny process.
Quoting the government’s Land Public Transport Commission (SPAD) chief executive Mohd Nur Ismal Kamal, the newspaper reported that the VMS is to help decide the selection of the proposed alignment and station locations to “make cost most effective”.
At the same time, it added, the study would also “consider the factor of helping unlock the full potential of real estate values in locations where stations are located”.
“The VMS will also design a procurement policy which will ensure cost savings and prevent any extravagant spending,” Mohd Nur was quoted as saying.
Pua also accused the MRT project regulators for being insincere in its procurement of public feedback, pointing out that even before the exercise was over, tenders were already being prepared for issuance next month.
“It shows how much weight they are putting into the public feedback. It has become quite clear that the exercise is for show.
“Feedback is collected but there is no intention of ever having them be integrated into the project management and decision-making,” he said.
Work on the MRT system is scheduled to kick off in June and the government has given its assurance that the three-month public feedback exercise would be instrumental in helping to improve the system.
Pua stressed that he was not against the MRT as the system was much needed to improve the country’s fragmented public transportation system but noted that the project should be cost-effective.
“But the way it is being conducted now, it is rushed, and does not give any confidence that it is a value-for-money project,” he said.
Penang Chief Minister Lim Guan Eng agreed and pointed out that the country’s existing rail system was fragmented and “confusing”.
“Do not repeat the same mistakes of the past. Why don’t we do our homework first ... we are talking about a project worth billions here ... not one or two (billion) or ten but maybe up to RM53 billion.
“A one per cent leakage is already RM530 million,” he warned the government.
Initial cost estimates for the MRT were set by project delivery partner (PDP) Gamuda-MMC at RM36.6 billion, but Pua noted that the figure could balloon to RM50 billion or RM53 billion.
Tony Pua said the appointment of McKinsey & Co was a possible conflict of interest.
“This is despite the fact that the project has yet to take off on the ground and raises major concerns as to whether it will fall victim to similar features cited in the Flyvbjerg study,” he said.
Pua was referring to findings by Oxford Professor Vent Flyvbjerg that he highlighted in the media recently which states that rail projects worldwide often suffered from cost overruns and overestimated targets.
“Flyvbjerg found that rail projects not only suffer from an average of 44.3 per cent in cost overruns but actual passenger traffic is 51.4 per cent lower than the forecast traffic average,” he said.
Also citing from Flyvbjerg’s study, Pua suggested that the Malaysian government consider the measures listed by the professor to prevent such excesses.
The first measure, said Pua, was that all forecast and business cases should be made subject to independent peer review and “scientific and professional conferences should be organised where forecasts would present and defend their forecasts in the face of colleagues’ scrutiny and criticism”.
Next, Pua said that forecasters and their organisations should share financial responsibility for covering cost overruns and benefit shortfalls resulting from misrepresentation and bias in forecasting.
Another suggestion is that public hearings, citizen juries and the like should be organised to allow stakeholders and civil society to voice criticism and support of forecasts.
“Knowledge generated in this way should be integrated in project management and decision making,” said Pua.
Finally, he said Flyvbjerg also suggested that all forecasts, peer reviews and benchmarking be made available for public scrutiny, including by the media.
“Fyvbjerg also argued that projects with inflated benefit-cost ratios should be reconsidered and stopped if recalculated costs and benefits do not warrant implementation.
“Project-realistic estimates of benefits and costs should be rewarded,” he said.
The MRT system is an entry point project identified for the Greater Kuala Lumpur/Klang Valley National Key Economic Area (NKEA) and aims to increase public transport modal share from 18 per cent to 40 per cent by 2020.
With the 40 per cent public transport modal share, the government hopes that at least four million trips of the estimated total of 10 million are made via public transport.
The remaining six million trips will continue to be made via private vehicles.
The MRT Environmental Impact Assessment (EIA) is presently up for public viewing until March 15 at all Department of Environment offices nationwide and several public libraries.
The Sungai Buloh-Kajang line alignment map is also up for public viewing until May 14 at seven locations across the city.
They are Kuala Lumpur City Hall, Petaling Jaya City Council, Shah Alam City Council, Selayang Municipal Council, Kajang Municipal Council, Bangsar LRT station and the SPAD office in Menara Dayabumi.
The public can provide their feedback on the project via email to feedback@kvmrt.com.my or through the SPAD toll-free line at 1-800-82-6868.
PKR MP Chua Tian Chang however questioned the appointment, revealing that while the firm was commissioned to study the full potential of real estate value for the project, the government has been disposing parcels of valuable land to “crony” companies at below market value.
ISC founder and chief executive officer Austen Zecha (picture) alleged that both he and his deputy were jointly approached on January 19 to “offer the client” (the ministry) a 50 per cent “rebate” or an annual share of the firm’s income from the account.
