Tony Pua warns of MRT cost overruns and failed targets

By Clara Chooi, The Malaysian Insider

KUALA LUMPUR, March 3 — DAP MP Tony Pua warned today that Malaysia’s most expensive transport project — the Mass Rapid Transit (MRT) — would likely suffer major cost overruns and fail to meet bloated targets, much like other mega-infrastructure rail projects around the world.

The Petaling Jaya Utara MP revealed in a statement today that a UK-based study in 2009 had shown that a majority of mega rail projects in several nations had hit similar stumbling blocks, largely due to “political and organisational pressures”, resulting in “overestimated costs and underestimated benefits”.

The study, called the “Survival of the unfittest: why the worst infrastructure gets built — and what we can do about it”, was conducted by Oxford professor Bent Flyvbjerg and was published in the Oxford Review of Economic Policy (2009).

Flyvbjerg considered 258 “mega-infrastructure” projects across 20 countries and found that nine out of every 10 rail projects suffered from an average of 44.3 per cent of cost overruns.

Early estimates have placed the Klang Valley MRT project, a three-line system, at a cost of RM36.6 billion but regulators Syarikat Prasarana Nasional Bhd and the government’s Land Public Transport Commission (SPAD) have insisted that the figures were not final.

In his study to measure the inaccuracy of travel demand forecasts, Flyvbjerg considered 208 projects in 14 nations on five continents.

“He (Flyvbjerg) found that rail projects not only suffered from an average of 44.3 per cent of cost overruns but actual passenger traffic is 51.4 per cent lower than forecast traffic on average,” Pua (picture) said in his statement.

In the Sungai Buloh-Kajang (SBK) line for the first phase of the MRT, SPAD has targetted to ferry up to 40,000 passengers per hour per direction (PPHPD).

According to the Environmental Impact Assessment (EIA) for the project, the SBK line is also estimated to have a daily ridership of 442,000 passengers in its opening year, expected to be in 2016.

The figure has however been questioned by transport advocacy group Transit who claimed that this target was impossible to achieve with the MRT’s fleet of just 58 trains travelling the 90-minute route.

“Other statistics found in the study were also no less encouraging — 84 per cent of rail passenger forecasts are wrong by more than ±20 per cent, and nine out of 10 rail projects have overestimated traffic,” Pua said.

He added that Flyvbjerg had also found that cost overruns in the order of 50 per cent were common for major infrastructures while overruns above 100 per cent are “not uncommon”.

“Also, he found that demand and benefit forecasts that are wrong by 20-70 per cent compared with actual development are common,” he said.

Most worrying in Flyvbjerg’s study, said Pua, was the underlying reason behind the construction of mega-projects across the globe that were similar to Malaysia’s MRT and the consistency of cost-overruns and bloated targets in the project outcomes.

“He (Flyvbjerg) claimed that ‘planners and promoters purposely spin scenarios of success and gloss over the potential for failure’ as the key cause of the over-promise and under-delivery,” he said.