Thursday, March 10, 2011

MRT: Greater Transparency & Accountability Please

SPAD must institute transparency, competition, as well as public and market control to ensure that the MRT delivers its stated benefits and targets within a confined budget

Last week I have issued a statement citing a study on major infrastructure projects around the world by Professor Bent Flyvbjerg at Oxford University which found that rail projects not only suffered from an average of 44.3% cost overrun, actual passenger traffic is 51.4 per cent lower than forecast traffic on average. The study “Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it” published in the Oxford Review of Economic Policy (2009) also noted that 9 out of 10 of suffered from cost overruns; 84 per cent of rail passenger forecasts are wrong by more than ±20 per cent; nine out of 10 rail projects have overestimated traffic.

Flyvbjerg had warned that the main reason for the ugly set of statistics is that “planners and promoters purposely spin scenarios of success and gloss over the potential for failure.” He also argued that “competition between projects and authorities creates political and organizational pressures that in turn create an incentive structure that makes it rational for project promoters to emphasize benefits and de-emphasize costs and risks. A project that looks highly beneficial on paper is more likely to get funded than one that does not.”

New estimates on the cost of the MRT project, RM50 billion and RM53 billion cited by The Star and CIMB Research respectively have far exceeded the original estimate of RM36.6 billion. 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 failures cited in the Flyvbjerg study.

To prevent such excesses, Flyvbjerg has called for several measures to be implemented by Governments seeking to implement such infrastructure projects. The key measures which should be adopted by SPAD and Pemandu will include:

1. Forecasts and business cases should be made subject to independent peer review. Scientific and professional conferences should be organized where forecasters would present and defend their forecasts in the face of colleagues’ scrutiny and criticism.

2. For publicly funded projects, forecasts, peer reviews, and benchmarkings should be made available for public scrutiny, including by the media, as they are produced, including all relevant documentation.

3. Public hearings, citizen juries, and the like should be organized 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.

4. Forecasters and their organizations must share financial responsibility for covering cost overruns and benefit shortfalls resulting from misrepresentation and bias in forecasting.

In fact, Flyvbjerg argued that projects with inflated benefit–cost ratios should be reconsidered and stopped if recalculated costs and benefits do not warrant implementation. Projects with realistic estimates of benefits and costs should be rewarded.

The implementation of the MRT to date by both Pemandu and SPAD has left much to be desired in terms of the transparency measures propagated in the above study. Besides the deluge of rhetorical statements that the MRT will improve public transport in the Klang Valley and that it will have a “catalytic” effect on the economy, the Government agencies have failed to provide detailed forecasts and business cases for peer review and public scrutiny.

While there is an on-going feedback process, the information provided for the route, station designs, traffic information as well as plans on integration to new and existing transport terminals are scarce or absent altogether. Worse, decisions on the MRT system are being made regardless of the public feedback outcome, with tenders for various parcels of the project commencing next month.

Hence just like the public feedback exercise carried out for the LRT extension project, it has become quite clear that the exercises are meant to “show” that feedback has been conducted, with no intention of ever having them “integrated in project management and decision-making” in any substantive manner.
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