Another story of how during good times so little due diligence is done on projects

 

THE REST OF THE STORY?  This railway due diligence alert is from the Middle East.

Previous sound second opinion advise  ABOUT THIS ETIHAD Railroad project from David Burns was apparently “dismissed”.Instaed, a huge capital cost project was approved.

Today, the same project he warned about is “in economic limbo”.

David participated in the early on market analysis for this railway and made the mistake at an important meeting of saying, in front of several “big guns”, that there might be a maret sizing issue.  Fo example, this then proposed railway might have a chance of being viable if it built inexpensively and with second hand locomotives and rolling stock.

That due diligence alert did not go over well.   Times were economically good back then. Why rock the boat?

Basically the only traffic on the railway is aggregate and that could go by water.

It appears that they are now realizing it.

Today’s headline is that Etihad Rail suspends Stage 2 tendering.  In a news report circulating in January 2016 and Written by Keith Barrow

ETIHAD Rail confirmed on January 26 that it has suspended tendering for the construction of the second phase of the UAE’s national railway network in a move which is likely to deal a significant blow to the GCC Railway project.

Stage 2 involves the construction of 628km of new lines, encompassing the line from Ghweifat on the Saudi border to the Omani frontier near Al Ain together with links to the UAE’s three principal ports at Khalifa, Jebel Ali near Dubai and Mussafah.

The project has an estimated price tag of around $US 11 billion.

Etihad Rail says it has informed bidders that tendering will be suspended while it reviews “the most appropriate options for the timing and delivery of this phase of the project.”

“Etihad Rail is one of the biggest and most complex infrastructure projects ever undertaken in the UAE,” says Etihad Rail chariman HE Nasser Alsowaidi.

In December the UAE’s Federal Transport Authority (FTA) granted Etihad Rail final safety authorization for Stage 1

The 264km Shah – Habshan – Ruwais line, clearing the way for the start of commercial operations on the first phase of the network. Etihad Rail says the decision to suspend tendering for Stage 2 will not have any impact on its preparations for the launch of operations on the first phase.

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It appears that they are now finally realizing that Mr Bruns rendered sound due diligence counsel.  Other project leaders should take note.  Always get and at least consider a second opinion.

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