WestConnex adviser “engineered” traffic numbers on Lane Cove Tunnel disaster

Sydney Morning Herald: WestConnex adviser “engineered” traffic numbers on Lane Cove Tunnel disaster. August 12, 2014. Jacob Saulwick, Transport Reporter

Court hears forecasters predicted traffic to fit the needs of the consortium it hired: Lane Cove Tunnel.

Why do traffic forecasters get it so wrong?

In the case of the Lane Cove Tunnel, which opened in 2007 with about a third of the predicted traffic volumes, the Supreme Court heard one suggested answer on Monday: forecasters come up with traffic figures based on their business needs, not what happens on the road.

Those figures are coming back to hurt the forecasters, two of the biggest names in the business, that are facing a $144 million lawsuit by aggrieved investors.

AMP Capital Investors, the manager of two funds that lost when the tunnel went into receivership within three years of opening, is suing Parsons Brinckerhoff and Booz Allen Hamilton, both of which have since won numerous lucrative contracts from the state government.

In the opening day of a trial that is anticipated to run for 10 weeks, Justice Michael Pembroke heard that Parsons Brinckerhoff “reverse engineered” traffic forecasts for the Lane Cove Tunnel to fit the needs of the consortium that hired it.

It did this by excluding, from its forecasts, estimates of how many motorists would use the tunnel outside peak hour, AMP’s barrister Tony Bannon said. “You are saying they worked backwards from their commercial objectives,” Justice Pembroke asked Mr Bannon. “Yes,” Mr Bannon replied.

The contract to build the Lane Cove Tunnel was awarded to a consortium that included investment bank ABN Amro, Thiess and Transfield in 2003. AMP contributed $80 million in equity to the project as the manager of two funds: REST Infrastructure Trust and the Infrastructure Equity Fund.

Soon after the tunnel opened in 2007 it became apparent the forecasts that had been used as the basis for the bid were wildly optimistic.

Parsons Brinckerhoff’s “base case” was that 187,000 cars would use the road every day. Booz, which had the job of evaluating Parsons Brinckerhoff’s numbers, put a conservative estimate of 150,000 cars using the tunnel a day.

Instead, by 2009, about 66,000 cars a day used the tunnel.

In his opening submission, which will continue on Tuesday, Mr Bannon proposed a number of reasons the figures had been inflated.

One was that Parsons Brinckerhoff initially said it would build forecasts based on estimates of traffic volumes at four times during the day: two in the morning and afternoon peak, and two periods outside peak hour.

However, Parsons Brinckerhoff dropped the estimates for outside peak hours after they helped contribute to an initial prediction that only 57,686 motorists a day would use the tunnel – a number ultimately pretty close to the mark.

“[They] quite frankly didn’t like the answer,” Mr Bannon said of the decision to drop the outside peak hour estimates.

Parsons Brinckerhoff also used the Sydney Harbour bridge and Sydney Harbour tunnel as comparators to help estimate the willingness for motorists to pay a toll on the Lane Cove Tunnel.

Mr Bannon suggested this was inappropriate because there are few alternatives to crossing the harbour apart from the bridge and the tunnel, but there are plenty of alternative routes through northern Sydney.

Parsons Brinckerhoff has since been appointed to work on the environmental and transport aspects of the WestConnex motorway which, if built, will be the largest motorway project in Australian history. Booz, since bought by PricewaterhouseCoopers, has been a favourite consultancy of Transport Minister Gladys Berejiklian.

After entering receivership, the Lane Cove Tunnel was bought toll-road operator Transurban for $630 million, about a $1 billion less than it cost to build.

The trial continues.

One thought on “WestConnex adviser “engineered” traffic numbers on Lane Cove Tunnel disaster”

  1. Peter Kus says:

    All parties to this action should be aware, if it not evident already, that Judge Pembroke will come into this with very biased.
    I cite 2 recent court cases:-
    Ronowska v Kus 2012 ( Equity Court)
    In this situation, two brothers and an independent witness were all deemed unreliable and self interested , whilst the plaintiff despite her illegal activities, was deemed to be “a devout catholic ” and totally believable. One brother was told in a derogatory manner, after his testimony , that he was “colloquial ” and could “now return to Lithgow “.
    This should be taken as an insult to people residing at Lithgow.
    In Ronowska v Kus (2) Supreme Court Equity,2012

    Pembroke showed his lack of knowledge in applying criminal law ? in this contempt matter, (amongst other things) by failing to nominate a sentence date. Resulting in the defendant being released from detention 6 months earlier.
    “Stick to hugging trees judge!” ( known as the ‘tree judge’ on his website) “you’d might do better service to the community”.

    Eberstaller v Poulos NSW Supreme Court Dec 2013. War of the Roses Sydney style SMH 28th July,2014.
    A more recent case of apprehended bias.

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