AECOM was forced to pay out $280 million in damages and another $121 million due to the incorrect and misleading traffic modelling that was relied on by investors in a major infrastructure project.
THAT should have got your attention.
As a reminder, AECOM is the author of the draft Business Case document for the Cowes to Stony Point Car Ferry project.
We will give you some background information on those court cases shortly.
In our article late in January of this year we made evident how the many reports and presentations since 2003 had included data to support a Cowes to Stony Point car ferry. We further explained in great detail how each one of these had presented conflicting data.
One of those reports was provided in 2008 by Maunsell Australia, now known as AECOM.
We then started to dissect the Cowes to Stoney Point Car Ferry Discussion Paper developed by EarthCheck and a of a group of subcontracted consultants headed up by Mark Olsen.
In this same article we made you aware of the numerous mathematical errors, non-verified and/or misleading assumptions and estimates as to the proposed car ferry’s usage and economic benefits.
We had come to the unfortunate conclusion that the ‘Discussion Paper’ is at the very least a very inaccurate document, in fact, could be deemed misleading.
Our next article went on to review statements in the Discussion Paper as to the alleged benefits of establishing a car ferry service. They were as follows; time saving, access to emergency services, residents travel for shopping, school or work, as well as the increased numbers of visitors during the winter season.
Also made clear was the fact that the majority of car rental companies will not allow their vehicles on ferries.
What we then concluded was that if the Discussion Paper information, assumptions and estimates were used in the draft Business Case document then this would result in a flawed, inaccurate and misleading Business Case.
Review our previous articles and research →
On 21st of February 2018 the draft Business Case document was released to the public.
Any financial data that was in the Discussion Paper did not appear in the draft Business Case.
It appears this was because the date of the first year of operation was shifted from 2024–2025, to 2021–2022.
Then the financial figures jumped from Year 1 operation, to Year Seven operation being, 2027–2028.
It now became difficult to compare a document which one was provided to form an opinion on, with a new document that contains unrelated financial data.
However, EarthCheck and those same subcontracted consultants who created the inaccurate and misleading information in the Discussion Paper, were again given the responsibility to provide data for the draft Business Case.
This Draft Business Case often quotes a document called the ‘Phillip Island San Remo Visitor Economy Strategy 2035’. EarthCheck and those previously mentioned sub contracted consultants were its developers.
Since the release of the draft Business Case, EarthCheck seems to be taking a back seat.
Many of us wrongly assumed that they were contracted to develop the draft Business Case, we know now that AECOM are the creators of this.
In more recent articles we revealed that in general, a large part of the information used by AECOM to support the car ferry was misleading and inaccurate.
We of course refer to the traffic and visitation estimates AECOM used to support the viability of the car ferry which involved the increased visitation during the winter months, as well as residents using the car ferry for various activities.
AECOM used international examples to support their traffic and visitation estimates, which we proved Hon. John Pandazopoulos, Chairman of Destination Phillip Island, conceded in a public forum that the alleged benefits for residents, workers and students were questionable.
A very important issue to note, is that an independent review of any of the facts or figures in the draft Business case has not been performed.
We want to return to the draft Business Case in order to highlight some interesting points.
In Appendix C, called Approvals Pathways, AECOM has outlined in some detail all the planning and environmental approvals most infrastructure development projects would be required to go through.
All are embedded in some type of State legislation.
AECOM is recommending that there be Ministerial Intervention, meaning that the Minister of Planning, Hon. Richard Wynne MP, use his powers to amend approval requirements under the various Acts to facilitate the project.
In simple terms this means, to make it happen.
AECOM has also stated that Ministerial Intervention would have the following benefits: “…overcome the lack of local planning authority support” “It can remove the need for further public notification”.
OK. Now let’s direct your attention to AECOM, the company.
PEI Financial Research Group through their publication Infrastructure Investor, reported a story on 2 October 2015 in which AECOM Australia was sued and ordered to pay damages relating to their overly optimistic traffic volume forecasts that as a result, forced a toll operator in Brisbane to go bankrupt.
AECOM had been paid $2.5 million dollars to create the traffic forecasts for a project. The court ordered damages to be paid that totalled $280 million. Read the complete story.
In a second out of court settlement relating to the above mentioned forecasts, AECOM paid out an additional $121 million in damages.
A Sydney Morning Herald newspaper article said:
“Maurice Blackburn has previously said that RiverCity investors relied on information in the toll road company’s product disclosure statement, including AECOM’s forecasts, when buying shares and were “misled” into thinking that the tunnel project would have plenty of traffic.”
Sydney Morning Herald (June 1, 2016) — Read the article
In another article by The Australian, it was stated that the AECOM court case and settlements were a wake up call to State Governments.
The article goes on to say:
“The traffic forecasting estimates that were the subject of this matter were provided approximately 10 years ago,’’ the spokesman said. “Since this time, governments in Australia have been working with the private sector to improve practices to ensure more robust methodologies for forecasting are applied.”
The Australian, Business Review (February 22, 2015)
In an article in New Matilda the investigative journalist reveals, we quote:
“Leighton Contractors and AECOM – two key players in NSW’s controversial WestConnex project…had been awarded the largest share in all three of the Baird Government’s WestConnex construction tenders, worth more than $8 billion. But not before the NSW Government made a mockery of the process created to ensure environmental checks and balances – the NSW Department of Planning assessed and approved an Environmental Impact Statement (EIS) after the contracts were awarded.”
Excerpt from NewMatilda.com article
The article goes on to say:
“The EIS, which included crucial traffic projections for Stages One and Two of the project, was produced by global engineering company AECOM.
The economic justification for the entire project – not to mention the traffic congestion, air quality and noise predictions – rests on the accuracy of AECOM’s predictions.”
Excerpt from NewMatilda.com article
As the writers of these articles we have stated that we are neither for, nor against the proposed car ferry.
We understand that there will be supporters of the car ferry. With due respect, we ask these supporters a question:
- If you were asked to invest your own money (not a lot) in the car ferry service knowing what you now are aware of from a business viability point of view, would you?
There are more important questions that we should all be asking:
- Why are the State government and local government using a company that has a history of supplying incorrect and misleading traffic modelling information for the development of a car ferry project here on Phillip Island?
- How can the Regional Development Victoria (RDV) and the Hon. Jaala Pulford MP make an informed, reliable decision regarding the suitability of this project based on the potential of using misleading information?
- Has the Regional Development Victoria (RDV) made this information available to the proponents who are already being considered to operate this flawed car ferry project?
- Has Regional Development Victoria (RDV) and/or any other departments being considered for financing of this car ferry been informed of the failure of the Clem7 and RiverCity Motorway Group and that AECOM’s flawed traffic modelling is the reason for this?
- What are State government and local government doing to investigate the validity of the current usage modelling and the subsequent impact on the plans for this entire project?
- Why are the State government and local government intending on proceeding with the car ferry project without an independent Environmental Impact Statement performed first?
Perhaps all of Victorian tax payers need to ask this question:
- Why are you the State Government, spending $80 to $100 million dollars on a highly questionable project when the building of schools, hospitals and the fixing of our roads are desperately needed?
Forward your questions to the following:
- Daniel Andrews — Premier of Victoria
- Juula Pulford — Minister for Regional Development
- Richard Wynne — Minister for Planning
- Jacinta Allan — Minister for Major Projects
- Luke Donnellan — Minister for Ports
- John Eren — Minister for Tourism
- Tim Pallas — Treasurer
- Pamela Rothfield — Mayor of Bass Coast Shire
- Bryan Payne — Mayor of Mornington Peninsula Shire
Remember: the Victorian State Election will be held this November.