TRAFFIC FORECASTERS SUED FOR CLEM7 NUMBERS
Written on the 18 May 2012
RECEIVERS of River City Motorway Group (RCM) have launched a $2 billion Federal Court legal action against traffic forecaster, Aecom.
KordaMentha accuses the Brisbane-based company of ‘misleading and deceptive conduct’ and making ‘negligent misstatements’ by ambitiously forecasting more than 100,000 vehicles a day while actual traffic volumes only totalled 22,000 a day.
The insolvency firm also alleges Aecom had predicted future demand by referencing a ‘one-hour demand forecast from a two-hour weekday peak-hour period’ without ‘allowance for seasonal adjustments’ including school holidays.
“We believe the work done by Aecom to support their traffic forecasts was substandard. We have engaged third party experts to review their output,” says KordaMentha partner Martin Madden.
After RCM’s Clem Jones Tunnel (Clem7) consistently failed to meet projected targets, the group financially collapsed in February 2011 with debts totalling $1.3 billion. The entity is now speculated to be worth just $500 million if sold.
“As a result of their work, RCM invested and borrowed significant sums. Aecom is liable as its work was negligent and caused significant loss to RCM, which resulted in its insolvency,” says Madden.
Aecom has undertaken forecasting studies for Sydney’s Cross City Tunnel (CCT), Lane Cove Tunnel (LCT) and Westlink M7 motorway but been scrutinised after the commercial failures of CCT and LCT.
An Aecom spokesperson says the company will ‘vigorously’ defend its actions and dismisses the allegations as ‘totally without merit’.
A Federal Court hearing has been scheduled for June 21.
Meanwhile Brisconnections, which is overseeing construction of the $4.8 billion Airport Link project, has defended its sluggish traffic forecasts in its latest annual report by describing traffic volumes outlined in its 2008 prospectus as ‘reasonable’ and unchanged.