TRAFFIC FORECASTERS SUED FOR CLEM7 NUMBERS

TRAFFIC FORECASTERS SUED FOR CLEM7 NUMBERS

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.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How to conduct an effective board assessment: a step-by-step guide
Partner Content
Your directors should conduct a board assessment annually. Let's examine what a boa...
OnBoard
Advertisement

Related Stories

“Lifting up your eyeline”: Lessons on ambition from the founder of a unicorn

“Lifting up your eyeline”: Lessons on ambition from the founder of a unicorn

While today ed-tech Go1 is a 'double unicorn' with a global...

Love is in the wallet: Australians to splurge $485m on Valentine’s Day

Love is in the wallet: Australians to splurge $485m on Valentine’s Day

Vibrant bouquets and sweet treats are high on the agenda for Austra...

Group structure thought starters: How should mine look?

Group structure thought starters: How should mine look?

What does your corporate structure say about you? Does it showcase ...

Administrators kick off sale process for Sun Cable

Administrators kick off sale process for Sun Cable

Administrators FTI Consulting have this week opened up the bidding ...