I talk about Personal Growth, Management, Infrastructure and More | C-Suite Executive | Mentor, Coach, Strategic Consultant | Real Estate Investor | 👇JOIN +2k readers 👇
A terror story inside
|
If you believe that “serious” countries are exempt of terror stories in the infrastructure space, think twice. ​ Even in the UK, the had the case of the Ghost Toll Booths. ​ The M6, a big PPP project in the middle of the country opened in 2003. Cost, around 900 million pounds. The project was financed through a mix of equity and debt, relying heavily on toll revenues to repay lenders and provide returns to investors. ​ And as it happens with many projects, the financing model for the M6 Toll assumed a high volume of traffic would be willing to pay for faster travel and cross the West Midlands. ​ Banks and investors were shown models predicting 75,000 vehicles per day would use the toll road. Reality: only about 50,000 vehicles. Worse, they tried to increase tolls… and drivers began avoiding the road entirely, opting for the free M6 instead. ​ In 2006, desperate to boost traffic numbers and revenues, project sponsors hired consultants to conduct studies on why drivers were avoiding the toll. One of the consultants jokingly pointed out that "even ghost drivers won’t pay this much." The poor financiers began referencing “ghost tolls” in internal memos to describe the imaginary vehicles in their original financial models—vehicles that never materialized but were crucial to making the spreadsheets work. ​ The “ghost tolls” became a running joke in the industry as an example of overly optimistic traffic projections in PPP projects. Critics quipped that the project wasn’t just haunted by its financial ghosts—it was cursed. The M6 Toll’s lenders eventually had to restructure the debt, and in 2013, the project went into receivership. It was later sold to private investors at a significant loss. Despite this, the project still operated and served as a functional motorway… ​ For other nightmares and ghosts… you can check the link below. ​
​
​ PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. ​ ​ |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | C-Suite Executive | Mentor, Coach, Strategic Consultant | Real Estate Investor | 👇JOIN +2k readers 👇
The Skye Bridge, connecting the Isle of Skye to mainland Scotland, was one of the UK's earliest Public-Private Partnerships. Opened in 1995, it was financed and constructed by a private consortium under a 27-year concession. The bridge replaced a ferry service and promised faster, more reliable access to the island. Until here… nothing new or strange under the sun. Right? Except that nobody told the locals… The private consortium set tolls significantly higher than anticipated, charging £5.40...
The Channel Tunnel, or "Chunnel," connecting the UK and France, was one of the most ambitious engineering feats of the 20th century. Over £9 billion or about $21 billion today. 50.5 kilometers (31.4 miles) of tunnel under the English Channel. Politicians smelling the blood of taxpayers… Paradise for corruption and things that can go wrong. During the project, some lonely managers noticed something strange. The daily records for soil removal from the British side of the tunnel didn’t add up....
Imagine this. The Big Dig in the 90s. A massive highway infrastructure project in Boston, Massachusetts, that aimed to reroute Interstate 93 into a 3.5-mile tunnel beneath the city. One of the largest and most complex infrastructure projects in U.S. history. Total cost, over $14.6 billion. Initial estimation, $2.8 bn. So typical. Well… as you can imagine, this required many workers… thousands and thousands of them. And workers, from time to time, need to do first and second… especially, after...