The $1 Billion Lesson in Arrogance (that taxpayers paid for)


Let me tell you a bedtime story.

It’s about a classic PPP project.

​

However, it’s a bedtime story for the nightmares.

​

It starts in Australia.

Sunshine.

Kangaroos.

And a bunch of brilliant bureaucrats who thought they could outsmart the laws of project finance.

​

The name?

Airport Link Tunnel in Brisbane.
The year? 2010.
The cost? $4.8 billion AUD.
The outcome? A flaming, billion-dollar disaster.

​

You see, they had a vision.

A tunnel linking Brisbane Airport with the city.

As I said… A classic PPP.

​

Except it wasn't.

​
Because here’s what they did:

They forecasted 135,000 vehicles per day.
Actual usage? 56,000.

​
That’s not a small miss. That’s delusion wearing a hi-vis vest.

​

They gave a 45-year concession.

​
Guess how long the private company lasted?
Two years.

​

They put most of the risk on the private sector.
Which sounds sexy in a press release, my friends working for government agencies – I know many of you read this newsletter…

Well…

​

The theory of risk transfer works perfectly… until the private sector runs straight into bankruptcy court.

​

By 2013, BrisConnections, the private consortium behind it, was dead.
Equity wiped.
Investors furious.
Lawsuits flying.
Public confidence? Torched.

And the cherry on top? La guinda, as we say in Spanish?
Retail investors were lured in with aggressive marketing and promises of gold.

​
Some lost their savings.
Others tried to sue.
Many just cried.

Meanwhile, the government shrugged:
​"Not our problem. It was a private failure."

​
Except…

​
Who do you think inherited the road?

Yes…

Yes…

Exactly.

​

We keep saying PPPs are about risk transfer.

​
But what good is transferring risk if you’re handing it to people who believe PowerPoints more than traffic models?

This wasn’t a tunnel.
It was a taxpayer-funded grave for common sense.

​

Moral of the story?
When your traffic forecasts come from a wish and a prayer,
When your risk allocation is designed to impress, not to function,
And when your procurement is driven by headlines, not expertise…

​
You don’t get innovation.
You get insolvency.

Sweet dreams, my friends.

​

By the way… Want more brutal truths about PPPs, minus the buzzwords?
Click below:

$99.90

The 15 Top Lessons of a PPP Project Nightmare

Learn about:
The number 1 killer of Projects
Why this was not going to be just "another construction project, mate"... Read more

​

​

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 👇

Read more from Vicente Valencia

This past Sunday, I was walking with my wife and son. A construction site. My son loves them. They were dismantling a big crane. Right next to our house. I was telling my wife… “For less than that, I shut down an entire work front on my last project.” There was a worker walking along the crane, without a harness. “He should be wearing a harness… Actually, he shouldn’t even be up there.” “Well,” my wife said, “That guy over there isn’t wearing one either, maybe they don’t need them.” “He...

If you are not going to love the answer, don’t ask. Simple. And still people… ask. I love chocolate. I make a terrific chocolate cake that is being famous in Spain, Canada and New Zealand. I pour fondant chocolate for a small army. 100%. Dark. Real. Pure chocolate. No sugar. I enjoy making this cake so much!! For my 3 year-old son’s birthday… do you think that I’m going to ask parents whether I should put 5 tablets of dark chocolate in the cake? I’d be crazy. Still, many people would ask. For...

Last Friday I almost closed a chapter. A terrible project. Lost lots of money. And of course… I’m looking now for the next. Many people out there play not to lose. But this is a losing strategy. You learn a lot when you lose. You barely know what went really well and why when you just win. It can be anything. But when you lose, you learn. Really well. You adjust. You repeat. You increase the odds for next time. When investing in real estate I see this trend all the time. Invest. It didn’t go...