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Saturday December 15, 2012

Gamuda on track with MRT project

The KVMRT SBK line under construction. The KVMRT SBK line under construction.

GAMUDA Bhd group managing director Datuk Lin Yun Ling looks re-energised. During Gamuda's board meeting on Thursday, the board just approved the renewal of Lin's contract to helm the company for the next five years, come June 2013. Further entrenching Lin's optimism on Gamuda is the doubling of his shareholding in the company from some 34 million shares to 67.63 million, and thus increasing his stake from 1.7% to 3.25%.

The reason for the fresh perspective to his career has been the biggest job Gamuda has tackled. As the Project Delivery Partner (PDP) with MMC Corp Bhd, Lin and his team at Gamuda are busy planning basically all aspects of the My Rapid Transit (MRT) project in the Klang Valley.

MMC Gamuda KVMRT (PDP) Sdn Bhd a 50:50 joint-venture company between Gamuda Bhd and MMC Corp Bhd was formed on Dec 27, 2010, while the formal agreement between Mass Rapid Transit Corp Bhd (MRT Corp) and MMC-Gamuda JV on the appointment of the latter as the PDP was signed on Feb 10, 2012.

The primary function of the PDP is to deliver the KVMRT Sungai Buloh-Kajang (SBK Line) within the agreed key performance index of target cost and completion date.

The total target cost would include the total aggregate works packages contract value and reimbursables capped at RM2.8bil.

Piling works

To date, MRT Corp has disbursed some 95% of the value of the project and is on track to complete it by July 2017. Work has started and this is evident from the various construction structures, ground and piling works that have started throughout the Klang Valley.

“I would say that we are on track to complete the SBK Line by mid-2017. Being PDP is significant. It is more than just being a turnkey contractor,” he tells StarBizWeek.

To ensure efficiency, Lin said there are now some 2,000 people working with the PDP for the SBK Line project, out of which 700 are directly hired and a further 600 are supervising consultants and 700 engineering and design consultants.

Some RM2.8bil has been allocated for the salaries and reimbursables (third party costs) such as engineering design and supervision fees and site investigations, among others, for the SBK Line.

Lin is pleased with the way the PDP model is meeting expectations for the project owner.

“To take an out-of-the-box approach using the PDP model was a bold move by the Government. It is as Blue Ocean as it gets. The benefits of using the PDP model can be seen in three aspects: spread', speed' and skills development',” explains Lin.

Lin explains that in terms of spread, this refers to the number and breadth of work packages being awarded. For example, there are more than 90 works packages to maximise participation by local contractors.

“This is spread out to big and small contractors so all have a share. The procurement process also becomes fully transparent. With so many contracts, the number of interfaces between the work packages is tremendous. PDP will have to manage it well,” Lin says.

In terms of the speed of rollout, Lin said that approval for the SBK Line was first obtained in Dec 2010, and construction commenced in less than two years.

“With the PDP, we are able to move faster because we can fast track the engineering process, we are familiar with the approval process for the railway scheme, land acquisition and local authorities. We have the incentive to do everything right and on time because the PDP guarantees the Government against any delays. Our fees are greatly reduced with delays,” says Lin. Skills development

For Lin, the rollout of the MRT presents not just an efficient mode of mass public transport in Greater Klang Valley but also provides an opportunity for the Malaysian workforce to acquire new and high order skill sets.

“In line with the Government's Economic Transformation Programme, the nurturing of local talents during the construction process of the MRT will sustain our move up the technology value chain and enable higher income jobs to be created,” says Lin.

Lin notes that there are currently yawning skill gaps in the local rail industry workforce. This has forced the PDP to resort to recruiting highly-skilled expatriates on two to three-year contracts. Their positions are mainly to fill in the gap for operational software integration, train power systems and driverless train control and signaling systems,” Lin adds that the PDP is also putting in place a comprehensive understudy programme, whereby local engineers are trained to eventually take over these responsibilities.

For example, there are 150 experienced engineers and 200 graduate engineers who are trained via the understudy programmes to ensure the entire rail technology value chain is developed and managed by locals in the coming years.

For the underground works, MMC-Gamuda JV has the Tunnelling Training Academy. The training is targeted at 2,000 people across the entire spectrum from engineers to mechanics and technicians, operators, supervisors and skilled workers, providing a head-to-toe route from academy to on-the-job training.

“We have the most to gain from doing it well because our incentives are aligned with effective outcomes,” says Lin.

In facing the longer term and sustainability issues of the MRT, MRT Corp and PDP are on the same page that this project is more than just building the line.

First up is the issue of better connectivity especially on the interchange with other lines, buses and taxis. Next is the quality of access to stations, for example, the feeder bus systems, park and ride facilities and even bicycle parking.

Studies on second and third lines

“We need full WiFi access throughout our MRT and a seamless ticketing system. Supporting this will be a sustainable and accountable platform for operations and maintenance. For the vibrancy of the stations and the surrounding area, there needs to be good integration between the commercial and retail activities. We also need to be energy efficient during operations. These are the other aspects of the MRT which are just as important as creating multiplier effects,” says Lin.

Meanwhile, the Government is already conducting feasibility studies on the construction of the second and third MRT lines and will make the decision on the lines next year.

The two new MRT lines consist of the “Circle Line” which is an orbital line around the main Kuala Lumpur city while the other line is similar to the SBK Line, but runs from the underserved areas of Kepong and Sri Kembangan.

“To determine the right time for the next line, two main things are to be considered. First of all, avoid bunching the lines together as that will stretch the supply chain. And the scenario where contractors and experienced manpower finish the current line with no continuity should be avoided. If they leave for other countries, it becomes a lot more costly to rehire them,” explains Lin.

Timing wise, the SBK Line was approved in Dec 2010, and it took two years for construction to get off the ground.

“The civil works will only take two and a half years of the entire five-year timeframe needed to complete the MRT. The second half of that is needed for outfitting systems, testing and commissioning,” says Lin.

“Taking all this into account, approval for the next line will need to be obtained before mid-2013 so that construction works can begin in 2015. This will be just nice as the civil works for the first line will be coming to an end by then,” says Lin.

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