McKinsey appointed consultant for MRT


  • Business
  • Wednesday, 09 Mar 2011

PETALING JAYA: McKinsey & Co has been hired as consultants to carry out the value management study (VMS) on the mass rapid transit (MRT) project.

This was revealed by Azmi Abdul Aziz, the chief development officer of Public Land Transport Commission (SPAD) in his presentation at the Greater KL: Smart City of The Future Conference on Monday.

The VMS is an important element in SPAD's plan to ensure that the MRT is carried out in the most cost-efficient way.

“The (MRT) project on its own is not viable but this is not something new. It is proven in the experience of other countries,” Azmi said. “So we are putting in efforts to ensure that the construction cost is minimised. Part of that effort is the engagement of McKinsey for work on the VMS.”

“We will be looking at land development and property development to help bring down the cost. It will be a rail-plus-property project.

“We will have fare and non-fare income from things like advertising and will ensure the maintenance cost is kept at optimum levels,” he said.

In an earlier interview with StarBiz, SPAD chief executive Mohd Nur Ismal Kamal had explained: “One interesting mechanism being used for the MRT project is the VMS, where an independent party will scrutinise the project plans and ensure that the optimum value is derived.”

He also said the VMS will help decide the selection of the proposed alignment and station locations to “make cost most effective” but at the same time, also consider the factor of helping unlock the full potential of real estate values in locations where the stations are located.

“The VMS will also design a procurement policy which will ensure cost savings and prevent any extravagant spending,” Mohd Nur said.

Another aspect of the VMS is that it will help with the early identification of non-fare box revenue.

“Such revenue will include rental or sale of property surrounding stations which can significantly contribute to future expansion of the network and system maintenance and upgrades.

“This kind of practice is again not new. About one third of the revenue of Hong Kong's Mass Transit Rail system is not from ticket sales, while in Tokyo the non-fare revenue is as high as 80%,” Mohd Nur told StarBiz.

“With all these steps being taken by the Government, it is hoped that the MRT project will delivered to the rakyat on time for them to enjoy its full benefits at the lowest possible cost,” he said.

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