Thoughts and Opinions On Today's Important Issues

Monday, June 14, 2010

BLOGExclusive: "Mich-Can Bridge would be in receivership today!"

It looks as if Wilbur Smith Associates knows a lot more about the Windsor/Detroit border than they have told us. In fact, if they know a lot more, perhaps that is why they have kept quiet the results of past traffic reports prepared by them if my information is correct. The results may well be another in a list of traffic projections that completely misread future border traffic and bear no relationship at all to actual numbers.

That may be as well why one of the DRIC RFPOI submitters has been so quiet about its past involvement in the border file. Read on!

It is no wonder that the DRIC-ites want legislators to "Stop Asking Questions On DRIC Forecasts."

We found out in the Senate hearings that Wilbur Smith Associates did the traffic forecast for the Blue Water Bridge. We also know now that traffic on both "twinned" bridges there has never reached the numbers compared with the time when there was only one bridge. Thank goodness for P3 operators and investors who might have put in funds that it is a "Governments" bridge and with low tolls as well (until recently when they were almost doubled), or it could be broke today. Their investment would be in the toilet and who knows what the bondholders would have done with the crossing.

Hmmmm, a riskless, no-brainer consequence that no one has wanted to discuss relating to Canada's $550M DRIC offer. I am sure you can guess why not as well as I.

Now the BLOGMeister has learned exclusively that WSA also did the original traffic forecast in the 1990's for the Mich-Can International Bridge Company, one of the key border proponents at one time for the new bridge between Windsor and Detroit.

In case you have forgotten what that project was:

It was a venture between Fluor Daniel, a huge American engineering and construction company and a group of Canadians whose job it would have been to operate the border. Here is how Fluor describes its approach in its documents to the DRIC RFPOI

  • "Fluor’s approach to construction of large projects is typically a balance of self-perform and sub-contracting to meet our clients’ goals for local participation and still deliver the project in the most cost-effective manner. In order to control project schedule, we typically self perform work on the schedule critical path. Our experience has shown that local firms and disadvantaged business enterprises (DBEs) deliver competitive prices, provide the depth of knowledge of local conditions that drive project success, and bring diversity of experience and knowledge that provides better solutions. We subcontract to local contractors who have resources in the area and clearly understand working conditions and local requirements and norms. This benefits our clients because the efficiency of working with local contractors reduces project costs and it benefits the local economy, which fosters local acceptance for the project and enhances the local perception of the client."

When looking at the DRIC project results today, what is remarkable is its similarity as to location and as to approach with that of Mich-Can.

Wilbur Smith Associates are not the only ones keeping quiet some information. Fluor was one of the parties that submitted a proposal for the DRIC Bridge. You would have to have lots of patience to read their proposal because it is the last one in the 521 page document submitted by MDOT. The placement is very interesting to me.

Nowhere in their submission does Fluor state its role with the Mich-Can bridge or reveal traffic projections. It really is a humourous when they say the following:

  • "We have followed the Detroit River International Crossing Project with great interest since its conception and have already advanced teaming discussions with potential partners, local subcontractors, and key local consultants for the pursuit and execution."

Note the following comments from the Fluor proposal and you will get a hint from what was learned in the past:

  • "Availability Payment Concession – Using this approach, Fluor (or the Fluor team) would be responsible for the design, construction, financing, start-up, and operations, maintenance and rehabilitation of the project but would not take traffic risk in its compensation structure. We would size our availability payment to amortize project debt, pay OM&R costs, and generate a return on equity invested...

    Lower cost of financing than a true toll road because traffic risk is assumed by the public sector...

    Confirmation of the financial feasibility of the deal structure (if toll road, plan of finance; if a subsidy is needed, quantification and sourcing)"

The BLOGMeister has been told by sources that the Mich-Can orginal traffic study was done by WSA in the 1990s. Their pro-forma balance sheets were built on "growth." In fact, the Mich-Can people spent several days in New Haven where WSA is located and apparently, no one ever guessed that a slowdown might occur.

As it was put to me:

  • "Economics 101 was forgotten by those gurus."

Note from the comment I placed above. The plan for the Mich-Can Bridge was to open in 2001. By this time, traffic had peaked in 1999 and was beginning to slow down even before 9/11.

The shocking comment made to me was

  • "If the parties had built the bridge according to the schedules they received, they would be in receivership today!"

Is it a surprise that the track record of WSA is 50-50 and that they insert a full-page disclaimer in their Refresher report?

One of the Michigan Senators asked whose numbers he should trust. With all due respect to WSA, unless they can provide clarifying information, their report should be tossed out. It does not meet the requirements of section 384 anyway.

MDOT must require WSA publicly to deal specifically with key issues relating to traffic reports and provide satisfactory answers. It is not sufficient for a WSA representative to appear in front of the Senate merely to say that he did not work on other projects and so cannot answer any questions about them or that other reports are confidential. Failure of WSA to do so should result in their report being ignored.

Senators need to ask themselves if they should trust MDOT's judgement on matters so important as P3s and border crossings when their consultants are not free to disclose relevant information!

I have no idea if they were asked to sign a "coflicts" statement but here is one that I saw that the DRIC people asked for from other Consultants:


    A commitment is required from each Consultant to maintain objectivity, avoid conflicts of interest, and abstain from financial entanglements that would create the appearance of a conflict of interest. ...

    Additionally, the Consultant and its Affiliates agree not to have any public or private interest, or acquire directly or indirectly any such interest in connection with the project, that would conflict or appear to conflict in any manner with the performance of the services under this Contract."

Questions have now been raised in relation to Wilbur Smith Associates about the following matters:

  • Acting for the Mich-Can International Bridge Company in doing a traffic study but not revealing the information obtained, presumably because it is a confidential still to that party and therefore cannot be released. How bad were the results of the traffic projections compared with actual traffic?

  • That is precisely the situation that WSA has in relation to the Canadian Government Traffic Report that it prepared which was the basis of its "Refresher" for Michigan, information for which, including revenue forecasts, they cannot reveal without Canada's permission.

  • A local office of WSA signed an advocacy advertisement supporting the construction of the DRIC bridge.

  • If WSA signed a conflicts statement similar to the one above, would they have a significant problem

  • WSA acted against the interests of the Ambassador Bridge Company in both Port Huron and in Buffalo.

No wonder the DRIC-ites are demanding that we


Who knows what we will find if we keep on asking questions and digging deeper. It appears as if we are merely scratching the surface right now.