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1.24 million trips. Then the receivers arrived
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I’m going to China in a few days. Suppliers. Factories. Meetings. And plenty of opportunities to discover that what I thought I knew was wrong. Preferably before transferring any money. In big infrastructure projects, that timing matters rather a lot. Take Brisbane’s Clem7 tunnel. In April 2010, its operator announced that 1.24 million vehicle trips had been made through the tunnel during its first three weeks. Almost 59,000 a day. Lovely numbers. But meaningless… If you stopped at that headline, as an investor, you may have started mentally spending your dividends and bonuses… But there was a small detail. Very, very small… Those three weeks were toll-free. Oups. What we call in the argot, a white start… vamos, a marcha blanca de toda la vida. And you know what? People liked the tunnel…Especially when somebody else was paying for it. Then… of course… tolling started. In the first week after charges began, average daily traffic was just 20,602 vehicles. I repeat… just in case that you forgot… from around 59.000 to 20,602. Oups… And the tolls were still discounted. More oups… Apparently, “I would use this road” and “I would pay to use this road” in a survey… are different sentences. You know… Like the polls prior to elections… Ahhh…. these irritating linguistic details. And what made the detail particularly irritating… is that you have borrowed a fortune. On 25 February 2011, RiverCity Motorway entered administration and receivership. Less than a year after opening. The tunnel was still there. The financial expectations had gone somewhere considerably darker. So… the reflection of the day… Information needs context. And it needs to reach you while you can still act on it. A traffic figure without the toll conditions can tell you the wrong story. A construction price without the latest market context can do the same… … as a financing assumption that was perfectly sensible before interest rates decided to develop a personality. By the time the consequences reach your Board paper, everyone becomes remarkably well informed. Wonderful. Now they can explain precisely why you lost the money. Even more “wonderful”, I guess… Well… I prefer getting informed earlier. Before the signature. Before the transfer. Before “we should have seen this coming” becomes the opening sentence of an emergency meeting. That’s why I’m going to China. And that’s why I recommend Morning Brew. Business, markets and economic news, explained quickly, with enough personality to keep you awake. Their free newsletter reaches more than four million professionals. Get smarter over your morning coffee. It’s a much more pleasant setting than getting smarter in front of your lenders. Use this information at your own risk. 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
Weekly insights on how to perform when it matters | High-stakes decisions. Real situations. No BS. | 👇JOIN +2k readers 👇
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