• LinkedIn
  • Twitter
  • Facebook
  • Youtube
  • Google+
 
Middle East  
 
 

The long term business case for rail

Looking ahead at the future of the construction industry locally, what are we likely to see in rail? Head of Rail at WSP | Parsons Brinckerhoff Brendan Young says rail has significant benefits to the region in the long term.

 

There is some talk about rail projects being ‘on hold’ in the GCC region due to the impact of lower oil prices and the resultant reduction in infrastructure spend. There is some truth in this statement as we are seeing programmes extend where it makes sense to do so.  That said, it is important to remember that the economic benefit for the region in developing a thriving rail industry is already well established and it is well recognised that the GCC will benefit greatly from rail infrastructure investment.

A fundamental truth about the rail industry is that it’s a great catalyst for economic development and prosperity, both directly and indirectly during project development and construction initially and then throughout operational service life.  As vital public infrastructure, railways connect people to places and products to buyers, forming a permanent backbone to local, regional and national economic growth.  According to the U.S. Department of Commerce every $1 invested in rail systems (track, locomotives, bridges, etc.) returns $3 to the American economy - a 200% return on investment.

There are a number of reasons why rail is great for our cities, including better connectivity and increased mobility and increased development opportunities along new rail networks - particularly at multi-modal rail hubs.  In many large cities upgrades to train stations have actually had a regenerative effect on the surrounding area and the local economy, becoming something of a community focal point rather than just a transit facility.  Since the 2007 reopening of St Pancras International, Kings Cross, London following £800 million of refurbishment works, the community has benefitted from a marked improvement to the station precinct with upmarket shopping facilities, regular music and drama events and even the longest champagne bar in Europe!   It has attracted a whole new demographic to the station development with around 25 per cent of its visitors never going near a train. This is a trend we are seeing worldwide and we have some great skills to offer in this area to help our client derive revenue from transit-oriented development.

Rail also creates jobs - both in the initial stages, during project development, as well as downstream during operations and maintenance.  Certainly for the Middle East, to achieve the ambitious GCC rail network there is a huge opportunity to build a sustainable industry in rail supply chain and operations and maintenance by further diversifying regional economies towards a greater emphasis upon service industry and the many employment opportunities this generates.

There are also benefits for commuters and general commerce as a viable rail network provides people with travel options while also reducing road congestion and traffic accidents as people migrate to public transport.  This freeing of road networks increases capacity for commercial trips and enables people and goods to move more efficiently around cities. This has obvious benefits to the economy and liveability in our cities.

A good example of this was demonstrated in a 2010 World Bank report which found the annual cost of Cairo’s traffic woes was about 50 billion Egyptian pounds – four percent of Egypt’s entire GDP. If you compare this to Jakarta, which is as densely populated as the Egyptian capital but has superior traffic management, the loss is far less – just 0.6% of Indonesia’s GDP .

Needless to say also, the environmental benefits of rail are well known.  The rail industry is leading the way in lowering operational energy consumption and sustainable design of stations and depots, demonstrating the ‘‘triple-bottom-line’ benefits of rail investment.

So when it comes to the future of rail in the Middle East, for me the future looks bright. Yes we may see some extension of programmes and yes, alternative procurement routes may need to be explored but ultimately the business case for rail is undeniable and it is my belief that our clients recognise this.  

Just last month we chaired an event in Kuwait where the response from senior officials in the room was extremely positive and the attitude was one of finding a way to continue the momentum we have all worked hard to generate. It’s just about finding a new way forward and that’s the kind of challenge we relish.

Brendan Young is Head of Rail at WSP | Parsons Brinckerhoff in the Middle East.