Case Study on the Reasons of Failure of PPP Infrastructure Projects

Failure Reasons of PPP Infrastructure Projects: Case Study of Kuala Lumpur LRT
Project
Malaysia was growing in population as a result of rapid development. This resulted in
an increase in car traffic, particularly in the city of Kuala Lumpur. Additionally, residents
suffer difficulties as a result of the area's overcrowding. LRT initiatives have been
implemented by the government as a way to alleviate traffic congestion in the city. The LRT
project was launched using the Build Operate Transfer (BOT) contracting method. The
contract was signed by the Malaysian government, Sistem Transit Aliran Ringan Sdn Bhd
(STAR-LRT), and Projek Usahasama Transit Ringan Automatic Sdn Bhd (PUTRA-LRT).
PUTRA-LRT, a subsidiary of Renong Bhd, was tasked with the responsibility of planning,
constructing, operating, and maintaining the line.
This organisation was chosen based on its previous achievement in the fields of
engineering and management. The company possessed extensive experience managing
roadway, power production, and infrastructure projects. Another partner to the LRT
transaction was STAR-LRT, which was majority-owned by the British corporation Taylor
Woodrow. In order to construct one of the world's largest privately funded infrastructure
projects, the organisation raised and invested $850,000,000 in funding and development.
After the financial crisis of 1997, when inflation soared from 8% to over 40%, the LRT was
doomed from the start. The Kuala Lumpur LRT project was determined to have flopped
during the operation phase. Lower than expected passenger numbers have made LRT services
unstable. Both companies denied to repay the loan, and as a result, the government served
default notices on START-LRT and PUTRA-LRT, requesting repayment within 14 days.

Project life cycle considering Project Implementation:
Initiation, planning, implementation, performance and monitoring, and closing are all
significant stages in the project life cycle. The five phases of the project life cycle determine
whether or not a project is successful. The construction industry has acknowledged the
project as a high-complexity endeavour with various construction risks, significant cost
implications, highly technical needs, and a diverse set of resources. In this scenario, the LRT
project was victoriously implemented, but performance was impacted by macroeconomic and
other external conditions that neither the project leaders nor the stakeholders anticipated
during the project's duration. The project was abandoned due to operational issues.
Initiation Phase: The project needed to improve congestion and create money through Light
Rail Transit (LRT). The project's need and objective were clearly identified, and the project
was documented and approved.
Planning Phase: Planning is vital in construction projects. The project scope, budget, risk
analysis, and feasibility research are all part of the planning process. This project had a
budget, collaborators, and risks that were evaluated before it was executed. The LRT project
used an outcome-based strategy.
Implementation Phase: START- LRT and PUTRA- LRT collaborated on the project's
design and quality. The LRT implementation phase was more challenging, although the
companies involved had vast infrastructure experience. A well-developed team, effective
resource allocation, tracking systems and revised project scheduling enabled them to
successfully complete the project.
Performance and Monitoring Phase: It guarantees that all processes and elements are in
sync with the project timeline. This phase concentrates on resource management to maximise
the project's outcome. In the instance of LRT construction, the project's outcome was the