Saturday, September 19, 2009

Parsons Brinckerhoff Bought By Balfour Beatty

NOTE: We've moved! Visit us at the California High Speed Rail Blog.



News broke on Friday that Parsons Brinckerhoff, which has a contract to be the program manager for the California high speed rail project, has been bought by Balfour Beatty, a British construction company:

A British construction company, Balfour Beatty, said Thursday that it had agreed to buy the New York transportation engineering group Parsons Brinckerhoff for $626 million.

Balfour Beatty said the deal would help it establish a global professional services business with more than 14,000 employees and give it a leading position in public works in the United States as the Obama administration spends billions upgrading the railways, roads and bridges.

Balfour Beatty has extensive rail project experience, including being a co-contractor on the Channel Tunnel and London's Docklands Light Railway. It is unclear that this point how the purchase will affect Parsons Brinckerhoff's operations or practices, if at all.

Let's hope this British purchase of a successful American firm turns out better than it did for Sterling Cooper.

36 comments:

Brandon in San Diego said...

PB will likely end up being the professional arm for Belfour Beattyy... doing the planning studies and engineering designs while BB will focus on construction.

This is likely a good match FOR the two... and provides effeciencies in efforts for developing "Design-Build".

However, I can also see a negative.... having the two tied together for that same purpose. Either one of the two may be limited in their ability to develop joint proposals with other construction or engineering firms... limiting options for themselves and the prospective customer.

Further, in those "design-build" opportunities, it would seem construction firms without formal relationships with design firms would be at a disadvantage. To this end we could see a wave of engineering design firms merging with construction firms.

Granted, I have limited knowledge on the design-build market... and the typical practices today for joint proposals for those projects. I do have some exposure to joint proposals for other types of projects.

Anonymous said...

PB is employee owned. What do think Tony Edward's payout will be?

Anonymous said...

Maybe they will send somebody smart over who will recommend dumping Tehachapis-Palmdale.

Anonymous said...

Oops I mean Tony Daniels.

Anonymous said...

Looks like the French want to run our railroad...

http://groups.yahoo.com/group/BATN/message/42598

"In a cover letter to the packages, Mr. Guillaume Pepy, the Chairman of SNCF and Chairman of Eurostar, noted that in California, Florida and Texas, SNCF's review and analysis of the available data regarding these three states leads it to the preliminary conclusion that HST 220, High-Speed Train passenger services operated at up to 220 mph, in these corridors will produce significant public benefits - benefits that will offset by almost twice the public investment in the design and construction of the systems."

BruceMcF said...

They only want the potential jewels in the crown - given that Americans a 2 and a half times more mobile than Europeans, they seem to figure that clearly offsets any reduction in mode share that HSR can expect due to the egregious public subsidies of air and especially car transport.

Alon Levy said...

Judging by the map on The Transport Politic, SNCF is also backing the route choices for California: Pacheco, Tehachapi, center city alignment for tracks. And it projects 65 million annual riders - less than the 90 million of CHSRA, but more than what any skeptic says.

AndyDuncan said...

The Cambridge Systematics numbers listed 65m in 2030 as base and 96 million as "high" estimates.

If SNCF is predicting 65 million by 2040, they're not far off the "base" numbers, although they think it will take 10 years longer to hit that number.

Still, good to see they think it can turn a profit at 50% airfare ticket prices.

Anonymous said...

The Cambridge estimates didn't include Sacramento and San Diego.

Their numbers for the whole route were 88 low and about 130 high - and this was for 2030. (someone can go back and look at EIR)

The SNCF numbers are quite a bit lower that CAHSR forecasts, but this shouldn't be surprise to anyone

Rafael said...

@ anon @ 2:16pm -

take a gander at Source Document 5 of the CHSRA's 2008 business plan.

For actual train fares at 50% of actual air fares, it shows a 2030 ridership estimate of 54.6m if only the starter line is available at that time and inflation-adjusted air/auto travel cost is up 8% over 2005/6 levels.

If the phase 2 spurs are already available by then, CHSRA's ridership estimate jumps to 93.1m.

The SNCF number of 65m can't be compared in a meaningful way until we learn what year it's for, whether it's for the starter line or the full network and what assumptions they made regarding the future cost of air/auto travel.

AndyDuncan said...

(someone can go back and look at EIR)

How about you? I'm sick of doing research for Anons. The numbers listed were for the full build out.

AndyDuncan said...

The SNCF number of 65m can't be compared in a meaningful way until we learn what year it's for, whether it's for the starter line or the full network and what assumptions they made regarding the future cost of air/auto travel.

According to the source at transport politic, it was full network, year 2040, running under the assumption that phase 1 would be done by 2020 and full build out by 2025.

Andre Peretti said...

I don't think the SNCF want to run CHSR. I suppose what they propose is the type of technical assistance contract they had with Taiwan Highspeed Rail Corporation: they worked on the project in collaboration with other European companies (notably Systra). Then, they temporarily ran the line while recruiting and training local staff. 45 French drivers drove the trains in tandem with a Taiwanese trainee. The in-cab signalling was (and still is) in English. Now, the majority of drivers are Taiwanese. In a few years, when all Frenchmen are gone, the language will be switched from English to Chinese.
THSR is really special: a European designed network with Japanese trains operated by French drivers.

With South Korea, the contract was different: all the staff, including drivers, were trained in France so that when the line opened it was 100% Korean-run.

For Saudi Arabia, things will have to be by proxy. The SNCF will train Moroccan (muslim) drivers who will train the locals.
I'm amused that the SNCF advised running trains through town centres. Do as I say, don't do as I do...

Alon Levy said...

SNCF's proposal for running trains through town centers makes sense, in context. California and the Midwest both have straight tracks with generous ROW passing through town centers. France does not: the LGVs are mostly built along highways, because existing rail ROWs aren't straight enough.

Reality Check said...

Yes, but what about the noise issue? Won't there be a huge outcry when people realize how loud a 220-mph HSR express train blowing through the center of mid-line towns between San Jose and Los Angeles is?

I understand there is a big and non-linear noise level increase when trains are in the 200-mph speed range (vs. the 125-mph range projected for the Peninsula).

A potentially serious problem with the mid-line city-center alignment will be that in order for HSRA to make their SF-LA express trip timings, I understand they will need to run at 200+ mph through towns between San Jose and LA. There could be a huge and difficult/costly-to-mitigate noise problem to deal with caused by non-stop express trains "flying" though town- and city-centers at 200+ mph.

Alon Levy said...

Yes, but what about the noise issue? Won't there be a huge outcry when people realize how loud a 220-mph HSR express train blowing through the center of mid-line towns between San Jose and Los Angeles is?

Maybe. It goes both ways - on the LGV Mediterrannee, Aix-en-Provence actually preferred a downtown station to an exurban one, knowing that many trains would pass through at 300 km/h. It got an exurban station but only for cost reasons, which don't exist in California.

Andre Peretti said...

HSR noise:
The higher the speed, the higher-pitched the noise. Fortunately, high-frequency sounds are the easiest to get rid of.

Rumble and clatter, on the contrary, are very difficult to block. They are transmitted both through the air and the structures. Normally, a high-speed train doesn't produce them if track deformation is kept within tolerance. That means no low-tech or poorly maintained rolling stock should be allowed on HSR tracks in noise-sensitive zones.

The noise duration factor is also important. A high-speed train flies by in a few seconds, which is too short for any real impact on your nerves.

Last remark, but this is a matter of personal taste: a TGV at full speed on a nice elevated structure is a beautiful thing to watch and I would enter its visual footprint as a plus rather than a minus.

@Alon
I was only joking at the SNCF's offering advice that they haven't followed themselves. Note that they will have to, in future. The government and the opposition have agreed (for once) on laws limiting sprawl and car dependence. So, those stations built in the middle of nowhere seem like a thing of the past.

Anonymous said...

I wouldn't read too much into SNCF's route choices other than the French company's fear of having to go through a US environmental review process. The chance that someone, with a clean slate, choosing an identical routing to that which has been chosen is approximately zero.
Let's wait to see the actual report.

Anonymous said...

It is unlikely that the Brits would contrary their new bosses, but I don't think it is totally out of the realm of possbility they might bring up the Grapevine. Especially when it becomes clear travel times are too long with the Tehachapis detour and too many stops.

BruceMcF said...

@Anone-of-many: Of course, that would require Brits unaware of the various tunneling risks exposed by the Chunnel project, and so willing to gamble on the hope that the Grapevine alignment will not run into problems that cannot be sidestepped, and unaware of the importance of intermediate population centers in the commercial success of HSR services.

Given those two massive blind spots, they could well fall far it.

Alon Levy said...

Anon, all of the main alternatives - Altamont, new Transbay Tube, the Grapevine - were studied in the EIR. They were just eliminated in favor of Pacheco and the Tehachapis.

looking on said...

@Alan Levy

Just remember, come Oct 8th or 9th, all the Bay Area to Merced EIR choices will open up again, since the current EIR is about to be de-certified.

Alon Levy said...

Who's Alan?

Anonymous said...

Balfour Beatty has done a few projects in the northeast, specifically on Metro-North projects. I know they did a replacement drawbridge with Metro-North in Bridgeport, and came in a year ahead of schedule and very much under budget. They should do fine in California.

(CT-DOT was so embarrassed because of their overruns on highway construction that they forced the state to give them oversight over Metro-North.)

Rafael said...

@ anon @ 9:20am -

"The chance that someone, with a clean slate, choosing an identical routing to that which has been chosen is approximately zero."

Why on earth would SNCF start with a clean slate and piss off their intended customer, CHSRA, by proposing a route change?

Rafael said...

@ anon @ 10:49am -

"Especially when it becomes clear travel times are too long with the Tehachapis detour and too many stops."

Travel times aren't too long, provided CHSRA can persuade residents of cities along the way that it has a sufficient handle on noise issues to enable the target speeds.

Not every train will stop in Fresno, let alone in Bakersfield or Palmdale. Afaik, a station at Hanford isn't even confirmed yet. If one has to be built for purely political reasons, it will receive only minimal service (i.e. many "locals" will actually skip it). The population density just isn't there.

HSR needs to serve the Central Valley precisely because it is de facto flyover country. The Antelope Valley lucked on the gnarly geology in the Grapevine.

BruceMcF said...

Anonymous said...
"I wouldn't read too much into SNCF's route choices other than the French company's fear of having to go through a US environmental review process. The chance that someone, with a clean slate, choosing an identical routing to that which has been chosen is approximately zero."

But the chance that someone, with a clean slate, would choose a route with none of the current choices is also approximately zero. Someone willing to bet the bank on "exploder" services (common trains decoupling to run to distinct destinations and coupling from distinct origins to run to a common destination) might go for Altamont.

OTOH, since that would face ALL of the NIMBY opposition on the Peninsula, PLUS additional NIMBY opposition in the east Bay, that clean slate would have to include confidence in their ability to ram their design through in the face of even greater NIMBY opposition than the CHSRA is facing.

A designer that believed in spurs and bypasses might well choose that for Fresno and Bakersfield, despite the political opposition that would come from those cities from being on "a mere spur".

A designer that believed in trusting to luck might go for the Grapevine and hope that either the tunneling is workable or that enough money can be thrown at an unworkable tunnel to make it work.

But making any of those decisions would require going out on a limb, and make the other decisions less likely. And doing all three of the riskier or more expensive approaches would be highly unlikely.

jim said...

I don't see how the route is too long. If I want to be in LA by noon, I have to leave my house at 9 am if I fly. and 9 am if I take hsr.

The difference being for the same price, I get more time traveling in comfort and less time waiting around in discomfort.

Anonymous said...

The Tehachapis detour is a major and obvious dumbing down of the hsr project. There's just a slight chance outsiders might note this.

Another technical study needs to be done with the bias that the Grapevine is superior. The existing technical studies were a priori pro-Tehachapis. This is typical of California development politics.

Comparing two booster studies would be fairer and more reliable. Let Herrennecht comment on how he would tackle the Grapevine bores. I would like to see what what a "can-do" attitude would produce as opposed to "It can't be done".

AndyDuncan said...

Another technical study needs to be done with the bias that the Grapevine is superior. The existing technical studies were a priori pro-Tehachapis. This is typical of California development politics.

So your solution to a "biased" study is another "biased" study?

Instead of just saying that the tehachapi alignment is a mistake, why don't you point out the sections in the tunneling report that you feel are biased? People on this board have repeatedly pointed out to you why the tehachapi route was chosen. If you don't agree with those reasons, then tell us why.

Just sitting here posting on every comment thread that you think it's biased because you don't like the outcome is not helping anything.

Anonymous said...

Is anyone hiring engineers right now for CHSR in and around LA?

jim said...

high desert excited high speed rail tehachapi wants own station.

Glenn said...

Californians who are concerned about government waste should be very troubled about the acquisition of Parsons Brinkerhoff (PB) by Balfour Beatty (BB). This transaction creates an enormous conflict of interest and puts billions of tax dollars at stake. As someone who favors this project and believes it will be great for California, the United States, and the economy as a whole, I do not want to see another government boondoggle where competition is squashed and taxpayer money is flushed down a hole.
PB as program manager should act as an unbiased government technical representative. As an agent of the government, the CHSRA is paying PB to look out for the Authority’s best technical and monetary interests. With this acquisition, the same company designing the project, evaluating the bids, and inspecting the construction is going to be bidding and constructing the project.
CHSRA has the fox watching the hen house.
I am certain PB will soon be advocating a design-build process which will eliminate competition from other firms costing California and U.S. taxpayers billions of dollars. Not to mention, eliminate business opportunities for small and medium-sized businesses. I am sure PB will recommend the construction be awarded to the most technically competent construction firm with a bid within the “engineer’s estimate.” And who is the engineer that sets the estimate? Parson Brinkerhoff. And who will PB choose to construct it? Balfour Beatty, of course.
PB/BB actions will likely not even be that overt. PB will be under pressure from the BB arm to design the project or use a procurement mechanism that gives the whole company a competitive advantage. For example, BB owns an electrification company. Why not design a project that has a lot of electrification? Or uses a machine, technology, or method that only BB has? Since CHSRA will be reliant on PB to make those decisions, who can stop them?
I would also not be surprised if CHSRA will state it needs to streamline the procurement process because of time constraints. I can already see the future CHSRA press release stating, ” the only qualified firm to do the work is PB/BB since they are so intimately involved in the project and have such extensive experience constructing similar projects around the world.” This may sound good but the result will be an elimination of an open-competitive bid process resulting in a sole source multi-billion dollar negotiation with one firm and an inefficient use of taxpayer money.
PB should excuse itself from the program manager position or vow not to participate in the construction portion of the project.
Obviously, this is not likely since BB just made a $636 million bet (the acquisition price of PB) that it can successfully influence the bid process and award itself the $35+ billion+California High Speed Rail Project.

BruceMcF said...

Anonymous said...
"The Tehachapis detour is a major and obvious dumbing down of the hsr project. There's just a slight chance outsiders might note this."

Unless your conclusion is based on on the fact that you disagree.

Whether the motives of making the argument are pure or venal is immaterial to the question of whether the case is sound.

The Grapevine is argued to involve more tunneling, with more limited opportunities to vary alignment to sidestep problem areas.

If that is true, then even if the two routes were all tied up in terms of their pro's and con's, you'd be advised by outsiders to pick Tehachapi. Its lower risk of a cost blow out and more opportunities to contain a cost blow out if it occurs.

It is, in other words, clearly the more robust option, independent of best-case benefit/cost assessment.

Worrying about how robust decisions are is the kind of thinking that the clever bond traders and investment bankers told us was old-fashioned, stick in the mud, dumbed down thinking. They were smarter than all of us sticks in the mud, and knew better. Except it turns out, they weren't. Between the lessons of history and the latest fad in statistical modeling, turned out that the lessons of history were right, after all.

Given that you'll be using a lot of Federal money on this thing, I'm happy y'all picked the more robust choice. And if you did if for the wrong reasons, well, that happens sometimes.

Michael said...

Californians who are concerned about government waste should be very troubled about the acquisition of Parsons Brinkerhoff (PB) by Balfour Beatty (BB). This transaction creates an enormous conflict of interest within the CHSRA and puts billions of tax dollars at risk. As someone who favors this project and believes it will be great for California, the United States, and the economy as a whole, I do not want to see another government boondoggle where competition is squashed and taxpayer money is flushed down a hole.
PB as program manager should act as an unbiased government technical representative. As an agent of the Authority, the CHSRA is paying PB to look out for the Authority’s best technical and fiscal interests. With this acquisition, the same company designing the project, evaluating the bids, and inspecting the construction is going to be bidding and constructing the project.
CHSRA now has the fox watching the hen house.
Behind the scenes and in its self-interests, PB will advocate a design-build procurement process which will eliminate competition from other firms costing California and U.S. taxpayers billions of dollars. Not to mention, it will eliminate opportunities for small and medium-sized businesses. Of course, PB will recommend the construction be awarded to the most technically competent construction firm with a bid within the “engineer’s estimate.” And who is the engineer that sets the estimate? Parson Brinkerhoff. And who will PB choose to construct it? Balfour Beatty, of course.
PB/BB actions will likely not even be that overt. PB will be under pressure from the BB arm to design the project or use a procurement mechanism that gives the whole company a competitive advantage. For example, BB owns an electrification company. Why not design a project that has a lot of electrification? Or uses a machine, technology, or method that only BB has? Since CHSRA will be reliant on PB to make those decisions, who can stop them?
I would also not be surprised if CHSRA will state it needs to streamline the procurement process because of time constraints. I can already see the future CHSRA press release stating, ” the only qualified firm to do the work is PB/BB since they are so intimately involved in the project and have such extensive experience constructing similar projects around the world.” This may sound good but the result will be an elimination of an open-competitive bid process resulting in a sole source multi-billion dollar negotiation with one firm and an inefficient use of taxpayer money.
PB should excuse itself from the program manager position or vow not to participate in the construction portion of the project.
Obviously, this is not likely since BB just made a $636 million bet (the acquisition price of PB) that it can successfully influence the bid process and award itself the $35+ billion+California High Speed Rail Project.

Robert said...

Thanks for making me laugh out loud re: Sterling Cooper! And you wrote your post BEFORE episode 6 wherein we learned what can happen when you combine American technology with British leadership!