Rapid Global Development Fueling Greater Demand for Rail and Transit
 Parsons Corporation Work on the $4 billion green and red lines of the Dubai Metro continues. |
“Outside the U.S., we’re expecting double-digit growth over last year,” says Fred Werner, Americas Transportation Group CEO at Los Angeles-based AECOM. “It’s driven almost everywhere by the strong global economy.”
Although there is global demand for projects in all sectors, major firms are seeing particularly strong growth in transit and rail. “If you look at the last two to three years, there’s been a tremendous shift toward transit,” says Bruce Johinke, global director of markets at New York-based Parsons Brinckerhoff. “The major cities in key markets are looking at major transit systems or upgrades. Programs that had been talked about for years are finally happening.”
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The 2007 Global Sourcebook Johnike says the uptick reflects an increased focus worldwide on sustainability. While “going green” is one consideration in transit development, it reaches well beyond that aspect.
“It’s not just environmental—it’s financial, economic and social sustainability,” he says. “It’s looking at how to shift people around economically in the long-term.”
In March, PB, in a joint venture with Systra of Paris, was awarded a contract to manage the development of a new 11.5-kilometer rail line in Mumbai, India. The new line is the first phase of the Mumbai Metro Rail project, which calls for 146 km of new rail routes split among nine lines with a mix of underground and elevated tracks. Mumbai-based Reliance Energy Ltd. is developing the new line as part of a 35-year concession to construct, operate and maintain the system.
PB also is working on several rail links to airports. In November, the company won a contract to manage the new Dubai Metro Purple Line in United Arab Emirates. The 30-mile line, which is scheduled to finish in 2012, will link Dubai International Airport to Jebel Ali International Airport, which is currently under construction. The project is being completed as work continues on the $4-billion red and green lines of the Dubai Metro. That project, which is being managed by a joint venture of PB and Systra, is scheduled to deliver in March 2010.
But major transit projects are not limited to developing nations. London is in the midst of the $20-billion Transport for London project, which includes the modernization of 200 Tube stations in the city. Croydon, U.K.-based Mott MacDonald was selected in April as lead consultant for the $1-billion Victoria Station upgrade. The project is scheduled to start in 2009 and be complete in 2014.
 Skanska Ab D47 highway in Czech Republic is major contract. |
David Singleton, chair of global infrastructure at London-based Arup, says his firm is seeing significant opportunities in transit and rail worldwide. The company has seen steady work in South Africa and this year it began developing a national strategy for train stations in the country. Arup also is keeping a close eye on China and Southeast Asia.
While movement of people is a main driver of rail activity, the pressing need to transport goods that feed developing nations is providing additional rail demands. Singleton says mining companies are increasingly turning to global design and construction firms to provide transport solutions.
“It’s something that firms have only recently gotten involved with,” he said. “A lot of mining companies in the past kept rail operations in-house. Now they are reaching outside more.”
That work extends into marine ports. Derish Wolf, chairman and CEO of East Orange, N.J.-based The Louis Berger Group, says his firm is seeing an increased need for specialized ports that can accommodate mining demands. “Last year, I thought we’d hit a peak and then our activity would flatten out a bit,” he says. “With the impact of these mineral booms around the world, business is picking up even more.”
The Middle East, particularly in the United Arab Emirates, continues to be a hot spot of activity for major firms, but some speculate this could be just the beginning. AECOM’s Werner says the Middle East boom in general building will be echoed with even more infrastructure work in the near future.
“With the tremendous build-up in land development, we’re seeing many agencies turning their attention now to infrastructure and making investments,” he says. “It’s not very mature and robust yet, but [we’re] getting ready for it to really take off two years from now.”
Efforts in the region are beginning to spread over to North Africa. In August, AECOM began working with the Libyan Housing and Infrastructure Board to manage a $40-billion effort to develop new urban housing and supporting infrastructure. In Algeria, work is under way on the new $11.2-billion East-West Highway, a 1,216-km highway that crosses the country from Morocco to Tunisia.
Tom Barron, executive vice president at Pasadena, Calif.-based Parsons Corp., says his company is beginning to take a hard look at the region, discussing turnkey airport, highway and bridge work in Libya. “We’re looking at northern Africa very cautiously,” he says. “It’s a careful process of figuring out the best way to work there and deal with government issues.”
While some global firms are reaching around the globe for work, Stockholm-based Skanska has found expanding opportunities near its home base. Stuart Graham, who is stepping down as CEO of Skanska, says the ever-expanding European Union continues to generate new projects in central and eastern Europe. “There’s a very big program in the Czech Republic to expand the rail and highway system, and there’s an even larger program we hope will get going in Poland,” he says. “It’s significant work.”
In November, Skanska inked a $170-million contract to rebuild a 40-km stretch of railway in the Czech Republic. Work will begin in January and be completed in 2010. Last year, the company signed another $170-million contract in the country to construct a 12-km four-lane expressway section of the D47 highway route. Work began in late 2006 and is schedule to be completed in 2009.
Berger also is considering numerous deals in Eastern Europe. In addition to highway and rail work, Wolff says the company sees growing need for secondary airports to accommodate economy carriers. “We’re not finding too many mega projects in Europe,” he says. “There are a lot of medium-sized projects in Europe these days, but when you add it all up, it’s a lot of business. That creates a handsome market.”