If we do not adhere to proper risk assessment on ALL projects


Sitting here in solitary confinement, a.k.a. social distancing allows a great deal of time for all kinds of thoughts. I find myself returning to the theme that I introduced in a recent column about the abso­lute need to properly evaluate all projects no matter what their current state of development.

But before looking forward it is timely to review a few recent proj­ects to see what we got right and what we got wrong. In the process, I guarantee there will be a few les­sons to be learned. Additionally, the arrival of COVID19 and its real and potential impacts on our economy need to be considered. While I did not see this pandemic coming, I nonetheless regard it as a stark re­minder of the need for risk assess­ment and mitigation in the planning and decision phases of all projects.
Looking back at the Sandals project is particularly instructive. I said in a previous column that we dodged a bullet. Many persons disagreed with me but that was the clear conclusion after exami­nation of the limited plans that we were given access to. That view was reinforced by the excellent work done by Afra Raymond in exposing the lack of data about existing State-owned hotels. We were buying cat in bag based solely on the perceived reputation of Sandals. Our leaders even chas­tised us for asking for a Feasibility Study, where they argued insanely that we didn’t need one as one had been done by Sandals.
Where would we be now if we had signed contracts as was being forcefully pursued by the govern­ment? We would be legally bound to a 500 million US dollar contract financed via loan capital that had no chance of turning a profit for at least five years. We would be add­ing that to the twelve billion TT dollar Petrotrin loan that hangs like a millstone around our necks. Can you see now how we arrive at these situations?
Given the state of the tourism and hospitality industries and their prospects over the coming five years, it is not certain that San­dals will survive. How long can they operate on revenues that are currently nil and likely to remain under 40% for years to come? There is absolutely no doubt that our economic plight, as dire as it is, would have been much worse had we committed to that contract.

A root and branch of the Crown Point airport project

When Sandals pulled out of that contract, I questioned the scope and design of the new air­port. Given that it was designed with the supposed Sandals traffic in mind, should we still be build­ing on that scale? At that point, we should have gone back to the drawing board. It would have been the logical thing to do. When your underlying assumptions change, as was the case with the airport the prudent things to do is to re-evaluate all other decisions that relied on those assumptions.
To be clear, I am calling for a root and branch reassessment of the Crown Point airport project. I am not calling for its termination nor should we rule it out. The underly­ing factors which presumably made it viable and desirable have changed in major ways. To ignore that fact is to guarantee another costly fail­ure that we can avoid by doing the proper analysis and doing it in an open and accountable way.
That will, in turn, have serious impacts on those affected by the development, not least the landowners who right now are already in an unstable situation. Will we leave them in that distressing po­sition while we dither, unable to make a decision, or do we con­duct an expeditious review, as we ought to do so that they and other affected parties can know their fate as quickly as possible?

The Toco Highway and port

While I will clamour for such action on the airport develop­ment, there are a few other proj­ects that merit our attention and urgent review. Among the first in line is the Toco Highway and port. These are hugely expensive proj­ects that we can ill afford unless their viability and contributions to national development are much better explained to the public. The nebulous statements that we have been fed in the past must end.
The tourism industry is changed drastically for the next decade at least. Most experts are projecting declines in revenue of between 30 and 70 percent per annum for at least five years. It is imperative that we review and adjust all our plans for that sector. That change must feed into any and all devel­opments related to that industry.
But that is only the most obvi­ous case where we must review and amend our development plans in light of the new normal. How will we deal with the potential departure of the oil majors from some of our marginal fields? What happens to the entire energy sec­tor given these convulsions driven as they are by a contracting global economy?
Each of these and several other troubling questions must lead us to re-evaluate the economic land­scape that we face and the deci­sion-making process that we adopt. Over the coming weeks, I propose to touch on the various sectors and how they are impacted by this pan­demic induced economic crisis.
To a greater or lesser extent, we can be sure that every sector and every person will be impacted. This is not something that we the public can ignore any longer. We have to demand a more open and informed approach to decision making re. development choices. While we correctly focus on the health aspects of this current crisis today, we shall be doomed if we ignore the financial and economic consequences.