By China Daily
The Mecca Light Rail, constructed by the China Railway Construction Corporation Limited (CRC) for Saudi Arabia, will become operational on November 13. Zhao Guangfa, president of CRC said within the company that this project was more a political mandate than a commercial project. Failure was not an option. The CRC has finished the task, but it has cost them 4.15 billion yuan in losses. The Mecca Light Rail is an important but complex project.
The project concerns relations between China and Saudi Arabia and many local regions; the price of the project does not match the contract. Labeled a “political” by the CRC, the project was destined to incur losses.
Some insiders have said that although the MMRA’s capriciousness and delays are responsible for the CRC’s losses, the core reason still lies in the CRC’s inadequate evaluation of potential risks. It lacks experience in constructing overseas projects based on American and European standards and has done a poor job in reducing risks in drafting contracts.
But the root of the failure lies in the crude organization and working habits the CRC formed when constructing railways at home. But when the company goes global, facing a complicated international environment, these problems will create many complications. Lu Duojia said that for the CRC, following the SOEs’ strategy of “going global” was one of their largest risks. There had been too many cases of failures and the SOEs should learn from their mistakes.
Article Source: : SC-Logistics