history repeats itself

It sounds like history repeats itself!!!

It's not very good news for ERG shareholders that the NSW government threatens to cancel the TCARD contract.

Whichever way this issue will go, it will have a negative impact on ERG's share price in the short-term as several small shareholders will panic and sell over the next 3 weeks.

Let's see how far below the Net Asset Value of 0.118 cents the share price will drop.

The NSW government's notices to ERG was executed very timely. It will give ERG shareholder's ammunition in the coming AGM to put pressure on Saville and threaten his Loan Re-structure proposals. You would think that Saville will have to come up with some answers for the AGM.

I remember back in 1995 when the Kennett government threaten ERG with litigation and cancelling of the Metcard project. The ERG share price plummeted and those who bought at the lows were laughing all the way to the bank a couple of months later.

3-4 years later ERG settled for $50m. That is, ERG won the litigation and the Victorian Government paid ERG $50m additional to the Metcard contract for changes to the requirements and subsequent delays.

Most people have no idea how the bureaucratic state machines work. They employ an army of analysts/contractors (after the Tender has been awarded) who are very keen to build the Rolls Royce of a software system and there is a blowout to the project's scope. Inevitably, there are continuous RFT scope issue resolution exercices and project delays that drag on and on and on...

Does anyone in the NSW government have any idea what requirements the initial RFT contained on which the Tcard project was based? Those requirements are very high level, very vague and can be interpreted in a number of ways. Along the way, the army of analysts employed by the department come and try to define the requirements with great imagination. Of course the requirements do not much the interpretation of the initial requirements bythe supplier. All that causes frustration and long delays to those who are involved with the project.

Add to that the lack of the definition of the fare structure and the business rules which are implemented in the Cubic paper/magnetic strip based ticketing system currently used by the NSW transport system. I have not read anywhere that Cubic have handed over to ERG their specifications (if specs exist) for the existing Sydney ticketing system.

A similar exercise has taken place in San Francisco with BART (the Rail company). It was made easier there since a new CEO took over at BART and Cubic was left with no other option but to cooperate. (As far as I know - I hope that's the case and there are no other surprises).

Add to that the opposition of the unions and all the state politics and you end up with a real mess.

If the contract is eventually cancelled there will be litigation initiated by both sides. I would say that the NSW Government will be the underdog in such a litigation race.

Michaelirish,

Have you got any news on the progress with BART at San Francisco?

Regards