my thoughts..

I've put together a few of my thoughts/research on the ERG situation, as the silence on here is defeaning.

It seems that Sydney is not the only city having issues with the implementation of the Smart Card system. It was actually quite interesting reading all the negative user comments on the website - http://www.news.com.au/couriermail/comments/0,23836,23063682-3102,00.html -

OK, so having considered all the possible scenarios, I think the government is not likely to dump ERG as it has been reported. Lets face it ERG and CUBIC are the 2 top dogs in smart card transit systems, and they are both experiencing their fair share of technical difficulties. That is pretty normal for new IT systems. I don't know enough about the other competitors but I doubt they come close.

For PTTC to dump the contract, this would mean:
1. a whole new tender process (6 months +)
2. a lawsuit from ERG (1-2 years)
3. new system design (1 year)
4 system implementation & testing (3-4 years).

This assumes the new company would do this all smoothly. So we're looking at about 7.5 years turnaround if this was the case. This is a very conservative estimate. In comparison, it has about a year to go before ERG has 90% up and running.

In my view, a likely scenario is the governement will possibly impose fines on ERG for the delay, and furthermore create a contract which will impose fines if there are future delays. By doing this:

1. They are "seen" to be dealing with the client appropriately
2. Getting the system out in the shortest possible timeframe
3. Delivering a quality system, and finally,
4. Avoiding a lawsuit.

This makes sense to me. If someone has other thoughts I would be keen to hear.

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ALSO, I rang a member of ERG's investor relations team earlier tonight and we spoke for about 45 minutes. I'll leave the name out for privacy reasons. Although he wasn't able to say much, they expect thay the Sydney project will continue. Apparently in the remedial plan which ERG submitted to PTTC there were some "very glowing references" from other sites including San Fransisco.

I did suggest to him that ERG needed to be more pro-active in providing investors with information and also dealing with the media "bullshit". For instance, I keep reading that it's ERG's fault that the system was not delivered in 2000 before the Olympics as promised by the governement. People seem to forget that the CUBIC court injunction set the project back until 2003 when the new contracts were signed by ERG and PTTC. This makes the project 5 years old - about as long as it has taken to deliver the Brisbane Translink project - which by user feedback sounds quite crap.

Getting back to the conversation, he mentioned that Duncan Saville was very upbeat about the ERG and that it has a bright future. Also, Beijing was going well and should be the next cab of the rank.

So that's it boys and girls, hope the info has been of use. For the record, 7.3 cents was irresistable today, I bought more shares. When ERG was in the same position a couple of years ago it seemed daunting - and then bang straight upto 34cents. I'm not getting of the roller coaster yet.