- Business Times reported that the MMC-Gamuda KVMRT (PDP) JV is set to receive a payout of over RM4bil for its role as project delivery partner (PDP) for the ongoing Sg.Buloh-Kajang (SBK) MRT project.

- The payment forms part of the overall RM30bil cost for the SBK line. This is made up of ~RM23bil for systems and construction, with another RM7bil for consultant fees and reimbursables to the PDP.

- The reported RM4bil payout for the PDP role is within our estimates. The target cost includes the total work package contract value and reimbursables, which are capped at ~RM2.8bil.

- The reimbursed items include overheads, engineering consultancy, quantity surveying, system integration work and site investigation, and topographical survey costs.

- Based on a 6% fee on the total value of the systems and total construction works, the JV will receive another c.RM1.8bil subject to it delivering the contract at the agreed target cost.

- To recap, the MMC-Gamuda KVMRT was appointed as the PDP for the SBK line back in February 2012. In addition, the duo is also the line’s tunnelling contractors under a separate RM8bil contract.

- The JV’s primary function is to deliver the 51km line within a predetermined set of KPIs that consist of target costs as well as completion dates.

- To-date, we understand that the SBK line has achieved an overall work progress of close to 48%. The entire line is scheduled to be completed by July 2017.

- More importantly, we continue to expect the MMC-Gamuda JV to be at the forefront to challenge for jobs under the second MRT line (Sg.Buloh-Serdang-Putrajaya). Our optimism stems from the JV’s existing role as both the PDP and tunnelling contractor for the SBK line, which is on track to meet its July 2017 dateline.

- Furthermore, the MMC-Gamuda JV has the added advantage of redeploying its existing tunnel boring machines (TBMs) under the SBK line for this upcoming line. Civil works for the SBK line’s underground stretches should be substantially completed by end-2014.

Source: AmeSecurities