Logit: Brazilian Engineering Consultancy Company

Interview with Diogo Barreto Martins, Director of Logit

Can you tell us a bit about the engineering consultancy sector? You work in quite a niche sector so what would you say are the differentials of Logit?

When you talk about consulting engineers, it sounds like a niche in itself inside of the general market, however we are niche within the niche. Perhaps when you think about engineering consultancy what comes to mind are big detailed project designs, for example for a railway or a road or even the rights of passage for ports, etc. However we don’t participate greatly in that sense, in actual fact we act in the planning stages. Logit plans if and when to build a bus corridor for example and in which areas to build it in. We put forward a master plan for the municipal or federal government so that they can see what they ought to prioritise and we put forward a functional design of how something should be implemented into a city. Therefore this sector is not so much about the detailed design of a project but the functional and conceptual terms.

We also take into consideration the operational efficiency of the projects that will be conceded or perhaps run by a third party or investor. We are always dealing with concessions for infrastructure, transportation and other services and obviously the government directly, if they chose not to concede a project.

When you have a transportation service, for instance a mass transit system, the infrastructure will obviously have to be built but the service itself will have to be appropriately planned. We plan the best way to conceive this infrastructure without entering into the detailed engineering designs and we look at the demand forecasting and operational plan for the service that will be executed. Usually, when you put technicians together, each one will look at their particular area of expertise but when you are looking at something so big that will impact a city there are many things you have to take into consideration.We have to consider how the government will manage the process, how mobility will be affected not only by the project itself but by what it is being restructured and we have to consider how the actual service will be run.

Engineering consultancy is a holistic approach and for you to be successful you need to put yourself in the government´s shoes and in the population’s shoes. That is where we have a different approach not only pertaining to the conceptual design but also concerning the financial modelling of the project.

We have to make sure a project is feasible and for that we use an interactive process using scenario generation. Using the example of a mass transit system, we have to immediately look at the financial constraints of the system and the area in which it is to be implemented. We also look at the costing and optimal pricing of tickets for a transit system that is going to be servicing such a huge demand. We also consider whether a project is going to have various phases of implementation. These are things that we do before a project gets started because often these engineering consultancy issues are only considered later on in a project´s development and sometimes a project even has to get scrapped. We make sure that these issues are considered in the initial phases and with government participation. When you look at mobility, given our recent manifestations here in Brazil, the institutional risk of developing a project of this sort has to be considered from the very beginning. You need to know how feasible a project is, what type of subsidies it may have, whether it will be under concession or not, what type of elements will be open to the private sector, etc. All of these aspects have to be taken into account because when the government sells these opportunities to the general public they can´t go back on their word. Therefore we take into account all of these issues right from the beginning in order to deliver a feasible and successful project for all parties.

I understand that you work here in Brazil and also internationally. What would you say are the main differences between working here and working abroad?

Government is similar in many countries. Particularly when we work with mass transit and mobility solutions the countries tend to have similar governments and economies to Brazil. Cost is very much an important factor in determining what version of a solution you can apply. When we conducted projects in South Africa relating to the mobility and accessibility studies concerning the World Cup 2010, we helped with projects in both Johannesburg and Cape Town.

We hold many talks at a municipal level and with the National Treasury who offer grants for the cities to not only construct these mass transit solutions, but also fund them for a certain period of time. In order to implement such new solutions there is an initial phase in which the population becomes accustomed to the solution and then you go on to reach a scale where it can be efficient with less subsidy and eventually can be economically sustainable. This is something that has to be discussed with the municipality and the federal government, particularly the bodies that will offer the grants, then you have to agree to the timelines to which the system will achieve certain targets.

Thus, working abroad is very similar: it still involves institutional risk and financial limitations. Sometimes the projects we work on are associated to an event, for example the World Cup in South Africa, and we also worked in Guadalajara with a project that was associated with the Pan Am Games. With these events there are certain expectations that are generated and have to be managed appropriately. We have to find the most cost efficient solutions but they also have to be feasible and self-sustainable. From the very beginning we need to know how we can mitigate risks and build a successful system that will achieve self-sustainability over time. We want these projects to be successful so that they can move on from the initial phases and go city wide and can address the mobility issues that we find abroad and which are very similar to our own.

Can you tell us a bit more about your work in South Africa regarding the World Cup?

The projects that we did in Cape Town and Johannesburg were part of the government´s pitch for the mobility studies and projects that they were intending to develop prior to the World Cup. In South Africa it was a bit of a specific situation because of the apartheid affecting the way that the cities expanded: there are low income families who need public transport living very far away from the city centre where the higher income population lives. Previously there was a very costly transit system with buses and there was practically no mass transit system. Given that transportation systems should be and are normally a priority for most governments, the big issue was how to address this situation. When you start to look at mass transit systems for this day and age you have to opt for cost efficient solutions. In the past, there was the idea that you couldn’t transit such large amounts of people using a bus system even though they are more affordable and malleable because you can change certain routes when necessary and it is relatively easy to build new corridors and connections and add new buses, something that is not very easy with an underground metro or train system for example. When you look at European cities like Nancy, Lyon and Lille, they have trams which are very expensive but that is because when they were implemented world class modern integrated bus systems didn’t exist. For cities that don´t already have a mass transit system in place, it makes sense to implement a BRT (Bus Rapid Transit) solution. Given our success in Bogota with the TransMilenio, we have been called for many of these assignments.

To implement these kind of systems we have to consider a 10 to 15 year outlook of how the city is going to grow over that time and then decide on the initial area in which we are going to implement the phase 1 system. We can then go on to expand from there outwards. We have to consider the areas that have increased demand, areas that will have less service, areas that have a greater political pull and other such considerations in order to phase the system out. Furthermore, we also have to consider how the system will be integrated into the existing transportation system, where the initial corridors will be built, the routes that will be taken, etc… Then we have to think about the operational plan which includes the number of buses that are needed, the number and size of the bus stations, the services that will be offered i.e. direct and stopper services all in order to make the most efficient system possible. Additionally, we have to look at the financial modelling of the system to make it economically feasible. We begin with a functional plan, then go on to an operational and financial plan and finally we help the city with the purchasing and tendering of the buses and we help them to make a yearly budget. This is what we did in both Cape Town and Johannesburg.

When we worked in Guadalajara before the Pan Am Games it was a similar scenario. We made a city wide outlook that essentially holds the government accountable to how the city should grow so that you don’t have sneaky ideas later on from future governments that will compromise the system that you are implementing. Then you implement the system in phases.

How much of your portfolio do these international projects represent?

About 25 to 30%.

Do you have any plans to further expand internationally or are you going to prioritise work in Brazil?

In certain respects we have had more projects in Brazil in the last couple of years because Brazil has boomed at a greater rate than other countries and also because we are based here in Sao Paulo.

Given that we don’t do specific projects but we do conceptions and plans, our work is very quality orientated and so in order to improve quality we have to grow organically. Although we do have international projects, we assemble our teams with members from our Sao Paulo team who are then relocated internationally so that we always have an oversight from our base here in Brazil. The more projects we have in a specific country the better because the more professionals we can keep in that country. Quality is absolutely key, we need to be sure that we can deliver a top notch solution. Thus there is no shortcut to our international development, it will happen as we grow more. We expect to have more scale here in Brazil and internationally but it will be by organic growth over the next couple of years. Continue reading…

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