Introduction
Providing examples of difficulties in mega projects, Eurotunnel and Central Artery/Tunnel Project (CA/T), also known as Big Dig, are two examples, which largely represent to an extent a similar range of issues. In that regard, both e projects provide an example of unprofitable structure, where different factors ranging from political, financial, and technical resulted in that both projects at the current state are not expected to pay off any time soon. The present paper contrasts the main factors behind the difficulties in both project, providing a recommendation on the approach program management, which would provide a higher return on investment (ROI) within a reasonable time period.
The Factors
The main and the common factor in both projects is the underestimation of costs. In that regard, according to Bent Flyvbjerg of Aalborg University, such a factor is the rule rather than the exception, where 9 out of ten projects are underestimated. The root cause in the Big Dig project, in addition to the underestimation of costs, can be seen in the long span in the construction, during which the re-estimation of costs, combined with the inflation, were paralleled with funding issues, which continued up until the opening of the project. Accordingly, it can be seen that the update on the financial costs as well as new occurring factors was taking long spans, up to 3 years.
The Eurotunnel project can be distinguished in that the factors contributing to the root cause of the project’s difficulty were also associated with the political division of the project. Such division between the two countries, which combined with the absence of a parenting company that would outline the shareholders and the dependence on the political changes within each country forced difficulties on the project. It should be noted that an important common attribute between the two projects can be considered its low ROI in the long term.
Recommendation
The main directive in the management of both projects can be seen through the establishment of a project management office (PMO), which will help in executing the objectives of the project as well as improving the practice and results of project management (Kendall & Rollins, 2003). The processes governed by the PMO should be conditioned with the implementation of the PMO value-oriented throughout put model, rather than the cost-containment model. It can be seen as the cost being the factor, and at the same time the underestimation of the cost being a rule, the focus on costs is likely to fail. In that regard, the throughout put model would fulfill the lesson in reporting the annual costs, while being focused on the objectives, rather than the ways to reduce costs. The throughout put model will be used to generate the data that will be used to assess the projects and accordingly will receive opportunities “that must be evaluated relative to current projects” (Kendall & Rollins, 2003, p. 28) Additionally, the long duration of the project was one of the factors in the low ROI, and thus, an advantage of the throughout put model can be seen in the emphasis on the reduction of the cycle time, where the reduction of the duration will be an ROI engine.
Reflection and Conclusion
An important notice should be mentioned regarding the megaprojects overviewed in the paper, which is the fact that those projects had the potential to be closed if their costs would have been correctly estimated. In that regard, it can be stated that the focus on the objectives and reporting “throughout” is a better approach rather than the focus on the costs, which as a rule would exceed the estimation in any way. In that regard, PMO can be considered as an advantage that would make the cost contamination occur naturally, rather than an objective in itself.
References
Kendall, G. I., & Rollins, S. C. (2003). Advanced project portfolio management and the PMO : multiplying ROI at warp speed. [Conyers, GA]: J. Ross.