Answer to Question #166054 in Management for Manyela

Question #166054

Case – Study: The Tunnel

Any project that involves tunnelling is risky. Any project that involved tunnelling under a city whilst trying to keep that city fully operational, is very risky. When that city is Boston in the USA, it is in a risk category all of its own. This does not, however, excuse the financial performance of this project, the results of which are exceptional and even make the performance of previous “stars of disaster” such as the channel Tunnel, look good.

During the 1950s, the commonwealth of Massachusetts commissioned new roads as part of a national road -building frenzy that took place at that time. The result was a partly elevated freeway that cut the city off from its old harbour and overtime coped increasingly less well with the volumes of traffic that were trying to use it. For many years, the project had been the subject of much politicking and had been rejected by a number of national administrations. {n 1993, it was given a go ahead.

At this time, the budget was US$2.6billion, an enormous sum of money for an 8-mile tunnel, but given the technical complexity of the task, this was considered acceptable. Gradually the costs rose, until in 1998, the estimated final cost was $10.4 billion. By mid – 2000 this had risen to $13 billion and by mid – 2001 to over $15 billion. It was still considered a technical success, but both politically and economically, it was a disaster. In Project management terms it is also a disaster - a 500 per cent – plus overrun on budget can only be described as ‘talented’.

How did such a financial disaster occur? The first is a feature of many large ‘political’ projects – that the ‘real cost’ would not be politically acceptable. The original budget was deliberately deflated to make the project happen. The second is technical risk – that of the tunnelling process. The ground through which the tunnelling is being carried out is reclaimed land that was originally under the sea. The tunnelling process being used was also new, presenting a degree of technical novelty.



Required

a) How might the project be considered a technical success but an economic, political and project management disaster?

b) Suggest how the 500 per cent – plus overrun might have come about.


1
Expert's answer
2021-03-01T09:34:46-0500

A project may be considered technically successful when planning, managing the budget and utilising the best technology in perfoming the given projects, for the case of this case study the tunneling company had the best technology to perfom the duty, and good convising power to convice the stakeholder that the project will be completed within allocate budget. In other scenario the project is considered economically disaster because the whole budget keeps on escalating to 500 percent causing the state to be decrared bankrupt, because the tunneling took longer to completion, it indicates that traffic was intence making it hard for people and products to reach their work place and destination on time, in other hand politicians had failed misserably causing disaster because the state was going bankrut because of their action of allowing such project to commence. Project management disaster occurs when the project manager lack skills to plan ,cordinating, allocating resources in the best way possible, project manager is supposed to set aside rules to be followed wich are punishable when broken in order to cater for all expences.


The 500 per cent plus overrun might have come about due to political nature of the state. The tunneling company may have seen if they give out the actual budget to be incured the politician could not have sign the deal hence putting small figure wich was to escalate higher as project proceed. Other reason might have occurred due to poor project management ,good project manager is supposed to create rules and procedures to be followed and wich are punishable when broken, the tunneling company may have broken certain rules like negrigence causing extra cost to the project. The final reason as to why the cost may have ovverun to 500 per cent ,may due to money raundering by officials reading to an increase of the budject.


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