Big Dig’s and Eurotunnel’s Difficulties: Program Management Processes

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Table of Contents

Introduction
Case Summary
Conclusions
References

Introduction

Financing and managing megaprojects have always been challenging tasks for their developers. The two recent examples of the megaprojects that had been designed to be successful but turned out to be actual failures according to the rates of the return on equity (ROI) are The Central Artery/Tunnel Project, also known as the Big Dig, in Philadelphia, and the Eurotunnel Project developed to connect Great Britain with the rest of the continental Europe (Kendall and Rollins, 2003, p. 22). This paper analyzes the two projects and offers a management process potentially able to boost the ROI figures for the Big Dig and the Eurotunnel.

Case Summary

Big Dig’s and Eurotunnel’s Difficulties

Thus, the two main points that complicated the completion of the Big Dig project included the inability of the developers to carry out the proper and valid cost estimation procedure and the failure of the project contractors to provide the necessary materials in time when the construction was commenced. As a result, the total cost of the project grew by $1.13 billion, which is a considerable sum for the project of such a scope (Kendall and Rollins, 2003, p. 19). The Eurotunnel project, on the other hand, seemed to be a complete success at the time of its development and completion but the following years manifested it’s being a failure in respect of return on investment (Kapka, 2006, p. 8). Drawing from this, both projects obviously experience problems with the program management and require new processes to be implemented to provide ROI growth within a reasonable period of time.

Program Management Processes Suggested

According to the issues discussed in relation to the Big Dig and the Eurotunnel projects, the following two project management processes can be recommended. Thus, to increase the ROI rates for the Big Dig and the Eurotunnel projects the developers should implement the two steps required by the Transportation Equity Act for the 21^st Century (TEA-21) (Kendall and Rollins, 2003, p. 4). First, every company dealing with a megaproject like the two discussed in this paper has to annually trace the changes in the initially agreed funding scheme for the project. Therefore, for the Big Dig developers not to be taken aback by the additional cost of $1.13 billion that accumulated for their project as a result of inflation and market changes between 2000 and 2005, it is recommended to implement such a tracing program. The developers of the Eurotunnel project should also follow the developments of the rates of return on investment their project has to be ready to react to any changes occurring. Second, according to the TEA-21, the developers of both the Big Dig and the Eurotunnel projects should report to the government in the proper form about any changes and modifications the original funding schemes for the project might undergo so that the government might provide the necessary funding to these projects in case if the developers fail to do so (Kapka, 2006, p. 10).

Conclusions

Thus, the major peculiarity of the megaprojects like the construction of the Big Dig and the Eurotunnel is the long-term developmental process that involves potential funding changes caused by inflation, devaluation, and other market changes. Restoring and increasing the ROI rates particularly for the mentioned projects would involve their conformity to the TEA-21 requirements.

References

Kapka, R. (2006) Financing Megaprojects. Public Roads, 69(4), 6 – 12.

Kendall, G. I. and Rollins, S. C. (2003). Advanced Project Portfolio Management and the PMO: Multiplying ROI at Warp Speed. J. Ross Publishing, Inc.

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Big Dig’s and Eurotunnel’s Difficulties: Program Management Processes

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