Eurotunnel Project Failure

Question

.Summarize the situation with the Channel Tunnel (Eurotunnel). Explain why poor project planning in terms of project control and change management made this project a failure.

What project control and change management strategies would you have used to prevent some of the issues?

Sample paper

Eurotunnel Project Failure

Project management is an essential part of any project undertaking. Project management involves the careful planning, control and execution of tasks to meet specific goals. The key challenge in any project management is to actualize the planned project goals within the outlined timeframe and costs. Another challenge in project management is in the allocation of resources or inputs to meet the outlined objectives. This paper will analyze project management in consideration to the Channel Tunnel project failure.

The Channel Tunnel Project commenced in 1988 with an aim of linking England and France through an underground tunnel (Anbari et al., (n.d)). The 31-mile tunnel would mainly be utilized by freight trains and Eurostar trains between France and the UK. The development of the channel was meant to foster development by improving trade between the two regions. The project was earmarked for completion in 1993, but it was not until 1994 that Eurotunnel was officially opened. The projected cost of the project also doubled, with a record $ 3.6 billion over budget. Several factors contributed to the costs going beyond the projected budget and completion time. These factors are related to project control and change management as discussed below.

Why poor project planning made this project a failure

With regard to change management, the introduction of new specifications as the project was ongoing resulted in delays and high costs which had not been factored in the initial budget. During the initial design phase, engineers failed to factor in air conditioning systems. It was then realized that high speed trains would generate a lot of heat from air friction hence the need for installation of an air conditioning system. These additional specifications resulted in high costs which had not been planned for in the initial budget. Other specifications which caused the budget overrun include the widening of the passenger doors of the train from 600 mm to 700 mm in width (Anbari et al., (n.d)). This design aspect was communicated late, causing a soaring of the manufacturing costs from $ 9 million to $ 70 million.

Particular aspects of project control also impacted the entire project. The contract was handled by competing firms, with those having the lowest bids becoming the winner. When the budget was exceeded, the competing firms borrowed money from banks at high interest rates. Loans for the project were obtained from over 200 banks from around the world, and additional financing from the capital markets (Anbari et al., (n.d)). Loan financing from banks had a negative impact on the project as refinancing was mandatory even in the face of the project extending projected completion period and being over the estimated budget.

The procurement stage of the project was also rushed. Tenders were issued late as interested companies were only given seven months to prepare and submit their proposals. This was a major public project which would have ordinarily required more time for firms to complete their proposals. Such a project requires a detailed design study which may take over a year. As a result, certain design aspects such as the need for air-conditioning were overlooked. The inclusion of the air-conditioning system led to a cost overrun of over $ 200 million (Anbari, F. T. et al., (n.d)). This had not been included in the initial budget.

Poor project planning was also evident in terms of projected revenues from the project once complete. It had been expected that once the project was complete, it would draw more people who traditionally depended on ferry operations to cross the English Channel. This projection ignored the likelihood that ferries would react to the opening of the channel by lowering their prices and improving services in order to retain the market share. In addition, the introduction of budget airlines which plied between France and the UK intensified the competition for customers. As such, the Eurotunnel operated below capacity for a long period after it was officially opened leading to financial problems (Krystek, 2011).

Proposed project control and change management strategies

Change is an inevitable part of most projects. As such, it is important to develop appropriate project control and change management strategies. The first strategy I would have used is a risk planning and mitigation strategy. Risk assessment should be an ongoing activity in any project. Risk planning involves keenly analyzing the environment for any material risks that may impact the project (Melton, 2007). These risks are listed, quantified and assessed in terms of likelihood of occurrence. This enables the project managers to develop a risk response strategy. Risk assessment would have enabled the project managers assess the risk of change control methods and the risk of the project extending beyond the planned timeframe.

The second strategy would involve developing a change approach. In this, it is first important to establish all the stakeholders to be affected by the change, for instance, the financiers and both governments. It is important to convince the stakeholders the reason for change. Second, a change management team could have helped implement the changes in the project. This team would have carried out all the necessary changes for a particular duration. The third strategy would involve a well-developed communication plan. There is need for appropriate reporting protocols in change management (Melton, 2007). For instance in the Eurotunnel project there was a significant delay in communicating the information that doors of the train should be increased in width to 700 mm.

In conclusion, project management is critical in the successful development of any project. Project management helps determine the scope, timeframe, and cost of a particular project. It is important to develop appropriate project control and change management strategies. A risk assessment strategy is particularly important in assessing known and unknown risks that may impact the project.

References

Anbari, F. T. et al., (n.d). The Chunnel Project. Project Management institute. Retrieved from:             http://www.pmi.org/~/media/PDF/Academic/case%20studies/Chunnel%20Project.ashx

Krystek, L. (2011). The Channel Tunnel. Unmuseum. Retrieved from:             http://www.unmuseum.org/7wonders/chunnel.htm

Melton, T., & Institution of Chemical Engineers (Great Britain). (2007). Project management      toolkit: The basics for project success. Amsterdam: IChemE/Butterworth-Heinemann.

 

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