The Panama Canal. Final Edition


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- Panama Canal since the view point of Project Management

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The Panama Canal. Final Edition

  1. 1. The PanamaCanalProject Management MGT 2410.Instructor Name: Thomas R.Lerra Daniel Lois 27/06/2012
  2. 2. PROJECT MANAGEMENT TERM PAPER. INDEX OF THE TERM PAPER:1. INTRODUCTION. 1.1. Presentation. 1.2. Brief Answer to the “W” questions of the project. 1.3. Origin and 1st studies about the Panama Canal.2. PANAMA CANAL FINAL PROJECT. 2.1. History. 2.2. Members of the project. 2.3. Problems along the project. 2.4. Main figures in the development of the project.3. CRITICAL ANALYSIS OF THE PROJECT. 3.1 Global Evaluation 3.2 Things done well. 3.3 Things done wrong. 3.4 Things that could have been done better. 4. CONCLUSION. 1
  3. 3. PROJECT MANAGEMENT TERM PAPER. 1. INTRODUCTION. 1.1 Presentation. One project that was visualized more than 300 years before its construction started has to be an amazing project. One project that is able to change the commercial routes, saving dozens of millions of dollars every month has to be an outstanding project. These reasons are just one brief example about why I decided to do the Panama Canal as term project. Its amazing history, its complexity and the way that it changed the global commercial routes, splitting a whole continent in two parts. During the next pages I will try to explain the key factors of this project, using concepts studied along the course and providing the framework of this project. 1.2. Brief Answer to the “W” questions of the project. Before starting to talk more in deep about the project management concepts and as an important part of the introduction, I will provide a brief answer for the “W” questions of the Panama Canal Project. a. What is the Panama Canal? The Panama Canal is a 51 mi canal for ships that connects the Pacific Ocean to the Atlantic Ocean. This canal crosses the country of Panama and it is a key in the global maritime trade system. b. When was it built? It was built between 1880 and 1914 (34 years). 2
  4. 4. PROJECT MANAGEMENT TERM PAPER. c. Why was it built? Before the Panama Canal was built, the ships have to cross Cape Horn (In the Southernmost tip of South America). The distance saved with the Panama Canal was around 13,000 Milles (Considering the length of the route that the ships had to do to go from one side to the other side of the future Panama Canal). d. Where was it built? The Panama Canal was built in the small country of Panama, the southernmost country of Central America. It has borderline with Costa Rica in the North and Colombia in the South. e. How was it built? The goal of this project is not to talk about the engineering and construction methods used in its construction. However, if we keep in mind the complexity of this project today, with all the machinery, technology that we have for the construction in general, it is easy to understand the difficulty to complete this project one hundred years ago. f. Who built the Panama Canal? I am going to talk about this in more detail in the point 2.2 and 2.6 of the paper. However, as a general introduction, one of the most complex issues of the Panama Canal was the different responsible along its different stages. From 1881 to 1889 the construction was under the French management. Later, in the second season, from 1890 to 1903, the United States started to show interest in the Canal. Finally, in the 1904, the U.S. acquired the Panama Canal and continued the construction. 3
  5. 5. PROJECT MANAGEMENT TERM PAPER. 1.3. Origin and 1st studies about the Panama Canal. One of the most interesting things about the Panama Canal is the fact that it was glimpsed 350 years before its construction started. The first mention of this project was in 1534 when the king of Spain Charles V requested a survey about a route for the ships to cross America. Later, from 1788 to 1793 Alessandro Malaspina established plans for its construction. Other attempts were made but it was not until 1880 when finally the definitive construction started.2. PANAMA CANAL FINAL PROJECT. 2.1 History. The history of the final project started in the middle of the 19 th century, when the discovery of gold in California provoked an interest from the U.S to dig the canal. Moreover, several surveys between 1850 and 1875 concluded that only two routes were possible. The first one crossing Nicaragua and the second one Panama. Finally, in 1876 an international company was created and in 1878 they obtained the permission from the government to build the canal. 2.2 Members of the project. a. The Compagnie Universelle du Canal Interoceanique. This company was the responsible of the construction of the Panama Canal. It was incorporated under French law in 1881. After 9 years building the canal, with hundreds of difficulties, over costs, problems, finally was declared bankrupt and dissolved in 1889. 5 years later its assets were bought by a new French company, the compagnie Nouvelle du Canal de Panama. 4
  6. 6. PROJECT MANAGEMENT TERM PAPER. b. The Compagnie Nouvelle du Canal de Panama. This new French company was set up in 1994 but it was bought my American companies in 1903 when the U.S started to take a very important role in the construction of the Panama Canal. c. U.S Government. During the first period of its construction the government of the U.S.A and the privates companies were very interested in the possibilities of the Panama Canal. Finally, in June of 1902 the U.S. voted to purse the Panamanian Option. One year later, in 1903, the Hay-Herran Treaty was registered. This treaty gave to the U.S.A a renewable lease from Colombia in all the land that it was proposed for the canal. The government of the U.S.A had a very important role in the independency of Panama from Colombia in 1903, providing to Panama military support. d. Isthmian Canal Commission. This institution was a commission of the U.S. government which mission was the overseeing of the construction of the Panama Canal. It was created in order to avoid the inefficiency management and the corruption occurred 14 years before under the French ownership. Its main goal was the monitoring and controlling of the development of the project. 5
  7. 7. PROJECT MANAGEMENT TERM PAPER. 2.3 Problems along the project. In the next points I will explain the main problems that happened along the lifecycle of the project. In the project it was dozens of problems and for this reason I am going to provide an overall with the most important 3 problems of the project. a. Lack of good previous studies about Geology and Hydrology. One of the most important problems in the project was the low level of accuracy of its studies about the geology and the hydrology of the area. Although the long history that the Panama Canal has (the possible route of the canal was studied for a long time before its construction). This provoked a huge over-cost in the project. Consequently, in 1893 the first company which started the project (Compangnie Universelle du canal) abandoned the project. Consequence: Astounding over cost and bankruptcy. b. Tough environmental conditions and low level of preparation for it. The huge health challenge of building the canal in the middle of the jungle and the low level of preparation for that gave as a result a huge amount of deaths among the workers. The main problem was the mosquito-infested Panamanian jungle which transmitted malaria and yellow fever, costing thousands of lives. Consequence: High amount of deaths among the workers. c. Low preparation of the first manager Ferdinand de Lesseps. Ferdinand Lesseps, who built the Suez Canal, was the responsible of the management in the first years. His excessive confidence after the construction of the Suez Canal was a huge problem in this new project. He made a huge mistake when he decided that if a sea-level canal worked when constructing the Suez Canal; it must 6
  8. 8. PROJECT MANAGEMENT TERM PAPER. work for the Panama Canal. The consequences of using this method instead of a group of dams was one of the consequences of the over cost in the first period (1880- 1893) of the project. Consequence: Delays, over costs. 2.4 Main figures in the development of the project. a. Ferdinand de Lesseps. Before the Panama Canal he was the developer of the Suez Canal which was successful built between 1859 and 1869.However, the success that he reached with the Suez Canal could not be reflected in the Panama Canal because the bad health conditions, the technical difficulties (because of the bad quality of the studies about hydrology and geology) and the financial corruption (Lesseps was found guilty) were some of the problems that Lesseps could not manage correctly. One of the lessons that we can learn about Lesseps is one of the keys of project management: “Each project is unique. Based on how he managed the project, we can establish that he was not a good manager, neither a good leader. b. Theodore Roosevelt. Theodore Roosevelt, the president of the U.S.A between 1901 and 1909, was, arguably, the most important figure in the final construction of the Panama Canal. He did the correct decision in the correct moment. After 20 years of unsuccessful construction of the Panama Canal under French work, Roosevelt was the main supporter of the completion of the Panama Canal. They key decision was made in 1904. Roosevelt bought the French equipment, started to pay the 7
  9. 9. PROJECT MANAGEMENT TERM PAPER. new country of Panama (one year before the U.S.A government supported Panama in its fight for its independence from Colombia). Without any question, he has to be considered the leader of the completion of the project from 1900 to 1914. He was not directly managing the project but his leadership in these key moments was basic for the success of the Panama Canal. c. John Findlay Wallace. The relation of John Findlay Wallace with the project can be considered as brief (from 1904 to 1906) but the importance of this period is enough to be remarked. He took a project that had been stopped for several years, making small improvements because of an outbreak of yellow fewer. However, the trait that I would like to remark is the great influence that he had on his workers. When he left the management of the construction two years after he started (in 1906) a lot of workers left their jobs because of his resignation and his departure provoked a drop in the moral of the workers of the canal. This kind of things only can happen with a good leader and this is the aspect that I want to remark of his personality. d. Colonel George Washington Goethals. He took the reins of the construction of the Panama Canal in 1907 as chief engineer and the Panama Canal was completed in 1914 (two years ahead the established date of 1916). In this period the technical problems were still continuous owing to the difference in the sea level, the control of the complicate Chagres River with the Gatum Dam, among other issues. His perseverance, his strength and his management skills carried out the project. He will be remembered as one of the 8
  10. 10. PROJECT MANAGEMENT TERM PAPER. 3. CRITICAL ANALYSIS OF THE PROJECT. 3.1 Global Evaluation. Considering just the development of the project we can give an overall evaluation of really poor. Even considering the incredible difficulty of one project like this, the evaluation of the project, in my opinion, it would be the same. In the next points I will talk more about what things were done well and what things were done wrong and what could have been done better. 3.2 Things done well. In this project, the things that were done well cannot be found until 1903, when the government of the U.S.A ( with the key figure of Roosevelt) took the control over the construction of the Panama Canal. The next are the main things that were done well. a. Military Support of the U.S.A to Panama in 1903 to become an independent nation. One of the biggest problems that under the French construction faced the Panama Canal was the extreme corruption which provoked the Bankrupt of the French company. With the direct support of the U.S.A in the construction of the Canal the corruption problems disappeared and finally the Canal could be built. b. The purchase of the French machinery and construction. In 1904, in a smart move of the U.S.A, they decided to take the rains over the Canal, paying several millions of dollars to the French company to buy its machinery, railway and excavation. 9
  11. 11. PROJECT MANAGEMENT TERM PAPER. 3.3 Things done wrong. The list of the things that were done wrong is endless and some of them were explained in the point 2.3 of the paper. a. Lack of deep studies about hydrology and geology. b. Insistence in the use of sea level in the project (without dams). c. Not enough resources to create healthy job conditions. 3.4 Thing that could have been done better. Some of the things that could have been done better are the next ones: a. The French government should have supported more the construction of the Panama Canal. From 1904 to 1914 the strong support of the U.S.A government provoked a huge success. Maybe with a stronger support from the French Government between 1880 and 1893 the French companies could have done a better performance than it made. b. The studies about geology and hydrology should have been deeper. In a new environment, with a wide surface the studies were not enough deep. With deeper studies the performance of the project could have been better. 10
  12. 12. PROJECT MANAGEMENT TERM PAPER. 4. CONCLUSION. The Panama Canal has been, without any kind of question, one of the most complex projects of the last 200 years. The length of the project, the technical difficulties, corruption, healthy conditions, politics, among other issues, made the Canal something that along its construction (Especially when the French companies left the project) seemed like it would not be ever completed. Nowadays, 98 years after its inauguration and 130 after its starting, the science of the project management has provided an important amount of knowledge, rules, programs that allow a more efficient development of projects all around over the world. However, it is obvious that nowadays there are still projects that do not reach their goals or suffer from over cost or delays in their life cycle. Moreover, with all the new techniques and knowledge the success of the projects has been increasing in the last years. This research paper has helped me to understand how the management of the project has improved in the past 100 years. I have also found connections among the concepts that we have studied in class and the reflection of them in the Panama Canal Project. 11