2. USDOT: A project costing $1B or more
Mega implies the size of the task involved in
developing, planning, and managing projects are
challenging
Socio-economic impacts
Engineering or construction innovation
The risks are substantial
WHAT IS A MEGAPROJECT?
3. Today the focus will be on public projects, especially
the California high-Speed Rail Project
Because of the scale of megaprojects, the general
public and public officials become enamored or
disenchanted
A sense of mastering the universe
There is an awe quality surrounding megaprojects
Important Benefits may flow from Megaprojet
WHAT IS A MEGAPROJECT?
4. Technical
Complex design and engineering
Complex construction technology
Complex construction management
Difficult to manage cost to budget
Social
Demand
Community impacts may be large
Bought into the “project”
Difficult to discuss the unknown or unexpected
Difficult to account for risk
Model of Megaprojects developed by Bent Flyvbjerg
See: Megaprojects and Risk: an Anatomy of Ambition
ELEMENTS OF A MEGAPROJECT
Budget
6. An analysis of 258 projects in 20 different countries found
the following cost overruns by project category:
20% on road projects
34% on bridge and tunnel projects
45% on rail projects
Key to dealing with Megaprojects is identifying and managing
RISK!!!
MEGAPROJECT TRACK RECORD
7. Built in 2550BCE
Tallest structure until
about 1300CE when the
Lincoln Cathedral was
built
Largest structure in the
world for nearly 4,000
years
Special housing for
workers
2.5 to 6 ton stone blocks
some from Aswan about
450 miles away
Some blocks within 1/8”
Platform on which
pyramid is build is within
tolerances expected of a
laser leveler
MEGAPROJECTS AREN’T NEW
GREAT PYRAMID OF GIZA
8. Optimism Bias:
Project promoters and planners spin scenarios of success and gloss over
risks and possible failure
Strategic misrepresentation
Why?
Competition for funds
“The dream” or the character of the project
Commitments made to a particular stakeholders, project or project scope
without understanding risks ,e.g.., financial, construction, patronage,
managerial, other
WHY DO MEGAPROJECTS EXCEED COST
PROJECTIONS
9. At the front-end, planning stage identify comparable, high
profile megaprojects and analyze drivers for costs increases,
schedule delay, and scope changes. This is for reference
Ensure project decision-makers bare burden of financing
Ensure the skill mix of the planners, engineers, and
contractors meet the demands of the project
Transparent decision-making
Honesty
HOW TO CONTROL MEGAPROJECTS?
10. Understanding demand is critical for transportation projects,
including airports, highways, toll bridges and tunnels, and public
mass transit projects
Financing is linked to demand forecast
Project scope and scale often linked to demand forecast
Manipulating demand infects the project with misplaced optimism
Understanding demand forecast is daunting and trust is usually
assumed in formulating of the forecast
DEMAND
11. Megaprojects evolve overtime—”organic phenomena”
Megaprojects function as agents of change for society, e.g.,
Channel Tunnel between Britain and France or the HSR Project,
Interstate Highway System, California Water Project
Impacts cannot be assessed at the front end
Projects can meet schedule and budget, but fail to meet current or
future needs
But:
Not easy to separate projects from scope, schedule, budget issues
Trade-offs abound. For example, more debt to pay for increasing
costs takes funds for debt service that could be used in other
projects
Omega Centre at the Bartlett School of Planning, University of London
ANOTHER POINT OF VIEW
MEGAPROJECTS NEED A BROADER
DEFINITION OF SUCCESS
12. 1981—Japanese-American group proposes a HSR project between
Los Angeles and San Diego
Project goes nowhere after legislative delegation visits Japan.
Legislators found the technology incompatible with coastal communities
because of noise
1990—Proposition 116 ($2B transit bond) authorizes $500,000
to identify a corridor for HSR to cross the Tehachapi Mountains
1996—Legislation establishes the HSR Authority
2008—Legislator places Proposition 1A on ballot to fund a HSR
project
Prop 1A passes with 52.6 percent of the vote
HIGH-SPEED RAIL COMES TO CALIFORNIA
13. Funding Requirements
Authorizes $9.95B bond—$9B to HSR & .950B for local
projects
Allows 0.900B for planning, engineering &up to 0.450B for
admin
Bond funds used for construction must be matched dollar for
dollar
Other sources of funding anticipated, including federal, local
gov’t, & private
REQUIREMENTS OF
PROPOSITION 1A OF 2008
14. Program Requirements
First phase Anaheim/LA to San Francisco Transbay Transit Center
Required to travel LA to SF 2:40 with a top speed of 220 MPH &
an average running time of 200MPH
Legislative intent HSR be completed by 2020
Before bond funds may be used for construction, HSRA must
demonstrate passenger service in a usable segment (a segment
with 2 or more stations) or an entire corridor shall not require an
operating subsidy
REQUIREMENTS OF
PROPOSITION 1A OF 2008
15. Business Plan to be delivered by Sept 2008, but delivered at end
of October days before the November election
Voters told construction cost of full system would be $33B
December 2009 new Business Plan with cost of $42.6B
Salient issue ridership
2007 by 2020 when fully operational ridership would be 68M passengers
2008 Business Plan ridership between 42M to 68M by 2020
2009 Business Plan (initial phase, SF, LA/Anaheim) 13.5M passengers
by 2020.
HSR ISSUES AT THE OUTSET
16. State Senate Transportation Committee asks ITS to review the
HSRA’s travel demand model
HSRA paid for the review
ITS reviewed the “Bay Area/California High-Speed Rail
Ridership and Revenue Forecasting Study”
RESOLVING RIDERSHIP ISSUES
ITS TO THE RESCUE
17. “. . .we have found some significant problems that render the
key demand forecasting models unreliable for policy
analysis.”
“. . .the mode choices of the individuals surveyed were not
representative of California interregional travelers.”
Because of the above findings, the report concluded “. . .it is
likely that the resulting model gives a distorted view of the
tastes of the average California traveler.”
“CS changed key parameter values after the model
development because estimates did not accord with the
modelers’ a prior expectations.”
ITS’S FINDINGS
19. Agricultural an issue from day one
California largest ag state: $45.5B, Iowa is second $29.9B
Dairy $7.6B, Almonds $3.8B
Number 1 export ag product almonds--$2.4B
Community issues on the San Francisco Peninsula
30 minutes San Francisco to San Jose
Community issues in East Los Angeles entrapped by highway
Orange County opposed HSR because of community concerns
ISSUES
20. Cost control is always an issue with megaprojects
Time itself becomes an enemy of cost control
Competency of project management and construction
management has an impact on cost
Selection of alignment and more precise engineering can
influence cost in either direction
Cost of property acquisition influences cost
Politics may affect project cost
HSR COST ISSUES
24. The great flip-flop: Merced to San Fernando Valley is dropped as
the Initial Operating Segment (IOS) and Silicone Valley to “near”
Bakersfield is the new IOS.
Later improvements to Caltrain will offer “one seat ride” between
San Francisco and Bakersfield
Phase I San Francisco to LA/Anaheim forecasted to open in 2029
What happened: no alignment for tunneling through the
Tehachapi Mountains
San Francisco to LA/Anaheim is now $64B
2016 DRAFT BUSINESS PLAN
THE GREAT FLIP-FLOP
27. “Engineering and Environmental challenges associated with
tunnels in mountainous terrains including-Design,
constructability and commercial challenges, groundwater
resources & geotechnical investigation”
Source: HSRA, Peer Review Group Semi-Annual Update, September
2015
The 2:40 travel time in Proposition 1A is no longer discussed
Cost Unknown
RISKS ARE HIGH TO CROSS THE
MOUNTAINS
28. PROPOSED BUDGET UNREALISTIC
1. State bonds to pay for
construction can’t be sold
until it can be demonstrated
that the IOS won’t require an
operating subsidy
2. $2.552B of Federal funds
must be spent & matched by
2017
3. Committed state bonds
must meet the no operating
subsidy requirement
4. $5.341B in cap & trade
funds is all that can be
counted on. Cap & trade
sunsets in 2020.
29. To access bond funds must prove to satisfaction of the
Legislature, an independent peer review group, the
Department of Finance, the Legislative Analyst that the IOS
can offer service that will pay for O&M to get bond funds—
about $6.775B
Use cap & trade funds—about $5.341B
Awarded federal fund—about $3.165B
$15.281B
About $5B short to build Northern California segment
WHERE WILL THE MISSING
MONEY COME FROM
