E1 - Panama Canal Risk Analysis

Risk Analysis of the Panama Canal
RISK ANALYSIS
OF THE
PANAMA
CANAL

GROUP MEMBERS
- DARA COYNE 14204332
- PATRICK CONNOLLY 14205706
- ROBYN PIM 11511247
- SEBASTIEN GIANCOLA 14200517
- TRISHNA GUHA 14200592
- XINTONG LIU 14203319
Construction 1904-14
WORD COUNT 5482
BMGT 44210 PROJECT MANAGEMENT
JOE HOUGHTON
PANAMA
CANAL

TABLE OF CONTENT
EXCECUTIVE SUMMARY …………………………………………………………………4
1. INTRODUCTION ………………………………………………………………………5
1. 1. Risk ………………………………………………………………………………5
1.2. Risk Management ………………………………………………………………5
1.3. The Risk Management Process …………………………………………………6
2. PLANNING FOR RISK MANAGEMENT…………………………………………………7
2.1. Project Selection …………………………………………………………………7
2.2. Overall Project Process ………………………………………………………7
2.3. Deﬁning Risk Management ……………………………………………………8
3. THE PANAMA CANAL …………………………………………………………………9
3.1. The First Panama Canal Project - ‘A Project Failure of Epic Proportion’ …9
3.2. What Went Wrong ……………………………………………………………9
3.3. The Second Panama Canal Project - ‘The American Way’ ………………11
4. RISK IDENTIFICATION …………………………………………………………………12
4.1. Diseases …………………………………………………………………………13
4.2. Mudslides ……………………………………………………………………14
4.3. Explosives ……………………………………………………………………14
4.4. People Risks …………………………………………………………………15
5. RISK MANAGEMENT …………………………………………………………………17
5.1. People Management ……………………………………………………………17
5.2. Resource Management ………………………………………………………18
5.3. Mudslide Management ………………………………………………………18
5.4. Explosive Management ………………………………………………………19
5.5. Technical Challenge Management …………………………………………19
6. RISK RE-PLANNING MANAGEMENT ……………………………………………… 20
7. CONCLUSION ………………………………………………………………………22
BIBLIOGRAPHY …………………………………………………………………………23

Executive Summary
In evaluating the risk management procedures of the American Panama Canal project,
it is clear that it was an arduous endeavour. The environment of Panama posed
significant challenges, ranging from the threat posed by disease and the climate in
disrupting excavation work. In accessing the effectiveness of the American risk
management approach, the shortcomings of the previous French attempt will be used as
a point of reference.
The French attempt to construct the Canal failed largely due to inadequate
management of risk. The initial plan to build a sea level canal led to technological
shortcomings and over ambitious funding estimates and designs, which constituted major
scope risks. The reluctance of the French to deal with resource risks such as the threat
of disease and excessive cost overruns resulted in 20,000 deaths and a $300 million
bill, five times the initial $60 million budget. In the face of such overwhelming losses, the
French project ended in failure.
After president Roosevelt revived the project in 1904, the Americans were prudent in
learning from the mistakes of the French. An ambitious public sanitation programme
virtually eradicated yellow fever and malaria in the region prior to construction. The
decision by the Americans to switch to a lock based canal was vital, as it reduced
excavation work and corresponding schedule and resource risks. They were also wise in
acknowledging the importance of employee morale, and they did much to improve this
by improving the living conditions of employees and enhancing communication channels
with management. This was important, as many of the setbacks encountered by the
project could only be overcome by sheer persistence and willpower on the part of
ordinary workers, with mudslides being a prominent example. The willingness of the
Americans to adopt new technologies such as the elastic railroad and steam shovels
also did much to mitigate schedule and people risk, despite the possibility of defect risk
posed by Isthmian tropical environment.
The success of the American project can be owed largely to the implementation of
these risk controls. As a consequence, the project finished six months ahead of schedule
and with a final cost of $375 million, approximately $23 million below estimates. 
4

1. Introduction
The dream of sailing through the
Panama Canal stretches as far back
as the 15th century, when Charles I of
Spain initiated a movement to build a
canal across the region. At the time, it
was deemed impossible to accomplish
such a feat. Then again in the 1800s,
the French attempted to create the
canal with no prevail. The effort
resulted in the loss of over 20,000
lives and the chief engineer
incarcerated for fraud. It was not until
the early 20th century did the dream
of the canal come to fruition under the
guidance of the United States
(Kendrick, 2006).
Deemed an impossible project, the
Panama Canal is now seen as one of
the great engineering wonders of the
world. Nonetheless, the project began
with great difficulties and risks. Our
project therefore, aims to explore the
management of the project through the
lens of risk management. Through
analysing the risks associated with the
project, it will be clear to the reader
that the accomplishment of the canal
was nothing short of extraordinary.
1. 1. Risk
A project manager understands that there are risks associated with every project.
No amount of planning can perfectly alleviate risk or completely control
unanticipated circumstances (Larson et.al, 2014: 205). According to Chapman et al.
(2001) risk relates to “an uncertain event or set of circumstances that, should it
occur, will have an effect on the achievement of the projects’ objectives”. A risk
always has a cause and if it occurs will also have a consequence. Consequently,
there are some potential risks that can be identified before a project starts such
as the malfunction of a piece of equipment. Risk can also be anticipated, such as
overspending, but they can also be far beyond imagination, such as the collapse of
the first Panama Canal (Larson et.al, 2014: 205).
1. 2. Risk Management
Risk management attempts to predict and control potential problems that can
affect a project. Risk management tries to identify as many risks as possible and in
5

turn minimise their impact. Therefore, if risks do occur there will be a system in
place that can help control the concerns. (Larson et.al, 2014: 205).
1.3.The Risk Management
Process
The most probable risks are likely to
occur during the early stages of a
project such as an error in time or
cost estimates. The reason for this is
the level of uncertainty that will
always exist during the beginning of
a project due to the number of
questions that need to be answered.
As the project progresses these
types of risks will lessen as the
questions are addressed. On the
contrary, Larson et al. (2014) notes
that it is at this stage where cost
risk increases, as it will be more
expensive to ﬁx a problem in late
stages, possibly because money has
already been put into the project.  
6

2. Planning for Risk Management
In particular, it is of great importance that the project manager pays attention to
the planning stage. Planning is crucial step to ensure the five-step process of risk
management succeeds. Kendrick (2003) believes projects fail for one of three
reasons:
• The project is actually impossible
• The deliverable is possible however the rest of the objectives are
unrealistic
• Finally, not enough thought has been put into the work and there are no
useful results.
Risk and project planning allow for the three situations to be dealt with in a correct
manner (Kendrick, 2003:17).
2.1. Project Selection
Projects are often the result of an organisation’s decision to create something new
or change something old. In the case of the Panama Canal it was the latter. The
choice process relies on project risk analysis. Of course, this shows that project
selection and risk management are closely linked.
An effective project selection process has three possible outcomes:
• The project is authorized and remains active,
• Changes to scope, schedule or resources are needed before it
continues; this is the case in regard the construction of the Panama
Canal in 1903, or
• Rejection (Kendrick, 2003:19).
2.2. Overall Project Planning Process
The overall approach used by a project manager can be a source of project risk.
It is impossible to identify and manage risk without good analysis. According to
Kendrick (2003), there needs to be regular reviews of the overall process, as this
will lead to a solid foundation for effective risk management.
7

2.3. Deﬁning Risk Management for the Project
Planning begins with the review of the project assumptions. Many project managers
will use project charters and databases, which will usually include information on
risk. It is important to take note of
these documents, as they can be
early indicators of the risk.
(Kendrick, 2003:29).
 
8

3.The Panama Canal
It is important to realise that the creation of the Panama Canal was much more than
just an unprecedented feat of engineering; it was an historic event that had a profound
effect worldwide (McCullough, 2001:11). Historian David McCullough (2001) believes that
the construction of the canal “apart from war represented the largest, most costly single
effort ever before mounted anywhere on earth”.
To enumerate the sheer size of the canal, it is approximately eighty kilometers long and
one hundred and fifty meters wide. Its construction resulted in two of the world’s largest
oceans, the Atlantic and Pacific, being connected (Gomez, 2014). It connects one
hundred and forty four maritime routes from eighty countries every week (Gomez, 2014).
Situated in Central America, the canal stretches from Limon Bay to the Gulf of Panama.
The Canal promotes world trade and reduces the travel time of its users by a significant
amount (Gomez, 2014): 13,000 kilometers to be precise (U.S department of state,
2008).
3.1. The First Panama Canal Project- ‘A Project Failure of Epic Proportions’
The first attempt to build the Panama Canal was undertaken by a French man named
Ferdinand de Lesseps in the 1880s. Lesseps, in spite of being just a diplomat by
profession, gained the title of ‘The Great Engineer’ after overseeing the successful
completion of the Suez Canal in 1869 (Herbert, 1913). It was estimated that building such
a canal would save shipping costs of USD 48 million per year and the canal itself could
be built in less than USD 100 million. But Lesseps’ lack of planning and risk
management ultimately led to its downfall (Kendrick, 2006).
3.2. What Went Wrong
It is believed that the first project to build
the Panama Canal failed because it was
premature in technology. It must be
remembered that technology in the late
1800s was not evolved enough to carry
the weight of a project of such scale.
Academics, had only started to look at
project management as a subject, and
there were no clear idea of what the
scope of project management was
(Kendrick, 2006). During the entire
project, planning was not thorough,
documentation was scarce if not faulty or
9

dishonest, and the attitude towards risk
management was to ‘hope for the
best’ (Kendrick, 2006).
At the International Geographic Congress
of Paris held in 1989, Lesseps presented
the idea to build a sea level canal at
Panama to potential investors, thus going
against the advice of well-established
engineers such as Lepinay. In fact, it was
Lepinay that came up with the lock and
dam concept to build the canal at
Panama that was later on successfully
implemented by the Americans (Llacer,
2005). What these prominent engineers
had pointed out to Lesseps was that
digging a sea level canal will not only be
extremely difficult, as workers will have to
cut through huge amount of earth which
rose up to 130 meters above sea level,
but also extremely dangerous as water
from the river Chagres could flood the
deep trench during construction resulting
in a loss to life, property and effort
(O’Connor, James, 1999). The investors
went with Lesseps’ plan. In fact, Lesseps
never thought planning was important
and paid even less heed to the technical
experts advising him otherwise. He
believed that the solution would present
itself when the problem arose.
Furthermore, Lesseps did not plan the
budget of the project correctly and only
raised $60 million, which was less than
one third of what his engineers had
estimated. Surprisingly, he did not
practice proper documentation and there
have been instances where he had
presented false reports to the investors in
order to give them a false sense of
comfort (Kendrick, 2006).
When the project finally went into the
implementation stage in 1882, Lesseps
inability to foresee and therefore
manage risks led to the deaths of at
least 20,000 workers. As previously
mentioned, Panama is a tropical area
which was rampant with diseases like
yellow fever and malaria at that time and
‘workers died by the hundreds’ (Kendrick,
2006). Consequently, the torrential rains
in Panama led to severe floods which
made it even riskier for the workers to
dig. The rain water combined with the
salty air destroyed machinery. Building a
sea-level canal meant digging up to 15
kilometres into the earth, which had never
been done before, for 80 kilometres
across the isthmus. Funding was low and
even less were allocated to construction,
as Lesseps spent the most of the funds
on publicity in order to keep the investors
happy.
In total 17,436 workers, most of whom
were natives of neighbouring
countries like West Indies and
Jamaica, lost their jobs as a
10

result of a mismanaged project. All these
factors combined slowed down the
progress of the project and also raised
the budget substantially (almost $300
million were spent on the project).
Ultimately, the lack of funds was what led
to the abandonment of the project. As a
result, Lesseps was found guilty of fraud
and was awarded five years in jail
(Llacer, 2005). 
3.3. The Second Panama Canal Project- ‘The American Way’
The project to construct the Panama Canal was re-opened in the early 1900s when
Theodore Roosevelt, the newly elected President of USA, decided that building the
canal was of strategic importance to the US (Kendrick, 2006). Roosevelt ensured that
the project managers learned from the mistakes of the French engineers and went
about planning and implementing the project differently. First off, he got the State to
fund the project and ‘engineered’ the freeing of Panama from Columbia without armed
conflict. Next, the US bought rights over the Panama Canal by paying $10 million to the
State of Panama (Dumitrescu, Cornel, 2014). Roosevelt then appointed project
managers who were not only capable but driven to complete to project efficiently. The
lock-and-dam concept was chosen to build the canal in the project.
The beginning of the second project to build the Panama Canal was troublesome. The
first project manager John Findlay Wallace, appointed in 1904, had no prior experience
in similar projects. He could not make any major decisions without the consent of a
seven-member commission, which rarely gave any unanimous support. In 1905, after no
real progress was made in the project,
Wallace resigned from his post saying
t h a t ‘ t h e c a n a l w a s a
mistake’ (Kendrick, 2006).
 
11

4. Risks IDENTIFICATION
As previously mentioned “a risk has a cause and, if it occurs, an effect” (Project
Management Institute, 1996).
When taking the Panama Canal project as an example, it is possible to classify
numerous risks from different origins and thus causing different consequences. See the
table above:
12
Potential Risk Detected Description of the Impact Likelihood of Occurence Severity of the Impact Attitude/Action/Solution
Mudslides
Causes damages on the on
going progress and
equipment, need to redo
the work.
Time and Cost Impacts
High
(4)
High
(5)
- Ask for
recommendations/
expertise from Geologist;
- Applicate a more
horizontal excavation.
Contracting
(Tropical)
Diseases
Tropical diseases, mostly
yellow fever and malaria.
Medium
(3)
High
(5)
- Control the vector
(mosquito);
- Improve the Sanitation;
- Isolating infected
people.
Use of Explosives
Unpredictable and
uncontrolled explosions
due to the high level of
humidity, lack on research,
constant need in using it.
Medium
(3)
High
(5)
- Approach expect in
explosives, i.e. a
Military Contract;
- Control the
environment before
any explosion;
- Better prepare and
equip the workforce,
i.e. suits.
Technical
Challenges
Engineering challenges,
including the system of
Locks (size), the creation
of an artificial lake, the use
electrical power.
Quality and time Impacts
Medium
(2)
High
(5)
- Adopt an updated
Technology;
- Contract high qualified
engineers;
- Adopt an adequate
Plan and measurement
system.
Earthquake
Unstable area, it happened
during the French
Construction.
Time, Cost, Quality and
Benefits Impacts
Medium
(2)
High
(5)
- Adapt the
constructions, i.e.
wood houses, and/or
basements to protect
people;
- Earthquake Drills

4. 1. Diseases
In order to fully understand the reason that diseases were considered as one of the
major risks, it is necessary to understand the arduous geography of Panama. Due to its
tropical climate, the area experiences humidity with long monsoon seasons that stretch
from May to January. On the negative side, it is the ideal habitat for mosquitoes that
are known to carry several diﬀerent infectious diseases such as malaria and yellow
fever.
Both diseases present the same initial symptoms: headaches, fever and muscle pain.
Clearly, these would pose an issue for any construction project and were undoubtedly a
major problem for the Panama Canal engineers to overcome.
13
High Occurence
of Precipitations
Tropical weather, very
humid and very common
rain.
Benefits Impacts
High
(5)
Medium
(3)
- Drainage;
- Protect the Equipement
to avoid major
damages.
Possibility of a
Worker Strike
Time, Cost and Benefits
Impacts
Low
(2)
High
(5)
- Adapt an adequate
system of wages:
- Improve the quality of
living;
- Keep the workers
motivation on.
Lack of Qualified
Workforce
Benefits Impacts
Low
(2)
High
(5)
- Decent incentives
system;
- An appealing and
strategic
communication to
attract target workers.
Bankruptcy
It occurs previously with
the French.
Benefits Impacts
Low
(2)
High
(5)
- Create a stable
relationship beyond
the stakeholders;
- Adopt an adequate
Planning and Control.
Possibility of Chief
Engineer issues
The project will stop if the
chief engineer is no long
present (sick, abandon the
project, death…)
Benefits Impacts
Low
(2)
High
(5)
- Decent Remuneration,
Rewards and Benefits
system;
- Keep the motivation
high.

By 1906, more than 85% of the canal workers had been hospitalized after exhibiting
tropical disease symptoms (American Experience, 2015).
Yellow Fever was far more detrimental and led to kidney failure, delirium, seizures,
coma, and often death.
Conversely, malaria had a lower fatality rate but was a more frequent reappearance
that resulted in extensive hospitalization. Undoubtedly, both diseases posed a major risk
in construction of the canal. Firstly, they affected the health of the workforce thus
lowering the number of active workers and secondly, they created an environment of
fear, as workers were afraid of being affected by these diseases.
4. 2. Mudslides
As a consequence of the tropical and humid weather conditions, mudslides were a
regular occurrence. While excavating hard rocks the soil became extremely unstable,
leaving the under layer of soil more susceptible to mudslides. (J. M. Duncan, 2008).
Whenever a mudslide took place, the ramifications were extremely dangerous for the
project. Workers were injured and equipment was damaged. This in turn affected the
progress of the project. Repairs demanded a significant effort from workers as the
damages were coupled with having to re-excavate the canal. This meant that work
constantly had to be redone. On the whole, it was a particularly high-risk occurrence,
with high impact on the project schedule and budget. (Kendrick, 2003)
4. 3. Explosives
It is important to realize the sheer scale of the Panama project. It would have been
impossible to dig and remove all the dirt without help from explosives.
However, this method was immensely dangerous due to the instability of the material
that the explosives made of. In fact, an explosive could explode at any moment thus
emphasising the danger workers faced.
“The worst accident to occur during the canal's construction, in fact, was caused
by the premature explosion of dynamite in the Bas Obispo cut on December 12,
1908, causing the death of 23 workers and injuring 40 others.” (American
experience, 2015)
14

However, it must be noted that the use of explosives, despite the risk, was necessary to
ease the difficulty associated with excavating the canal.
4.4.People Risks
Larson and Gray (2011) note that ‘people’ are a major source of resource risk due to
several factors. People risks arise within the project team and there are endless
amounts of risk associated with these. Examples include loss of morale, loss of loyalty,
high turnover and delays.
People risks often arise within the project team and can affect productivity. An example
is the mismatch between a team member’s skills and the tasks at hand. If a team
member is inadequately skilled to accomplish the tasks, then the project’s productivity
will suffer as a result. The problem project managers face with specialised or skilled
workers is that they come at a high cost. Kendrick (2003) illustrates that every project
requires technical experts with specialised expertise. In relation to the Panama Canal,
problems arose due to the sheer size of the project and the difficultly in attaining skilled
workers.
One reason attributed to the difficulty in attaining workers was the danger involved with
working on the Panama Canal: contamination and disease, dangerous working
conditions, a compensation system based on racial segregation (McCullough, 1977).
Danger associated with the work was a main issue amongst the white workers, and it
was overcome by paying them higher wages. White workers were paid in gold coins
compared to the non-white counterparts (McCullough, 1977). Of course this racial
segregation was typical of a time when there was a racial divide throughout America.
And as for Theodore Roosevelt, he would employ anyone “who would make the dirt
fly” (Connif, 1985).
Subsequently, Kendrick (2003) also submits that people are a prominent resource risk
due to several factors, most notably turnover, delays and late starts. It is quite difficult to
accurately predetermine or predict the possible loss of staff members. This could be
seen in the construction of the Panama Canal when work had to stopped because of a
strike held by the steam shovel operators (Kendrick, 2015). The chief engineer at the
time, George Washington Goethals, refused to meet the demands of the workers and
work had to stop for several weeks. His uncompromising attitude led to a
15

decision that a whole new team of steam shovel operators was to be employed.
Furthermore, Kendrick (2003) reasons that aligning people’s requirements with those of
the project requires continuous attention by the project manager. One way in which
managers can avoid causing problems in this area is through proper planning and by
hiring staff whose abilities match those required to successfully complete the project.
Moreover, project managers can use retrospective analysis to gauge the necessary
staffing requirements for a project. This was not possible initially during the construction
of the canal due to the fact it was the largest project that had been undertaken
worldwide.
It was clear from the failure of the French Panama Canal that success in this project
required more attention on workers. Due to the safety hazards associated with working
at the Canal site, it was essential that workers were adequately remunerated and
retained. Goethals focused on motivating and retaining workers. Kendrick (2003)
maintains that Goethals’s success was based on combining an outstanding project plan
with a well-fed, well housed and well organised workforce. An example of this different
approach could be seen in Goathals weekly open door sessions where workers could
come in to talk to him about any issues or concerns that they had (Kendrick, 2003).
Furthermore, Kendrick submits that Goethals treated
workers with dignity and respect which led to greater
loyalty amongst workers. 
 
16

5.Risk Management
John Stevens, with an extensive
background in building railroads, took
over from Wallace and immediately
addressed the problems in the project.
He believed in preparing and planning
which is in line with Kendrick’s idea that
managing risks starts in the planning
phase (Kendrick, 2006). By then, the
seven-man commission was disbanded
which aided Stevens in his planning.
5.1. People Management
In preparing for the project, Stevens set
up dormitories and dining halls for the
workers and storage rooms for all
equipment and materials required in the
project. To battle the risk of diseases, he
collaborated with Dr. William Crawford
Gorgas. Six months into the project
Yellow Fever was eradicated and deaths
due to Malaria had been reduced
drastically. Steps were taken to control
mosquitoes and other insects by coating
bodies and stagnant water surfaces with
ﬁlms of oil. This not only reduced the
chances of contracting diseases from
mosquito bites but also helped in reducing
the threat of insects which in turn
increased the productivity of all workers
and the led to the speeding up of
progress of the overall project (Kendrick,
2006).
S t e v e n s b e l i e v e d i n e x t e n s i v e
documentation and he spent most of his
time in Panama amongst workers asking
questions. This documentation process
enabled Stevens to know every detail of
how the Canal was to be built. He applied
the Work Break Down Structure (WBS)
and broke down the project into smaller
and easily understandable duties.
Consequently, this also boosted the
morale of the workforce, as people could
now fully understand their roles and tasks
(Dumitrescu, Cornel, 2014). Moreover, he
strived to improve the living conditions of
his workers by providing them with better
food and living conditions. He also
rewarded high performing workers by
bringing their relatives to Panama
(O’Connor, James, 1999). Essentially,
keeping ones workforce happy and
motivated is an eﬀective way of
managing risks.
Following the resignation of two (civilian)
Chief Engineers, Roosevelt contracted
George Washington Geothals, a major in
the US Army Engineering Corp to
complete the project. Under Geothals
leadership, the Panama Canal Project
was completed in 1914, six months ahead
of schedule and $23 million under budget
(Richard, Weingardt, 2007).
17

Geothals continued the work of Stevens
in keeping the workforce motivated.
Firstly, he started a weekly bulletin called
the ‘Canal Record’ that documented the
progress of the project and recognised
those responsible for that progress. This
not only gave a true account of the day
to day’s progress but also created
healthy competition within the workforce.
Furthermore, those
who worked on the
project for more
than two years
were awarded with
a medal. Geothals
even hosted open-
d o o r S u n d a y
sessions where any
member of the workforce could approach
him with any query.
5. 2. Resource Management
In terms of equipment, innovation in
technology in the twentieth century was
taken advantage of and huge steam
shovels were used for digging purposes.
This made the process of digging faster
and the new technology also helped to
prevent the erosion of equipment due to
salt and humidity in the air.
During the implementation stage Stevens
developed the ’Elastic Railroad’ track.
This allowed for the tracks to be moved
in a quick and efficient manner, thus
saving on resources. Stevens also devised
a way to load loose soil onto flatcars,
which was then transported to the dam
building sites. At these sites, machines
similar to a snowplow, unloaded the flat
cars and promptly transported them
back to the original site without any
delays or any unnecessary stops.
In spite of achieving
resounding success in
the project, Stevens
resigned from the post
of Chief Engineer due
to his lack of expertise
in hydraulics which
was required to
further the project.
5. 3. Mudslide Management
As previously mentioned, managing
mudslides was no easy task. Mudslides
were frequent during the project and
hampered the progress of the project
and welfare of the workers. Each
mudslide was followed by more digging.
The French had initially dug the canal at
a 1 : 1 slope that posed a higher risk to
causing mudslides. Under the Americans,
it was changed to a 4:1 slope and this
proved to be more stable
(Kendrick, 2006).
18

5.4. Explosive Management
Explosives were constantly used during
the project to blast through boulders. As
previously mentioned in the ‘Risk
Identification’ section, the explosives used
were highly unstable and unsafe as they
would go off without any prior warning.
They mitigated this by implementing
rigorous safety precautions, as they were
unable to eliminate this risk as a whole.
5. 5. Technical Challenge Management
Geothals’ biggest technical challenge
was the construction of the locks for the
Canal. Locks were used periodically for
small vessels but never for big ocean
liners. Hence, the doors for the locks had
to be large and strong to allow them to
counter the immense pressure placed on
them when they were shut. Of course, this
was of great importance, as Panama is
an earthquake prone zone.
The locks could not be operated
mechanically without innovation, so
Geothals began using electrical power to
operate the locks. Utilising electrical
power at such a large scale had never
been done before and required a great
degree of innovation (Kendrick, 2006).
Vanadium alloy steel was used due to its
strength and weight in the construction of
the lock system. It was necessary to
create hallow doors as solid doors would
have proved inoperable. The insides of
the doors were to be filled with water to
increase their mass in order to counter
the pressure exerted by the water when
the locks closed. The sides of the doors
were made exceptionally thick with
reinforced concrete that even after a
century of use and lots of earthquakes
later, one can see only a few cracks
(Kendrick, 2006).
Contractors were outsourced to produce
the 1000 electric motors required to run
the massive locks, hence minimising risk
effectively. General Electric who were
known for its specialisation in providing
electrical systems (Kendrick, 2006). 
19

6. Risk Re-Planning
The largest problems were the significant difficulties associated with building the sea
level canal proposed by the French and the volatile environmental conditions in the
region. The American team were prudent in accounting for developments in both the
wider shipping industry which could have potentially affected the long term viability of
the project (Petrovski, 1993).
Amongst the most significant measures taken by the American engineers was the
decision to switch from the sea level design proposed by the French to a lock based
one in 1906, two years after the project began. After examining the landscape of the
region, they concluded that the surrounding mountain range would be too difficult to
excavate, and would pose too great a threat to the feasibility of the project given the
schedule and scope risks represented by delays and cost overruns (Cornish, 1909).
The region was also plagued by environmental hazards which did much to hamper the
progress of the project. Mudslides were frequent, and contributed to a doubling of
excavation estimates between 1906 and 1913 (Kendrick, 2006). In response, the
American team had no choice but to simply excavate the areas again at great expense
in terms of money and time. In this case, the project managers had to trust in the
persistence and morale of their workers in accomplishing the task.
Although the French faced similar scope and scheduling risks in the initial expedition, the
American approach to the same risks contributed greatly to the eventual success of the
project, while the negligence of the French team in tackling the same problems led to
their failure. The most prominent example of this can be found in the risk posed by
tropical diseases in the Panamanian isthmus. In the original project, the French were
reluctant to deal with the threat posed by Yellow Fever and Malaria due to scientific
uncertainty over mosquito based theories of viral transmission. As a consequence,
outbreaks of disease resulted in a 66% infection rate amongst French workers, a
development which significantly added to the decline and bankruptcy of the French
project (Stern, 2005).
In contrast, the American team responded to this threat by implementing an ambitious
public health programme to eradicate the mosquito-borne diseases that had plagued
the first canal project and the construction of the Panama Canal railway fifty
20

years previously. Advances in tropical medicine allowed oﬃcials to identify the species
of mosquito responsible and facilitated far reaching sanitation policies improving
sewage and water infrastructure in the local areas, as well as fumigating local
residences of infected residents. As a
consequence, casualties amongst workers in the
American project were drastically reduced at
levels of 5,000 over the course of the project
compared to 20,000 in the French initiative
(Stern, 2005). Although the health initiatives
represented a considerable expense of $20
million at the start of the canal project, the
eradication of the mosquitoes greatly facilitated the progress of the project by
mitigating the scheduling and resource risks entailed by labor shortages. This also did
much to raise the quality of life and morale of the employees, aiding the capacity of the
American project to overcome delays and complications during the construction process.
The capacity of the engineers to incorporate developments in the ship making industry
and international environment were also of note. Advances in the industry had enabled
the construction of larger vessels, while the US navy had also made requests to increase
the size of the proposed locks so as to accommodate military ships. In response to this,
the proposed width of the locks were increased from 98.5 feet to 110 midway through
the project whilst retaining their length of 1050 feet (Hummer, 2003). In doing so, the
Americans were able to optimize the capacity of the canal and to maximize revenue,
thereby mitigating the risk of scope risk stemming from the growing demands of the
global shipping industry.. This has held true for most of the canals history, as few ships
are built beyond the speciﬁcations of the Panamax standard, with speculation of post
Panamax builds only becoming widespread in the wake of the recent extension project.
21

7. conclusion
In evaluating the success of the American Panama Canal project, it is apparent that its
eventual triumph can be largely attributed to the capacity of the Americans to learn
from the mistakes of the French engineers who preceded them, and to adapt to
changing circumstances by deftly integrating solutions to these problems into their
ongoing plans.
Despite all the risks identified and the challenges faced, the Chief Engineers and their
workforce managed the risks effectively and ensured the construction of the Canal was
a success. The Panama Canal was the jewel of an emerging world super power, the
United States, and its offerings to world healthcare and engineering were without
precedent.
 
22

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