Report On Project Management Of Chunnel Project
EXECUTIVE SUMMARY
This project is based on The Chunnel Project undertaken for creating the connection between England and France via underground tunnel. In the given case of Chunnel Project, the initial scope was to create the fixed transportation link between England and France. The analysis revealed several issues with the project that are as follows. Firstly, the project scope was not well defined that lead to project delays and ineffective risk management strategies due to inability of team in identifying risks at initial phases. Secondly, the large construction projects like Chunnel Project include several stakeholders due to which communication challenges could incur. One of the major communication challenges in the case was to deal with two international governments given the differences in the political aspects, their attitudes, language and the underlying local goals. The major implication of ineffective communication amongst stakeholders and Governments lead to significant cost and time variances associated with Chunnel Project. Thirdly, in the Chunnel Project, PMO was not focused upon during the inception phase. Only a back-office was formed for supporting the activities. The role of PMO in Chunnel Project was to help the sponsors as well as shareholders in monitoring the whole project and the overall activities of the project. Fourthly, three costing methods were used i.e. target cost for tunneling with cost-plus fixed-fee basis, lump-sum for terminals and procurement contracts for the rolling stocks on cost-plus-percentage-fee-basis. However, the fixed contract pricing model is only suitable when the project work and scope is well defined. This didn’t happen in case of Chunnel Project due to which several issues incurred including contentious relationships with contractors and increased justification of cost overlaying. Fifthly, the main causes of cost and the schedule variations in Chunnel project were the poor communication, poor scope and lack of stakeholders’ involvement in early stages. The delay in requirement communication regarding passenger doors widening and ignorance of air conditioning escalated the costs of the project to rise immensely. Lastly, the teamwork lost its charm as the project moved in later stages. Due to improper provisions and lost momentum, the teamwork didn’t hold its position throughout the life of the Chunnel project.
INTRODUCTION
This project is based on The Chunnel Project undertaken for creating the connection between England and France via underground tunnel. The aim of this report is to discuss various compartments involving project management of Chunnel Project including its project scope, communication process, roles & duties, pricing, key stakeholders’ involvement, project performance and key lessons learnt through its analysis.
The report structure includes the detailed breakdown of the following concepts including project scope definition, communication management, stakeholder management, project manager competencies, pricing, and project teamwork and project evaluation. These concepts would be aided by the books and peer-reviewed journals.
PROJECT SCOPE EVALUATION
Project scope is defined as the process by which the projects are defined and then prepared for implementation across the organization (Mirza, et al., 2013). Scope is a crucial stage where the risks of the project are identified and analyzed. The project scope includes the identification of the factors that are involved in project initiation, definition of the objectives and identification of the measures of performance (Khan, 2006). A clearly defined project scope is a perquisite for outlining the required work activities in order to achieve project milestones and create project deliverables. The scope creep occurs when there are various changes and continuous or uncontrolled growth in the project scope leading to cost and time overruns. This can occur due to poorly defined project scope at initial stages (Khan, 2006).
In the given case of Chunnel Project, the initial scope was to create the fixed transportation link between England and France. It can be said that the project scope was not well defined that lead to project delays and ineffective risk management strategies due to inability of team in identifying risks at initial phases. The overall scope was highly ambitious and the decision to finance the tunnel from private investments relied on maximization of economic returns, risk minimization and meeting functional requirements. Due to bi-national working arrangements and binding requirements by IGC and Treaty of Canterbury, scope creep occurred throughout the lifetime of the Tunnel project. Similarly, due to high bureaucratic power given to project overseeing, the scope creep incurred that contributed to cost and time overruns. Due to lack of efficient scope of project, no air-conditioning cost of USD200 mn was added in the project costing. With these lacking areas, it can be deemed that the scope of Tunnel Project was poorly defined due to which resource planning, cost estimation and budgeting became difficult.
Due to poor project scope and various changes in early project costing, the return on investments (ROI) assumptions also changed while giving poor indications of project profitability and cost-benefit analysis of the project. Such as, initially the cost estimates of Chunnel Project had been USD5.5 bn but by the time of its completion, it rose to USD 14.9bn with a year delay. This cost overrun could lead a trail of unhappy and unsatisfied investors as well as stakeholders. The poorly developed project scope at initial stage, continuous changes in the scope and lack of control impacted the Tunnel Project’s budget, time schedule and its lifecycle.
COMMUNICATION ISSUES
An effective project communication plan must be documented for identifying and outlining the processes through which information would be communicated with the team members, stakeholders, sponsors, community and customers (Chan, et al., 2004). The plan outlines the delivery on information, receiver information and the frequency. A clear communication plan is obligatory for project success as it ensures that all stakeholders would receive the necessary information (Famiyeh, et al., 2017). Hence, a robust communication plan must be designed for increasing consistency of the project management.
The large construction projects like Chunnel Project include several stakeholders due to which communication challenges could incur. One of the major communication challenges in the case was to deal with two international governments given the differences in the political aspects, their attitudes, language and the underlying local goals. The communication between French and England government failed as the two teams were put at end of the tunnels while working towards the middle and because of the limited communication at political level. This delayed the communication system and caused misunderstanding. Another challenge was the language difference between the two governments as the documentations had to be either translated or be described in both languages at the development stage.
Similarly, insufficient communication was apparent during the development and design process leading to changed opinions. With no direct contract between banks and the contractors and involvement of 700,000 shareholders and 220 international banks with the project, a huge communication gap occurred. Moreover, no horizontal and vertical channels of information flow were identified or established in Chunnel Project. The major implication of ineffective communication amongst stakeholders and Governments lead to significant cost and time variances associated with Chunnel Project.
In order to meet the communication challenges at the development stage, the project manager could have relied on digital communication channels for maintaining information flow across the two culturally diverse teams (Ahuja, et al., 2010). Emails, memos and webpages could have been used for sharing project status, slides containing important information and changes in scope of the project in both languages. A communication strategy should’ve been formed containing key stakeholders, responsibilities and resources in the development phase of the Chunnel Project (Ochieng & Price, 2010). By establishing a clear communication plan through digital channels, the project manager could’ve ensured that each side of the project stayed in touch with each other and knew the development progress at each side. This would’ve reduced the differences of opinions in later stages as the teams could’ve poured their opinions during the development and design phase and not later in the project lifecycle. Internal memos and reports could’ve been shared with both teams through digital channels for fostering the communication within the teams (Ochieng & Price, 2010).
ROLES & PERFORMANCE OF PMO
Project Management Office (PMO) is a body that can help the project managers in formulating the structure required for standardizing project management practices and carrying on the whole project management portfolio in large construction projects (Spalek, 2012). According to Pemsel & Wiewiora (2013), PMOs are the focal points of the project management practices especially that deal with multi-cultural working environment. Through PMOs, the project managers can delegate, organize, monitor, control and oversee the whole project. PMOs can improve the efficiency and the success rates of the project; however it doesn’t mean that PMOs are suitable for every environment (Pemsel & Wiewiora, 2013).
In the Chunnel Project, PMO was not focused upon during the inception phase. Only a back-office was formed for supporting the activities. The role of PMO in Chunnel Project was to help the sponsors as well as shareholders in monitoring the whole project and the overall activities of the project. As the project under consideration involved 220 banks, France & Britain Governments and 700,000 shareholders, PMO was required to provide communication channels between the stakeholders. Moreover, given the magnitude of the project, the complex logistics systems were also to be overseen by the PMO. In the given case, the decision of each stakeholder was inconformity which led to un-unified solution. Due to this, PMO was unable to handle the critical issues in the Chunnel Project.
PMO wasn’t given the right to supervise since the inception of the project due to which the critical issues like communication failure and delayed information appeared. Hence, it can be said that had the PMO in Chunnel Project gained clear rights over supervision and formed roles and responsibilities with help of key stakeholders since the inception of the project, the project could’ve based on the best practices. During the development phase, PMO performed well in planning, designing and detailing of the project. However, it didn’t learn from the past failures and showed the signs of improvement.
PRICING OF PROJECT
Fixed-price contract (lump-sum or firm-price contract) is mostly used in the construction industry (Boukendour & Bah, 2001). Under this contract, the specifications and design requirements are provided by the owner and the contractor then agrees to perform the required work at a fixed rate. It gives the owner an overview with certainty about the nature of work obligated for the contractor (Gordon, 1994). All the risks of rising input prices lies on the shoulder of the contractor under this arrangement. Hence, it is very important for contractors to estimate the project prices and then schedule the job in order to avoid any financial cost overlays (Gordon, 1994).
In the Chunnel Project, three costing methods were used i.e. target cost for tunneling with cost-plus fixed-fee basis, lump-sum for terminals and procurement contracts for the rolling stocks on cost-plus-percentage-fee-basis. In the implementation phase, the TML issued fixed-price contracts with subcontractors and vendors. Using the fixed-price contracts is beneficial for such projects as it would push the contractors to work effectively and efficiently in order to avoid cost overruns as all the burden would’ve been borne by them (Gordon, 1994). However, the contentious relationship and argumentative culture between contractors and owners could arise due to such contractual agreements. This happened in the case of Chunnel Project when the contractors raised claims and tend to justify the rising costs that delayed the project further. Although the fixed-price contract was a clever move by TML, but the unclear scope definition on which the competitive bids were approved were the reason of claims and contentious relationship arising between contractors and the owners.
Based on the analysis, it can be implied that using a fixed-cost contract should be considered when the project scope is clearly defined and the risks are clearly identified associated with project delays and cost overruns before setting the prices of the contracts (Błaszczyk & Błaszczyk, 2013). This would lead to healthy relationship with contractors during the whole project thereby reducing the claims and legal disputes. Therefore, the fixed contract pricing model is only suitable when the project work and scope is well defined. This didn’t happen in case of Chunnel Project due to which several issues incurred including contentious relationships with contractors and increased justification of cost overlaying (Gordon, 1994).
INVOLVEMENT OF STAKEHOLDERS
Stakeholders are defined as the individuals or the organizations that are actively involved in the project and that their interests could positively or negatively impact the project execution and its completion (PMI, 2000). It is very important for the project manager to identify the primary and secondary stakeholders for their project in order to get their buy-in during the planning and initiation phases. According to Aapaoja et al. (2013), the best time of influencing the project success is during the early project stage because all the decisions made in early stages could reduce the unnecessary changes required in later development stages thereby reducing the total life-cycle costs. Hence, it is important to identify and get the stakeholders involved in inception phases because early involvement could lead to lower likelihood of developing poor design and higher likelihood of improved construction operations. Aapaoja et al. (2013) also outlined that the early knowledge about the end-users of the project could lead to higher customer satisfaction regarding the functioning of final project.
It is regarded that when stakeholders know about the exact objectives of the project and the design specifications at early stages, it is more likely that the stakeholders would be able to meet the adjusted specifications and clear communication about the end project (Caron, 2014). Early involvement could also result in more room for creative solutions and intensive exchanging of ideas. It also leads to synchronized procedures that could be run in phases. The early involvement and identification of stakeholders would allow them to become a part of effort that will let the project team to gain buy-in and support from the key stakeholders throughout planning and execution process (Caron, 2014).
The key stakeholders in Chunnel Project are
- Primary Stakeholders: British Chunnel Tunnel and France Manche (banks and construction companies). These primary stakeholders were most influential and had the greatest power over the construction project. These stakeholders have high interest and high influence over the project due to their stakes in the project. Hence, the best way is to manage their needs most closely as these are the key players(Olander & Landin, 2005).
- Secondary Stakeholders: Inter-Governmental Commission that monitors the quality and the safety issues. It includes the potential customers, local citizens and the construction employees. These secondary stakeholders had little influence over the construction of the project but they represented most of the potential customers. Hence, their opinions were considered to be important during the planning process. Hence, these are the high-interest with low-influence attributes (see figure 1 below). The best way to manage these stakeholders is to keep them informed about the project deliverables and outcomes(Olander & Landin, 2005).
PROJECT PERFORMANCE EVALUATION
SPI and CPI allow the project managers in assessing the project’s performance (Aliverdi, et al., 2013). These two are the most important parameters of the project and can help in analyzing efficiency of the project. These parameters provide the management the deviations in terms of cost and schedule from the baseline. SPI is a measure of schedule efficiency that is expressed as the ratio of the earned value to the planned value. (Aliverdi, et al., 2013) It outlines the time efficiency of project. It is calculated as Earned Value / Planned Value. On the other hand, the CPI helps in analyzing the cost efficiency of the project as it measures the value of work completed as compared to actual cost spent. CPI is expressed as a ratio of earned value to the actual cost (Aliverdi, et al., 2013).
For Chunnel project, the main causes of cost and the schedule variations were the poor communication, poor scope and lack of stakeholders’ involvement in early stages. The delay in requirement communication regarding passenger doors widening and ignorance of air conditioning escalated the costs of the project to rise immensely. When IGC failed to approve the changes in doors on time, the manufacturing cost ballooned from USD9 mn to USD79 mn. Similarly, the key financial shareholders were fully determined about reducing their own net losses due to which they failed to approve the negotiation arrangements with the contractors on time. These issues not only increased the costs but also the time of the project. Hence, both CPI and SPI would’ve been affected by the poor communication, inefficient scope, and lack of stakeholders’ engagement and the benefit-based relationships of shareholders (contractors).
TEAMWORK
Team work is an important part of the project management (Yang, et al., 2011). In the previous assignment, we had limited time to carry out the research given the tiresome lecture hours and COVID-19 implications. In order to carry on with our previous project, we first outlined the meeting dates and then distributed the workload evenly amongst the team members. A clear time frame was set for completion whereby a progress report was decided to be shared every night at 11:00pm on shared digital portal. All the group members were strictly adhered to the time frame stipulated. Through proper communication plan and clearly articulated roles & responsibilities, we were able to deliver our intended group work by the targeted time successfully. Moreover, I believe that it is out mutual win-win strategy that let us focus on achieving the best group work as a “whole” instead of just focusing on our parts. We ensured that the group project is perfectly structured by helping each other wherever possible.
As compared to our project management considerations, the project management team of Chunnel Project lacked in communication, clear roles & responsibilities and inadequate definition of scope & objectives. The teamwork was apparent during the inception and development phase as showed by the two government involved. However, the teamwork lost its charm as the project moved in later stages. Due to improper provisions and lost momentum, the teamwork didn’t hold its position throughout the life of the Chunnel project. The major failure of teamwork became apparent when both governments refused to financially support the project and laid all the responsibility of funding on private sectors. This not only caused mistrust amongst the governments but also created demand for safety by the private sector. Due to these issues, the concept of win-win strategy was also forgotten as the project reached its closure. Each involved party was focusing on meeting its own priority and fulfilling its own interests instead of working towards mutually beneficial outcome.
The above teamwork showed by Chunnel Project Team and Us has clear distinctions from win-win strategy to communication and from project scope to clear roles and responsibilities.
CONCLUSION
The above whole analysis of Chunnel Project clearly implied many lessons to be learnt in the area of project management and the process of effective project briefs structuring. During the whole analysis of project, we learnt that adequate time must be spent on initial phases of project designing as a poorly structure project scope can lead to cost overruns and time variations. Moreover, the sound risk management techniques and adequate planning must be put in place from start. It was analyzed that the successful projects are those that have clearly articulated project scope, clear roles & responsibilities, effective communication strategy and a motivated team that believes in team-work instead of achieving individual goals. It is very important to communicate with each other throughout the project like our group did during this and previous group work. Sufficient communication can not only bring creative ideas related to successful completion of project, but it can also minimize lots of unnecessary cost wastage and time overlays.
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