Case Studies – Parallel Project Training Blog | APM Project Management Articles, Information and News from ParallelProjectTraining.com http://blog.parallelprojecttraining.com Tue, 31 Jan 2017 19:19:41 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.2 Orlyval Metro Paris http://blog.parallelprojecttraining.com/project-case-studies/orlyval-metro-paris/ http://blog.parallelprojecttraining.com/project-case-studies/orlyval-metro-paris/#respond Thu, 25 Nov 2010 14:22:57 +0000 http://blog.parallelprojecttraining.com/?p=827 Orlyval is a light Métro of type VAL with small gauge in the south of Paris between the station of the RERB of Antony and the Aéroport of Orly. Matra Transport which had produced a number of VAL (Véhicule Automatique Léger) systems in Lille, was highly interested in establishing a VAL system in Paris. This…

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Orlyval is a light Métro of type VAL with small gauge in the south of Paris between the station of the RERB of Antony and the Aéroport of Orly. Matra Transport which had produced a number of VAL (Véhicule Automatique Léger) systems in Lille, was highly interested in establishing a VAL system in Paris. This was critical to their strategic plans to grow the business. In 1986, they made a spontaneous proposal to build a system from Anthony to Orly, for which they would arrange the finance and operation. That proposal arrived right at the moment where privatisation and concessions were gaining popularity as highly effective solutions as compared to public firm and agency delivery.

Orlyval is both a technical success and an economic failure. The project is still operational, viable as market demand for the moment covers operating costs. However market demand is a little more than half as expected in the 1991 business case. It is a spectacular failure on a number of accounts:

First, the privatisation approach, using a concession, has developed a sour taste amongst the banking and investment community but to the great joy of the public institution communities.

Secondly, the banks as well as the other investors, had to swallow a loss of 1.5 billion FF, with the only hope that if traffic turns upwards they may be in a position to recover 500,000 billion FF.

In this risky project for the private investors and the banks, the process of risk analysis was rendered ineffective due to the relatively low individual stakes on the part of a wide range of investors (Matra Transfinex, Crédit Lyonnais, Crédit local de France, Indosuez, BNP, CIC, Crédit National, Barclays Bank, NNB, Air Inter, RATP), the political climate which led banks to forgo risk analyses, and the euphoria which led this whole group to discount critical studies.

However, on the up side, the project delivery was a fantastic success being delivered on time, and even earlier than estimated for a standard turn-key contract.

The system has been in operation since 1991 but went in to bankruptcy in 1992 and ownership was transferred to public metro operator RATP.

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Dartford Third Crossing http://blog.parallelprojecttraining.com/project-case-studies/dartford-third-crossing/ http://blog.parallelprojecttraining.com/project-case-studies/dartford-third-crossing/#respond Thu, 25 Nov 2010 14:21:50 +0000 http://blog.parallelprojecttraining.com/?p=825 The Dartford-Thurrock crossing, also known as the Third Dartford Crossing and the Queen Elizabeth II Bridge, is the first major Build-Operate-Transfer (B.O.T.) project developed in the U.K. this century. The crossing is the third road link over the Thames River between Kent and Essex counties, and complements the existing, two separate, north-and south-bound tunnels completed…

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The Dartford-Thurrock crossing, also known as the Third Dartford Crossing and the Queen Elizabeth II Bridge, is the first major Build-Operate-Transfer (B.O.T.) project developed in the U.K. this century.

The crossing is the third road link over the Thames River between Kent and Essex counties, and complements the existing, two separate, north-and south-bound tunnels completed respectively in 1963 and in 1980. A third crossing was needed to off load traffic from the tunnels, particularly with forecast of increased traffic that would follow the completion of the M25 motorway. The third crossing would become an integrated part of the motorway.

In 1986, the Department of Transport made a request for proposal for the execution of the third crossing. The bid document invited contractors to propose three options, one of them being a radical shift from traditional practice in the UK; a concession to operate the two existing tunnels, and to build, finance and operate the third crossing. Seven firms presented various tunnels and bridges schemes. Trafalgar House, in consortium with its main bankers, won the contest for a four-lane bridge project. The bridge would be built in three years at a cost of £86m and the total B.O.T. scheme, including the debt of the two tunnels, would cost about £200m.

The project’s financial structure proposed by the Trafalgar House consortium was innovative. It included less than 1% of equity from Trafalgar House the rest being from financiers. It also required that Trafalgar House and its partners take the risk for construction, operation, and financing. The financiers attached significant value to the proven demand and revenue from the two existing crossing, compared to many ‘greenfield’ projects. This meant that the commercial risk was low, despite the fact that the concession company would not be allowed to increase toll rates at more than the rate of inflation. Indeed, the government was not prepared to let the concession company benefit from potential upsides, even if it was taking all of the downside risks. The treasury’s opposition to private projects and fears of discontent from the populous over high toll fees were the main reasons. The concession company was required to revert ownership of the crossings as soon as the debt was repaid, which was expected to be after 14 years of operation. (The concession had been attributed for a maximum of 20 years).

The bridge was successfully designed and built, and opened as expected in 1991. It has four lanes and doubles the capacity of the existing two tunnels. The structure consists of an 812 metre long, cable-stayed main bridge, and one kilometre long approach viaducts on both banks.

The project provides an excellent example of B.O.T. development. It shows the difficulty of pushing the ideology of private ownership for projects, such as urban transport ones, that have traditionally been the responsibility of governments because of their inherent features. The success of Dartford created a window of opportunity and served as a benchmark to develop the whole principle of Private Finance Initiative (PFI) in the UK. However, it is not a type of project structure, especially in terms of financing, that can be easily repeated. The project’s structure was feasible because there was a very low perceived risk.

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Eden Project Cornwall http://blog.parallelprojecttraining.com/project-case-studies/eden-project-cornwall/ http://blog.parallelprojecttraining.com/project-case-studies/eden-project-cornwall/#respond Thu, 25 Nov 2010 14:20:45 +0000 http://blog.parallelprojecttraining.com/?p=823 The Eden project in Cornwall was conceived by Tim Smitt in 1993. His vision for Eden was ‘to promote understanding and responsible management of the vital relationship between plant, people and resources, leading towards sustainable development’. The project was mobilised in 1994 with a £40,000 grant from Restormell District Council with Nicolas Grimshaw acting as…

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The Eden project in Cornwall was conceived by Tim Smitt in 1993. His vision for Eden was ‘to promote understanding and responsible management of the vital relationship between plant, people and resources, leading towards sustainable development’.

The project was mobilised in 1994 with a £40,000 grant from Restormell District Council with Nicolas Grimshaw acting as architect. Using the novel concept of geodesic domes made up from a grid of similar elements, either triangles or hexagons he was able to design the domes while the site was still being used as a clay pit.

Half the £106m funding came from the Millennium Commission with the remainder provided from a wide range of sources including banks, European Commission, Local Authorities, a number of charitable sources and equity partnership from the builders. The business case was based on getting 1m visitors per year. Following the poor reception for the Millennium Dome, the Millennium commission cut the funding to £74m, which triggers a significant de-scoping of the project and a cut in the expected visitors numbers to 750,000 per year. The result was a smaller car park, visitor centre and abandonment of the education centre and desert biome.

Local green campaigners and some members of the local community felt that the funding could be better invested in more schools, hospitals and that it would lead to a significant increase in traffic on local roads.

Construction started in February 1998 at risk because funding had yet to be secured and then work was stopped for two months because heavy rain made the clay pit unworkable.

By August 1998 the project was in financial crisis with significant a overspend pushing the budget to £86m; the banks, EU and charities were all ready to withdraw funding from the project. The project had to seek political support from John Prescott (minister for local and regional government) to break the log jam. In the end the banks and the Millennium Commission agreed to provide additional funding to cover the overspend.

During the build phase the site opened to so the public could see the ‘big build’. By the end of the project 500,000 people had visited the construction site.

The Eden project opened on 17th March 2000, in the first twelve months 1.8m people visited the site.

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Wembley Case Study http://blog.parallelprojecttraining.com/project-case-studies/wembley-case-study/ http://blog.parallelprojecttraining.com/project-case-studies/wembley-case-study/#comments Thu, 25 Nov 2010 14:19:45 +0000 http://blog.parallelprojecttraining.com/?p=821 Wembley was designed by architects HOK Sport and Foster and Partners with engineers Mott MacDonald, built by Multiplex and funded by Sport England, WNSL (Wembley National Stadium Limited), the Football Association, the Department for Culture Media and Sport and the London Development Agency. It is the most expensive stadium ever built at a cost of…

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Wembley was designed by architects HOK Sport and Foster and Partners with engineers Mott MacDonald, built by Multiplex and funded by Sport England, WNSL (Wembley National Stadium Limited), the Football Association, the Department for Culture Media and Sport and the London Development Agency. It is the most expensive stadium ever built at a cost of £798 million and has the largest roof-covered seating capacity in the world.

The all seater stadium is based around a bowl design with a capacity of 90,000, protected from the elements by a sliding roof that does not completely enclose it. It can also be adapted as an athletic stadium by erecting a temporary platform over the lowest tier of seating. The stadium’s signature feature is a circular section lattice arch of 7 m (23 ft) internal diameter with a 315 m (1,033 ft) span, erected some 22° off true, and rising to 140 m (459 ft) tall. It supports all the weight of the north roof and 60% of the weight of the retractable roof on the southern side. The archway is the world’s longest unsupported roof structure.

The start up phase of the project was complex because of the multiple sources of funding (see above) and the differing requirements of the stakeholders. The FA had a strong preference for a pure football stadium while Sport England wished to see a multi-purpose sports arena. The confusion over scope delayed the approval of funding and a marginal business case was only just approved on the day the demolitions started. In the end the “platform system” was conceived to convert the stadium for athletics use, but its use would decrease the stadium’s capacity to approximately 60,000. No athletics events have taken place at the stadium, and none are scheduled.

The initial plan for the reconstruction of Wembley was for demolition to begin before Christmas 2000, and for the new stadium to be completed sometime during 2003, but this work was delayed by a succession of financial and legal difficulties. It was scheduled to open on 13 May 2006, with the first game being that year’s FA Cup Final. However, worries were expressed as to whether the stadium would actually be completed on time. The new stadium was completed and handed over to the FA on 9 March 2007, with the total cost of the project (including local transport infrastructure redevelopment and the cost of financing) estimated to be £1 billion.

In October 2005, Sports Minister Richard Caborn announced: “They say the Cup Final will be there, barring six feet of snow or something like that”. However in December 2005, the builders admitted that there was a “material risk” that the stadium might not be ready in time for the Cup Final and in February 2006, these worries were confirmed by the FA who moved the game to Cardiff’s Millennium Stadium.

The delays started from the very start. The procurement process to contractor followed a twin track approach. Multiplex, who ultimately won the contract, were given preferential treatment from the start. An enquire by David James (the well know company doctor) concluded that the procurement process “while showing no evidence of corruption was unlikely to satisfy best practice standards” and “lacked a level playing field”. In December 2003, the constructors of the arch, subcontractors Cleveland Bridge, warned Multiplex about rising costs and a delay on the steel job of almost a year due to design changes which Multiplex rejected. Cleveland Bridge were removed from the project and replaced by Dutch firm Hollandia with all the attendant problems of starting over. On 20 March 2006, a steel rafter in the roof of the new development fell by a foot and a half, forcing 3,000 workers to evacuate the stadium and raising further doubts over the completion date which was already behind schedule. On 23 March 2006, sewers beneath the stadium buckled due to ground movement. The General, Municipal and Boliermakers Union leader Steve Kelly said that the problem had been caused by the pipes not being properly laid, and that the repair would take months. A spokesman for developers Multiplex said that they did not believe this would “have any impact on the completion of the stadium”, which was then scheduled to be completed on 31 March 2006.

On 30 March 2006, the developers announced the stadium would not be ready until 2007. All competitions and concerts planned were to be moved to suitable locations. On 19 June 2006 it was announced that the turf had been laid and on 19 October 2006 that the venue was now set to open in early 2007. WNSL, a subsidiary of The Football Association, is expected to pay around £36m to Multiplex, as well as the amount of the original fixed-price contract. This meant that Wembley Stadium was ready for the 2007 FA Cup Final on 19 May that year. The official Wembley Stadium website announced that the stadium would be open for public viewing for local residents of Brent on 3 March 2007, however the event was delayed by two weeks and instead happened on 17 March. The keys to the new Wembley stadium were finally handed over to the owners on 9 March 2007 ready to be open and used for upcoming FA Cup football matches, concerts and other events.

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