This assignment focuses on the concept of “risk within ambitious and complex” Projects.
At the end of the assignment you should be able to;
• Research a topic and critically appraise the content of associated documents and papers in order to ascertain their validity and contribution to the subject area
• Analyse the principles of environment and culture and the relevance within organisations
• Develop written skills required for a university assignment submission at level 7
“When Eurotunnel, the private company that owns the Channel tunnel, went public in 1987 in order to raise funds for the project, investors were told that building the tunnel was relatively straightforward. Regarding risks of cost escalation, the prospectus read (The Economist, 7 October 1989, 37):
Whilst the undertaking of a tunnelling project of this nature necessarily involves certain construction risks, the techniques to be used are well proven. The Directors, having consulted the Mâitre d’Oeuvre, believe that 10% would be a reasonable allowance for the possible impact of unforeseen circumstances on construction costs. (“Under water, over budget,” 1989, p. 37).
Two hundred banks communicated these figures for cost and risk to investors, including a large number of small investors. As observed by The Economist (“Under water, over budget,” 1989), anyone persuaded in this way to buy shares in Eurotunnel in the belief that the cost estimate was the mean of possible outcomes was, in effect, deceived. The cost estimate of the prospectus was a best possible outcome, and the deception consisted in making investors believe in the highly unlikely assumption–disproved in one major construction project after another–that everything would go according to plan, with no delays; no changes in safety and environmental performance specifications; no management problems; no problems with contractual arrangements, new
technologies, or geology; no major conflicts; no political promises not kept; etc. The assumptions were, in other words, those of an ideal world. The real risks of cost escalation for the Channel tunnel were many times higher than those communicated to potential investors, as evidenced by the fact that once built, the real costs of the project were higher by a factor of two compared with forecasts.”
Bent Flyvbjerg, Mette Skamris Holm, and Søren Buhl, “Underestimating Costs in Public Works Projects: Error or Lie?” Journal of the American Planning Association, vol. 68, no. 3, Summer 2002, pp. 279-295
The World Bank coined a term for this approach to project planning, Everything Goes According to Plan – the EGAP principle. Discuss the EGAP principle in detail and explain why it can be so pervasive in mega projects. What would be a more appropriate approach to project planning?
You are required to further research the subject and expand on the issues raised within the article and may use your own case studies to draw comparisons between the projects or emphasise the points being made.
PLEASE NOTE: This assignment is not just about the Channel Tunnel construction project, but about project assumptions, the approach taken to mega-projects and the consequences of getting it wrong.
Working individually, you are to write report (using headings and subheadings) as set out in the task
The report is to be fully referenced and all sources of information must be correctly identified and cited within the text. Reference Indexes are to be separately provided at the end of the report. The Harvard System of referencing should be used. Academic neglect to reference your work correctly will lead to a poor mark and possible failure of this assignment.
Note that you should use 12 Font size and Calibri or Arial Font – Times New Roman should not be used. Remember to align scripts to the left hand side not ‘justified’.
The following assessment criterion is presented as a guide to the marks available for this work and each section of your paper should be reflective of this weighting. For example, failure to provide an introduction or providing recommendations will result in a loss of 10 marks each.
% of Mark
Introduction and Background Research
Clear introduction to the issue and its background context – the role of the
Risk Manager having to manage “risk within ambitious and complex” projects.
Analysis and Synthesis of the Task
Critical analysis of the around the financial issues around the construction the Channel Tunnel and other similar projects.
Discussion on the risk considerations which should be taken into account when constructing and managing an ambitious and complex, international project
Conclusion and Recommendations
Summarising the main points raised
Structure and presentation
The content of the paper should be clear and well – structured in logical sequence
The paper should follow the prescribed academic format including referencing