Chair of Project Management
Prof. Dr.-Ing. K. Spang
Challenges for large infrastructure projects in Germany Prof. Dr.-Ing. Konrad Spang Chair of Project Management University of Kassel, Germany
SIG Mega Projects, Primosten 04.09.2015
MP in Germany: Situation (1)
Chair of Project Management
Prof. Dr.-Ing. K. Spang
3 internationally wellknown MP with negative publicity:
• Elbphilharmonie Hamburg: cost explosion, big delay • Airport Berlin Brandenburg BER: cost explosion, big delay • Railway Mainstation Stuttgart 21 : cost explosion, people against project
SIG Mega Projects, Primosten 04.09.2015
MP in Germany: Situation (2)
Chair of Project Management
Prof. Dr.-Ing. K. Spang
„Public“ Conclusions: These projects have all failed! German engineers are not or no more capable to plan and build large projects! For experts some questions: Is there a systematic problem? …. processes, project management, strategy …. Is there a political problem? …… democracy, responsibility ……… Is there an expert problem? … knowledge, experience, empowerment … Are these 3 projects typical for MP in Germany generally? Is there a German problem? And further on: What is the base for an „overflow“? What is project failure? Cost overflow = inefficient projects or more money for more value??? What are the project specific reasons for the cost overflows? SIG Mega Projects, Primosten 04.09.2015
MP: International investigations + research
Chair of Project Management
Prof. Dr.-Ing. K. Spang
•
Flyvberg et. al. (2002): 258 Road and Railway projects: 86% of the projects had cost overflow
mean value 26% overflow systematic under-estimation (politics, „project competition“) problem of personal responsibility no learning (…. reduction of overflow ….) ! •
Odek (2004): 620 road projects in Norway: 7,9% overflow
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Supianek (2015): Meta study + study of german road projects more projects lower cost overflow …….. Scale effect, mean value!? few projects projects with „bad“ results? international study specific national reasons not visible most cost increase in early project stages importance of (the same!) base! no learning!
,
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MP: influence of number of investigated projects
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Cost overflow [meanvalue in %]
Supianek, 2015
Number of projects
SIG Mega Projects, Primosten 04.09.2015
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MP: influence of base
Chair of Project Management
Prof. Dr.-Ing. K. Spang
deduced from: Supianek, 2015
200 180
160
cost index 1 cost index 2 cost index 3
140 120 100 EP
PD
LPF
End
EP …. Early project phase PD …. preliminary design finished
LPF ….Legal process finished End …. Project finished/Start of service
SIG Mega Projects, Primosten 04.09.2015
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MP in Germany: project competition
Chair of Project Management
Prof. Dr.-Ing. K. Spang
German federal roads: necessity of investment / annual budget
Treasury plan 2015
necessity lack = 2,8 Bill. €
Competition between projects SIG Mega Projects, Primosten 04.09.2015
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MP in Germany: study in in road and railway authorities
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Sözüer, Spang (2014)
SIG Mega Projects, Primosten 04.09.2015
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MP (in Germany): Cost and time overflow: First conclusions
Chair of Project Management
Prof. Dr.-Ing. K. Spang
• Statement 1: there is not one reason, there are many/various reasons • Statement 2: cost overflow or time overflow does not mean „project failure“
• Statement 3: „overflow“ depends strongly from the base (phase, quality) • Statement 4: overflow or underflow depends from culture (org./nat.) • Statement 5: cost under estimating often has political = strategic reasons
• Statement 6: long term projects have a big portion of price increase (20y-50%!) • Statement 7: no learning effect! Knowledge management? • Statement 8: personal responsibilty of deciders is necessary! Transparency
SIG Mega Projects, Primosten 04.09.2015
MP: Reality in Germany: public acceptance?
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
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MP in Germany: Examples (1)
Chair of Project Management
Prof. Dr.-Ing. K. Spang
• 3 examples of projects: In service and daily use since many years Everybody is happy and can´t imagine a situation without them nobody is discussing about former problems MP Examples: Waldschlösschen Bridge Dresden: 181 mio €
MP Examples: Mainstation Berlin: 1 billion € (with rail net) MP Examples: Airportstation Frankfurt: 225 mio € SIG Mega Projects, Primosten 04.09.2015
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MP in Germany: Examples (2)
Chair of Project Management
Prof. Dr.-Ing. K. Spang
• 3 examples of projects: Large Projects in work
SIG Mega Projects, Primosten 04.09.2015
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MP Elbphilharmonie – Project
Chair of Project Management
Prof. Dr.-Ing. K. Spang
•
Multifunctional building in the harbour area of Hamburg („Harbour City“)
•
3 Concert halls (2150, 550, 170)p, Hotel, Restaurants, 45 appartments, plaza on 37m, car park
•
110 m high x 22/68 m, 26 floors,
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29 elevators and 82m long curved escalator
•
based on an old granary, glass on brick with 1096 different glass elements
•
Architect: Herzog & de Meuron, Basel/CH
SIG Mega Projects, Primosten 04.09.2015
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MP Elbphilharmonie: cost development
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Total cost [€]
2003 project description
116
2005 feasibility study
187
2006 2nd cost estimate
229
2006 contracting
352
2008 contract amendment
561
2013 new contract
865
SIG Mega Projects, Primosten 04.09.2015
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MP Elbphilharmonie – Causes for Cost overrun
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Using „Hertie School of Governace, Working paper 2, 2015“
•
optimism bias
•
Deception
•
Both fostered by public + political pressure + high expectations
•
Manifested in insufficient risk management
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Unfinished planning (i.e. detailed sollutions!) before contracting + start of construction
•
Weak oversight
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Inadequate project organisation, project + stearing level
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Large projct changes as f.ex. increase of gross floor area of 42%, 3rd concert hall
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Expensive sollutions of architects + specialists as „king of accoustics“ Yasuhisa Toyota
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Many disputes between client + architect and contractor
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Inadequate anti-claim management by the client
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Not profitable project forces contratcor to strong claim management
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Example: Railway Mainstation Stuttgart 21
Chair of Project Management
Prof. Dr.-Ing. K. Spang
•
From dead end station to throug station,
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high speed connection from Frankfurt – Stuttgart/ S-Airport – Munich
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Planning from the 80´s to 2010 …. 30 years!
•
Start of construction 2010 2022
•
Cost from 2,5 to 6 billion € (1,8 bill € riskbuffer)
•
Early cost information …. No risk buffer, no detailed planning, cost level from 1994
•
Big part of the inhabitants of Stuttgart where against when the construction should start – nevertheless all stakeholders had participated in the legal process
•
Many opponents were not formal stakeholders, they were „simply against“
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Conservative people didn´t want to sacrifice their „old“ town and park for a modern station
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People were against such a large investment
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People were against the recent state government
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Referendum gave majority in favor of the project
•
Elections brought a change of government (from black/yellow to green/red)
SIG Mega Projects, Primosten 04.09.2015
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Example 3: HS Railway project Berlin – Nürnberg 12 Bill. €
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
Example: HS Railway project Berlin – Nürnberg
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
Example: HS Railway project Berlin – Nürnberg
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Travel time from city center to city center Train 1993 Train 2011
Train 2017 Car Plane
SIG Mega Projects, Primosten 04.09.2015
Example: HS Railway project Berlin – München: 500km
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Megaprojects are „technically“ complexe projects
• 8.1, ABS Nürnberg-Ebensfeld: 83 km/230km/h …… upgrade, under service • 8.1, NBS Ebensfeld-Erfurt-: 107 km/300km/h …. greenfield • 8.2, NBS Erfurt-Halle/Leipzig: 123 km,/300km/h …. greenfield • 8.3, ABS Halle-Berlin: 187 km/200 km/h ……. Upgrade, under service • 3 large interchanges …….. Change all under service 1.200 km power cable 520 „normal“ bridges + 37 large bridges (ca 28km) .. Saale-Elsterbridge 8,6 km
27 Tunnel (ca 64km), 22 electronic railway control centers, 81 railway level crossings, 37 stations 36.000 parcels of land
SIG Mega Projects, Primosten 04.09.2015
Example: HS Railway project Berlin – München: 500km
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Megaprojects are „financally“ complexe projects • National money (FRG) …… Ministries of transport + treasury, court of audit! • European money (TEN; EFRE) ……. regulations,europ. court of audit • 6 Federal states (GVFG ... Regional traffic) … Ministries of economy +treasury • Municipalities (EKRG ….. Crossing railway/roads) …….. • Company money (DB….. Nework/energy/stations) • 12,3 bill. € to handle with • Tendering + contracting for 12,3 bill. € • 12.000 contracts
SIG Mega Projects, Primosten 04.09.2015
Example: HS Railway project Berlin – München: 500km
Chair of Project Management
Prof. Dr.-Ing. K. Spang
MP are „technically“ + economically complexe projects Cost increase! Start (Design): 1990 finish (service): 2017 = 27years!
Planned costs
Cost increase
1993: 12,3 bill DM
Interchanges Leipzig, Halle and Erfurt: 1,5 bill. €
1996: 14,5 bill DM
Extensions for freight trains: 700 mill €
2006: 10,3
New railway technic:ETCS, ……. New saftey standards, especially in tunnels
2011: 12.1 bill € 2017: 12,6 bill €
SIG Mega Projects, Primosten 04.09.2015
New EU obligations (natura 2000) Planing + working for 27 years: price increase about 70%
MP: HS Berlin – München: landscape and nature
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
MP: HS Berlin – München: bridges
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
MP: HS Berlin – München: working and travelling
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
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MP: HS Berlin – München: Infopoint
Chair of Project Management
Prof. Dr.-Ing. K. Spang
SIG Mega Projects, Primosten 04.09.2015
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MP in Germany
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Conclusions
SIG Mega Projects, Primosten 04.09.2015
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MP in Germany: Cost and time overflow: First(?) conclusions
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Statement 1: There is not one reason, there are many/various reasons Statement 2: Cost overflow or time overflow does not mean „project failure“
Statement 3: „Overflow“ depends strongly from the base (phase, quality) Statement 4: Overflow or underflow depends from culture (org./nat.) Statement 5: Cost under estimating often has political = strategic reasons
Statement 6: Long term projects have a big portion of price increase (20y-50%!) Statement 7: No learning effect! Knowledge management? Statement 8: Personal responsibilty of deciders is necessary! Transparency
SIG Mega Projects, Primosten 04.09.2015
MP : Conclusions for Germany
Chair of Project Management
Prof. Dr.-Ing. K. Spang
•
Quality of base variies strongly
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Many (political/business case) changes / lack of systematic change management
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Lack of „risk and failure culture“ and no or not enough systematic risk management
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„special“ treasury regulations, which forbid risk reserves in the budget
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Complexe (very democratic) legal process for infrastructure + energy projects
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Strong influence of green groups
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Devised organisation (costs!) for national infrastructure projects
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Many companies in the construction market/hard competition/ price decision
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Relationship client – contractor more adverserial than cooperative
•
Cost estimations generally do not include price increase
SIG Mega Projects, Primosten 04.09.2015
MP in G: What should we do
Chair of Project Management
Prof. Dr.-Ing. K. Spang
1. 2. 3. 4. 5.
Stable base /preliminary design Consequent risk identification and management - up from preliminary design Risk buffer within budget „second opinion“ = additional expert forecast Incentives for cost reduction, optimisation, good cost performance (f.ex. Value engineering) 6. Consequent controlling (cost, scope changes) 7. Consequent and transparent change management 8. Intensive + early started stakeholder management 9. Project specific holistic organisation with a powerfull project manager 10. Gates, where 2, 3, 5, 6, 7, 8 has to be proofed 11. Cooperative contracts and not price focused procurement 12. Systematic Knowledge management
SIG Mega Projects, Primosten 04.09.2015
MP in G: What should we not do
Chair of Project Management
Prof. Dr.-Ing. K. Spang
• Systematic underestimating (politics, orgaisational culture) • Deliver cost forecast to early • Not to start bevor really clear and final scope • Underestimate new technology / pioneer projects • Project changes without systematic and transparent change management
SIG Mega Projects, Primosten 04.09.2015
Chair of Project Management
Prof. Dr.-Ing. K. Spang
Prof. Dr.-Ing. Konrad Spang Chair of Project Management University of Kassel, Germany Mail
[email protected] ph +49-561-8044681
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