Tram trouble – Why Do Projects Fail?

The following entry is a record in the “Catalogue of Catastrophe” – a list of failed or troubled projects from around the world.

Organization: City of Edinburgh Council
Project type : Public transit – Tram Network
Date : September 2003 – May 2014
Cost : £1 Billion (including anticipated loan interest) versus an original estimate of £375M (based on a much larger scope than was actually built)

Synopsis :
What started out as a noble idea in 2003 was later described as the “hell on wheels” project by the Chairman of Edinburgh Transport Limited. When originally conceived the project was intended to reduce traffic congestion, reduce carbon emissions and help the city cope with the increased demand for public transport in the next decade. Today the project is regarded as a shambles and although Edinburgh does now have a tram, what they’ve ended up with falls far short of what was envisaged. Needless to say the public aren’t happy with what they got for their money.

Edinburgh Tram
(source wiki commons)

Political influence and disputes between the contractors and consultants marred the project and the project came to a halt on several occasions. As early as 2005 the Scottish Parliament shelved the project when new cost estimates revealed an increase of 30% to the original £375m that was earmarked for the project. Although the project did get going again, those early cost increases were a warning sign of even worse to come.

Soon after construction started in 2007, delays and cost overruns started to accumulate. Disputes between the various parties involved, quality related issues and changes in design plagued the project and between 2008 and 2009 it became clear that the project had some deep seated issues. Ceasing on the issues, the project became a political football as opposing political parties used it as a vehicle for campaigning against the sitting government. After 3 years of construction delays the City of Edinburgh Council stepped in. To limit ballooning costs and because of ongoing delays, the project’s scope was reduced. At that point the decision was made to terminate the tramline in the City centre instead of the Waterfront as had initially been envisaged.

Edinburgh residents had to endure the inconvenience of roads being dug up for the best part of seven years causing congestion and financial harm to businesses. The tram eventually took its first passengers in 2014, at a cost of approximately £1 billion including loan interest. Reports indicate that only a third of the originally plan was built (Figure 1 below). As built was just 14km long and had 15 stops along way. At a cost of approximately £1 billion, the final cost was a massive £71.4m/km ($107.7m USD/km). As a point of reference, the average per km cost for tramlines completed in 17 other cities in the northern hemisphere for the period 2010 – 2014 was about £22.7m/km ($34.4m USD/km). Does a 314% cost increase validate an outcry? It would certainly seem so!

Figure 1 – Edinburgh tram routes (proposed and actual)
click for larger version

(source wiki commons)

Public opinion remains divided as to whether or not the project will eventually prove to be beneficial. Some feel that the project will never recoup the money sunk into the project while others feel that although it was a painful experience the system will ultimately deliver some of the value it set out to create. An enquiry is currently underway to find the root causes and who was accountable for the fiasco. The list of issues being considered by the enquiry is worth reading as it points to some of the potential causes and acts as a reminder for those leading these major capital investments projects of the dangers they need to address (The Edinburgh Tram Inquiry – issues being considered – October 2015).

Contributing factors as reported in the press:
Initial stories indicate that the following issues were at play: Underestimating the complexity of the project. Lack of contractor oversight. Lack of quality controls. Failure to establish appropriate controls and management processes to ensure the project was properly organized.

Links:

Hylton Ferreira