31 Dec Crossrail’s Latest Issues Begs the Question, How do We Judge Success in Transport Megaprojects?

Arcadis found that a one-month average delay on transport spending plans from 2016 to 2021 would cost the UK £2bn in GDP. Crossrail, Europe’s largest infrastructure project, has made the news for financial issues thrice in 2018: for a £590 million cash injection in July, a £350 million “interim loan” in October and a £1.4 billion bailout in December. The launch of Crossrail has been pushed back from December 2108 to autumn 2019. So, can Crossrail be salvaged?

Whilst the latest funding increase is significant, Oxford BT Professor and megaproject management scholar, Bent Flyvbjerg told The Economist that this 7% rise is not bad by international standards. His research with the University of Oxford has found that the average cost increase for rail megaprojects is 45%. Project management lore teaches that projects need to meet cost, quality and time criteria in order to be deemed successful. This seems eminently reasonable.

However, some projects with eye-watering cost and schedule overruns are considered a success when their delivery is a distant memory. David Worsley, Visiting Lecturer at Newcastle University’s Centre for Railway Research, explained transport projects that overrun or exceed their budget can still be deemed worthwhile,

“as sometimes the case for their implementation is very strong. In the UK, the Department for Transport generally requires that the benefits to society generated by a project – in terms of saving travellers’ time, avoiding accidents, or reducing greenhouse gas emissions, for example – should exceed the costs to the public purse by a ratio of 2 to 1. Most years, the Department funds dozens of projects where this benefit-to-cost ratio is greater than 4, indicating that an urgent transport need is being met. These projects would still be judged an appropriate use of public money in the event of modest budget or schedule overruns.”

 

The Public Administration and Constitutional Affairs Committee is conducting an inquiry into the UK government’s management of megaprojects. Flyvbjerg told the Committee, “you can have major projects that technologically and functionally are very successful, as I would say the Channel Tunnel or Eurotunnel is. However, financially and economically it is a disaster.” Whilst the American Society of Engineers acknowledged it as one of the “Seven Wonders of the Modern World”, this was not for its financial achievements. The Channel Tunnel exceeded its initial budget by 80%, required refinancing and demand for the Eurostar was less than a third of what was anticipated.

Flyvbjerg continued, “if you want to focus on building the infrastructure that gives the biggest return for the economy, you need to be very careful about what you build and give due consideration… You need to look at how it affects the whole economy over the whole lifetime of the piece of infrastructure.” Our understanding of project success needs to go beyond merely meeting project constraints.

The Ibaraki Airport construction met the key cost, quality and time project tenets but the airport is considered “an airport without planes” because it was poorly located for the needs of the populace. With the forecasted passengers going from 810,000 to 200,000 and Japan’s two largest airlines refusing to operate there, it could hardly be deemed successful. Ibaraki is an object lesson in how cost, quality and time are far from the only important factors in assessing transport projects.

Flyvbjerg told the Committee, “very rarely do people stop and look back and assess, ‘Did we actually get the benefits that we set out to get from this project?’ and then study whether it is the case or not… unfortunately, it does not happen very often.”

This is the ultimate test of a transport megaproject. Have we delivered on the purpose of the project? This is even more crucial than meeting the budget. Transport projects need to meet several imperatives, including societal, economic and logistical. The amount of investment required can be financially significant on a national or even international scale. It’s crucial that such projects aren’t just delivered well, but that they deliver the necessary outcomes.

Whilst Crossrail is delayed and will exceed its original budget, there is still scope for it to deliver on benefits and serve its stated purpose: to “make travelling in the capital easier and quicker and reduce crowding on London’s transport network.” Less beleaguered commuters and travellers around London may yet deem Crossrail worthy of the investment.  Crossrail’s appraisal should ultimately come down to its cost-effective delivery in fulfilling its purpose. Government may be comforted that when judging Crossrail and other transport projects, the expensive but effective Channel Tunnels of the world are looked upon more favourably than are “airports without planes.”

 

This article first appeared in Forbes.