Post on 25-Jan-2017
Transportation SustainabilityCE 256Prof. Susan Shaheen
MEGAPROJECTS AND THE CALIFORNIA HIGH-SPEED RAIL PROJECT
UNIVERSITY OF CALIFORNIA BERKELEY
PRESENTED BY ARTHUR BAUERMARCH 10, 2016
USDOT: A project costing $1B or more
Mega implies the size of the task involved in developing, planning, and managing projects are challenging
Socio-economic impacts
Engineering or construction innovation
The risks are substantial
WHAT IS A MEGAPROJECT?
Today the focus will be on public projects, especially the California high-Speed Rail Project
Because of the scale of megaprojects, the general public and public officials become enamored or disenchanted
A sense of mastering the universe
There is an awe quality surrounding megaprojects
Important Benefits may flow from Megaprojet
WHAT IS A MEGAPROJECT?
Technical Complex design and engineering Complex construction technology Complex construction management Difficult to manage cost to budget
Social Demand Community impacts may be large Bought into the “project” Difficult to discuss the unknown or unexpected Difficult to account for risk
Model of Megaprojects developed by Bent Flyvbjerg See: Megaprojects and Risk: an Anatomy of Ambition
ELEMENTS OF A MEGAPROJECTSchedule
Budget
Scop
e
Big dreams
Big dollars
Big risks
CORE ELEMENTS OF A MEGAPROJECT
An analysis of 258 projects in 20 different countries found the following cost overruns by project category:
20% on road projects
34% on bridge and tunnel projects
45% on rail projects
Key to dealing with Megaprojects is identifying and managing RISK!!!
MEGAPROJECT TRACK RECORD
Built in 2550BCE Tallest structure unti l
about 1300CE when the Lincoln Cathedral was built
Largest structure in the world for nearly 4,000 years
Special housing for workers
2.5 to 6 ton stone blocks some from Aswan about 450 miles away
Some blocks within 1/8” Platform on which pyramid
is build is within tolerances expected of a laser leveler
MEGAPROJECTS AREN’T NEWGREAT PYRAMID OF GIZA
Optimism Bias: Project promoters and planners spin scenarios of success and gloss over
risks and possible failure
Strategic misrepresentation
Why? Competition for funds
“The dream” or the character of the project
Commitments made to a particular stakeholders, project or project scope without understanding risks ,e.g.., financial, construction, patronage, managerial, other
WHY DO MEGAPROJECTS EXCEED COST PROJECTIONS
At the front-end, planning stage identify comparable, high profile megaprojects and analyze drivers for costs increases, schedule delay, and scope changes. This is for reference
Ensure project decision-makers bare burden of financing
Ensure the skill mix of the planners, engineers, and contractors meet the demands of the project
Transparent decision-making
Honesty
HOW TO CONTROL MEGAPROJECTS?
Understanding demand is critical for transportation projects, including airports, highways, toll bridges and tunnels, and public mass transit projects
Financing is linked to demand forecast
Project scope and scale often linked to demand forecast
Manipulating demand infects the project with misplaced optimism
Understanding demand forecast is daunting and trust is usually assumed in formulating of the forecast
DEMAND
Megaprojects evolve overtime—”organic phenomena”
Megaprojects function as agents of change for society, e.g., Channel Tunnel between Britain and France or the HSR Project, Interstate Highway System, California Water Project
Impacts cannot be assessed at the front end
Projects can meet schedule and budget, but fail to meet current or future needs
But: Not easy to separate projects from scope, schedule, budget issues
Trade-offs abound. For example, more debt to pay for increasing costs takes funds for debt service that could be used in other projects
Om ega Cen t re a t th e Ba r t l e t t Scho o l o f P lann i ng , U n i ve rs i t y o f Lo ndo n
ANOTHER POINT OF VIEWMEGAPROJECTS NEED A BROADER
DEFINITION OF SUCCESS
1981—Japanese-American group proposes a HSR project between Los Angeles and San Diego Project goes nowhere after legislative delegation visits Japan.
Legislators found the technology incompatible with coastal communities because of noise
1990—Proposition 116 ($2B transit bond) authorizes $500,000 to identify a corridor for HSR to cross the Tehachapi Mountains
1996—Legislation establishes the HSR Authority
2008—Legislator places Proposition 1A on ballot to fund a HSR project Prop 1A passes with 52.6 percent of the vote
HIGH-SPEED RAIL COMES TO CALIFORNIA
Funding Requirements
Authorizes $9.95B bond—$9B to HSR & .950B for local projects
Allows 0.900B for planning, engineering &up to 0.450B for admin
Bond funds used for construction must be matched dollar for dollar
Other sources of funding anticipated, including federal, local gov’t, & private
REQUIREMENTS OF PROPOSITION 1A OF 2008
Program Requirements
First phase Anaheim/LA to San Francisco Transbay Transit Center
Required to travel LA to SF 2:40 with a top speed of 220 MPH & an average running time of 200MPH
Legislative intent HSR be completed by 2020
Before bond funds may be used for construction, HSRA must demonstrate passenger service in a usable segment (a segment with 2 or more stations) or an entire corridor shall not require an operating subsidy
REQUIREMENTS OF PROPOSITION 1A OF 2008
Business Plan to be delivered by Sept 2008, but delivered at end of October days before the November election
Voters told construction cost of full system would be $33B
December 2009 new Business Plan with cost of $42.6B
Salient issue ridership
2007 by 2020 when fully operational ridership would be 68M passengers
2008 Business Plan ridership between 42M to 68M by 2020 2009 Business Plan (initial phase, SF, LA/Anaheim) 13.5M passengers
by 2020.
HSR ISSUES AT THE OUTSET
State Senate Transportation Committee asks ITS to review the HSRA’s travel demand model
HSRA paid for the review
ITS reviewed the “Bay Area/California High-Speed Rail Ridership and Revenue Forecasting Study”
RESOLVING RIDERSHIP ISSUESITS TO THE RESCUE
“. . .we have found some significant problems that render the key demand forecasting models unreliable for policy analysis.”
“. . .the mode choices of the individuals surveyed were not representative of California interregional travelers.”
Because of the above findings, the report concluded “. . .it is likely that the resulting model gives a distorted view of the tastes of the average California traveler.”
“CS changed key parameter values after the model development because estimates did not accord with the modelers’ a prior expectations.”
ITS’S FINDINGS
SOURCE OF DISPUTES: ALIGNMENT
Highway 99
Agricultural an issue from day one California largest ag state: $45.5B, Iowa is second $29.9B
Dairy $7.6B, Almonds $3.8B
Number 1 export ag product almonds--$2.4B
Community issues on the San Francisco Peninsula 30 minutes San Francisco to San Jose
Community issues in East Los Angeles entrapped by highway
Orange County opposed HSR because of community concerns
ISSUES
Cost control is always an issue with megaprojects
Time itself becomes an enemy of cost control
Competency of project management and construction management has an impact on cost
Selection of alignment and more precise engineering can influence cost in either direction
Cost of property acquisition influences cost
Politics may affect project cost
HSR COST ISSUES
Draft 2012 Business Plan $98B
COMPARISON OF DRAFT 2012 AND FINAL 2012 BUSINESS PLANS
The great flip-flop: Merced to San Fernando Valley is dropped as the Initial Operating Segment (IOS) and Silicone Valley to “near” Bakersfield is the new IOS.
Later improvements to Caltrain will offer “one seat ride” between San Francisco and Bakersfield
Phase I San Francisco to LA/Anaheim forecasted to open in 2029
What happened: no alignment for tunneling through the Tehachapi Mountains
San Francisco to LA/Anaheim is now $64B
2016 DRAFT BUSINESS PLANTHE GREAT FLIP-FLOP
Draft 2016 Business Plan Flip-Flop Silicone Valley to Bakersfield
NO CLEAR PATH THROUGH THE TEHACHAPI MOUNTAINS
“Engineering and Environmental challenges associated with tunnels in mountainous terrains including-Design, constructability and commercial challenges, groundwater resources & geotechnical investigation”
Source: HSRA, Peer Review Group Semi-Annual Update, September 2015
The 2:40 travel time in Proposition 1A is no longer discussed
Cost Unknown
RISKS ARE HIGH TO CROSS THE MOUNTAINS
PROPOSED BUDGET UNREALISTIC
1. State bonds to pay for construction can’t be sold until it can be demonstrated that the IOS won’t require an operating subsidy
2. $2.552B of Federal funds must be spent & matched by 2017
3. Committed state bonds must meet the no operating subsidy requirement
4. $5.341B in cap & trade funds is all that can be counted on. Cap & trade sunsets in 2020.
To access bond funds must prove to satisfaction of the Legislature, an independent peer review group, the Department of Finance, the Legislative Analyst that the IOS can offer service that will pay for O&M to get bond funds—about $6.775B
Use cap & trade funds—about $5.341B
Awarded federal fund—about $3.165B
$15.281B
About $5B short to build Northern California segment
WHERE WILL THE MISSING MONEY COME FROM
Thank you
Questions