First, in spite of the fact that government agencies on both sides of the Channel had been examining fixed link schemes for decades, when the decision was made in 1984 to open the project for bidders, very little time was allowed for detailed design studies in advance of construction. The schedule called for the Tunnel to be open for operation in May 1993. This meant that the project was to move from design concept to completion in a mere 7 1/2 years.
As a result, many of the design problems were not identified at the start of the project and more importantly no provisions were made for them in Eurotunnel's initial cost estimates. This problem was at the heart of the dispute over costs between Eurotunnel and TML at the end of 1989. TML argued that the cost increases were chiefly due to deficiencies in the initial design and cost estimates. Eurotunnel maintained they were due to TML inefficiencies in following a perfectly satisfactory design. The arbitrator appointed to assess those early claims found largely in favor of Eurotunnel, but the disputes continue.
Another complication was that Eurotunnel and TML were required to submit designs to the IGC (Intergovernmental Commission) for authorization. The original concession agreement contained merely a general outline of the plan. The additional submissions that follow up later fill in the necessary details. The IGC can reject any design on the grounds of safety, security, environmental acceptability and so on. Under the pressure of time, IGC received a number of design drafts during construction. This led to a series of piecemeal approvals on some of the project, which made final rejection more difficult.
Secondly Eurotunnel lacked the necessary skills to negotiate with the experienced contractors. It was actually created much later, since TML (Trans Manche Link) the construction consortium had clear conflicts of interest. Eurotunnel negotiated with TML on the entire construction of the project, rather than breaking them up into smaller specialized jobs and handing it over to different vendors.
Third source of cost escalation for the Tunnel is one that is common to nearly all acquisitions. That is the competitive pressure that prompts bidders to cut their cost estimates to the bone in order to make a successful bid. Knowing that they were to be judged on financial viability, the competing consortia tended to minimize their margins. Later on, the cost increases were blamed on delays from the parliamentary process which authorized the project and the early financing difficulties. Fourth, an imbalance in the client-contractor relationship is generated when the cost of schedule overruns is more damaging than direct cost increases. In other words, since Eurotunnel cannot earn a cent on its investment until the Tunnel is operational, it is apt to find schedule delays more damaging than cost overruns. This put a real weapon in the hands of contractors.
There were even technical issues, the major one being Air-cooling systems. Rail tunnels in general do not require air-conditioning because air can usually circulate freely from one end of the passage to the other. Not so in the case of the 32-mile long Chunnel. The heat that the high speed trains will generate as they pass through the long, narrow tunnels is expected to cause temperatures as high as 130 degrees Fahrenheit. As a result, Eurotunnel had to buy the world's most expensive cooling system, (one it did not account for earlier).
Why do projects fail? Before we analyze the reasons for the failure with Channel Tunnel project lets understand the areas, in general, why do certain projects fail? One of the best project management oracles of all time, Dr. J. Davidson Frame, states that projects fail mainly because of two reasons: 1. A failure of estimation. 2. A failure of implementation. Project Management as a concept was introduced into the industry to deliver projects in time, cost and the desired quality. Has a discipline it has two main intentions. First to address the need for new management structures, to organize individuals and contractors towards the delivery of a specific project rather than towards the conventional achievement of an organization profit. Second, is to address the need for operational tools to quantify, control and deliver various specific project tasks. The Project Management team for the Channel Tunnel Project failed to address these core issues at the right time to steer the project for successful delivery.
Project Management-Success or failure The Channel Tunnel project was handed over nearly 2 years late and 5 billion pounds over budget. The role of project management has not been clearly defined and so it is safe to assume they were never given the importance or authority they deserved. The whole project was managed by the Client (Eurotunnel) and the Contractor (Trans Manche Link). As mentioned earlier, the Contractor had little or no incentive to finish the project on time. Their objective for the project did not align or match with the clients' objective. The contractor's priority was to make money out of the construction activity. It was much less concerned whether or not Eurotunnel was going to be viable as a business, since the construction companies put little equity into it. On the other hand, the client was inexperienced and young to liaise with the contractor and number of disputes arose between them.
Fragmentation was also a major cause of delays. Allen Sykes (RTZ-DE, project management on the British side) once mentioned "if 18 banks, 2 governments, and 2 railways are involved, to say nothing of 2 construction companies, then pace of progress will be very slow, and may stop altogether." Also we are aware that the project saw light after years of study and research. The initial objectives set out by the founding, and later on outgoing members, changed with the addition of new members. There was no clear objective and strategy in place to guide the teams to successful completion. It was more like steering a ship through rough waters without a rudder.
Whilst there have been recent changes in the way the industry operates, the majority of construction projects are still delivered using traditional procurement systems. Design and construction were considered as two separate entities. This results in poor performance in terms of flexibility of use, operating and maintenance costs and sustainability. The suppliers and sub-contractors were not involved during the design process and could not give their input towards buildable design. Construction started once the initial design was finalized but the design was never updated to incorporate the safety features imposed by the authority and other technical details due to site conditions. And once the realization seeped in they were set back in time to make the necessary modifications. This added to the variation works claimed by the contractor towards the end.
The final construction works was awarded to TML on the basis of competitive tendering. The contractor, to be the winning bid quoted an amount that was stripped to the bone. They were more concerned with the cost rather than value of the project. Once the project got underway variations came in all forms like design, technical and safety issues. The budgeted cost was never updated once more information came through. The Project Management team had the responsibility to bring this to the Client's & stakeholder's attention. Yes, minimum visibility had to be maintained but the concerned authorities should not have been kept in the dark.
The project was never monitored on a regular basis. The project management was responsible to monitor performance. Even though the project was unique the whole process of construction was similar and repetitive. Progress of works at various milestones was not recorded to indentify problem areas. The management was concerned to achieve the final product and hence gave little or no importance to the process, (as long as it worked).
Modifications were not incorporated at various stages (when things were much in control) and towards the end it cost more time and money to rectify them. The project lacked an overall "supremo" able to champion the project ahead. Project management lacked the necessary leadership skills to carry forward the project. The people involved in the construction of the project were never motivated to hand over the project in time and cost. There was also insufficient emphasis placed upon the organizational and strategic dimensions of PM.