Millennium Train Project in New South Wales - Case Study Example

Unit Title: Millennium Train project Date Table of Contents Table of Contents 2 Abstract 3 Brief introduction 4 Objectives 4 Scope 4 Project stakeholder analysis 4 Brief description of how the project was managed 5 Problems 5 Impacts of the outcome 6 Critical analysis of the project outcome and conclusion 6 References 8 Abstract This report analyses the Millennium Train project that was initiated in New South Wales on 1998. The project consisted of two main phases with the first one on 8th October 1998 and the second phase in 2002. The project experienced problems when it became beyond the schedule and surpassed the estimated budget. The project lacked well organized project risk management as there was no risk management plan. This led to the government being in a weak negotiating position as the supplier had a monopolistic power. The contract did not offer risk sharing leading to the government bearing the risks alone. The outcome of the project was delayed schedule, increase in cost and technical problems. The project serves as a lesson that adequate measures must be taken to ensure there is risk management in a project. This could have protected public interests. Brief introduction The millennium Train project was initiated on October 1998. The New South Wales State Rail authority signed a contract allowing the designing, construction and the maintenance of the electric Millennium Trains. The trains were to be 81 suburban double deck passengers’ trains in the first phase. The second stage of the contract which involved additional 60 cars and a period of 15 years maintenance were signed on 5th December 2002. The first set of the vehicles entered into service on July 2002. Objectives The project was initiated to help in providing clean, accessible, reliable and punctual train services for the passengers. According to the State Rail and City Rail commitment, the main objectives of the project were to enhance the quality of the city rail system. The system was set to increase the suburban fleet to ease the transport problems. There was need to improve on the capacity of the rail system especially during the peak hours (New South Wales, 2003). Scope The scope of the project was to replace the aging Tulloch trains in the Sydney New South Wales with modern trains and also to expand the railway network in the city. The railway system in Sydney was old since it was laid in 1855.The project was expected to take two phases with the first phase taking off in 8th October 1998 and the second phase in 2002. The area of the train coverage was supposed to be exclusively in the suburban network (New South Wales, 2003). Project stakeholder analysis Stakeholder’s management is vital aspect of the successful projects. The analysis helps the project managers to win the support from the stakeholders during project implementation. The stakeholders should be communicated with regularly and updated on the project progress. Millennium Train projects main stakeholders were the government and the public who are the tax payers. The public had financed the project and the government was the initiator of the project. The project success was meant to help the public transport. The designed system had to ensure that it was compliant with the set standards by the authorities and stakeholders. The process of managing the stakeholders is very crucial as it also helps in identifying the reaction of the people during the project implementation. The government kept the public informed on the project development and challenges (Prabhakar, 2008). This was done to ensure that there was support for the project. Brief description of how the project was managed The project involved two phases each with a separate contract. The first phase started in 1998 with the contract to design build and maintain for 15 years the double deck electric powered passenger trains. The second phase was commissioned December 2002 which involved additional purchase of 60 new cars and a maintenance contract for 15 years. The project strategy was to put the vehicles on the rail with the set budget allocation. The third phase of the project was estimated to take around a billion dollars and operating funds for four decades. The project strategy was to increase the suburban train fleet with 12.7 percent through a purchase of 145 cars. Through purchase of 200 millennium train cars, there was expected removal of the old 56 Tulloch cars and increase the car trains from 6 to 8 (New South Wales, 2003). The project was expected to give the additional number of train that could service the Parramatta Rail Link (Beckhaus & Halgren, 2007). Problems State rail took the required measures in handling the contracts on the Millennium rail project. Despite this, the project was complex and led to several problems being encountered in the management. The design required investment in time and money. The major problem that the project encountered was the rise in implementation cost than the expected figure. The problem was realized late relating to the government announcement. Another problem that occurred was the design task took longer time than the planed schedule. According to the figures that were released by the Auditor General, the contract cost rose by 24 percent by $ 114 million. This led the cost to shoot to $588 million. The project’s cost also rose by 17% to $658 million. The management had a hard time trying to justify whether the project rising cost was consistent with the value for the money (New South Wales, 2003). The procurement of the transport infrastructure was faulted and there were faulty acquisition procedures. The project used the traditional competitive tendering process. This led to a situation where there was a monopoly market being created in the country passenger industry. There was also lack of optimal corporate governance elements. The key decision makers in the project were advised of the potential of a risk premium from outsourcing maintenance for the train manufacturer. This could have been exchanged for a maximum performing train and enhanced features. Despite this, the decision was not taken. There was no risk management plan for the millennium train fleet (New South Wales, 2003). Another problem occurred due to tendering process taking a long time to be approved and there was lack of sufficient internal audit resources for the project. The project managers who in this case were the government lacked enough experience in managing the contracts. This gave the private sector an advantage as they were competent and experienced. This led to the government and the public bearing the risk of the project increase in cost. The contract did not offer a provision for risk sharing between the government and the private sector undertaking the project. The project problems were blamed on the restructuring of the New South Wales rail authorities and the purchase environment which was described as disruptive at the State Rail (New South Wales, 2003). Impacts of the outcome The impacts of the project outcomes were technical errors and problems associated with the City Rail network (Nick, 2003). The stakeholders were also affected by the increased cost of the project and delayed schedule. There were also software related problems which made the system unreliable. In April 2003, the trains were withdrawn from the service and a full audit was carried out. After they were rectified, they were back in service on June 2003 (Darren, 2002). Critical analysis of the project outcome and conclusion Millennium train project problems arose due to lack of appropriate risk management knowledge and procedures. Lack of internal audits led to the risks being unmonitored (Prabhakar, 2008). This issue had been persistent over the previous projects. The options for responding to risks were not carefully accessed. If they were accessed carefully, the risks would have been mitigated in the State Rail business objectives. The reputation risks were not well monitored (New South Wales, 2003). Marketing and communication have a capability to spread reputation risks to the public and the employees of the corporate. This was not taken care of during the project leading to the project having a bad publicity. The project management plans were also inadequate to protect the public interests. The project experienced problems in management despite the fact that there are varieties of sources which can help in the issues. There is need for the information to be shared on project management to ensure that the public is taken care of (New South Wales, 2003). There was poor evaluation on the purchases options that State rail would have looked at. This would have ensured that they get the value for the money spent. The maintenance contract was also not well accessed. There was no risk sharing which gave the private sector an advantage. This led to the contracts having inappropriate performance standards. As a manager, I would take the stakeholders management principles that were demonstrated by this project in future. The project stakeholders were constantly informed on the progress despite the shortcomings. This is one way in which the project can achieve support from the stakeholders. The measures that were put in place by State Rail to handle a large project were impressive although they encountered several problems (New South Wales, 2003). Apart from the positive side of the project, there were shortcomings which I would avoid in future as a project manager. One of the issues is poor risk management. The project demonstrated poor risk management which led to the stakeholders losing cash. The public were not protected under the contract making them to bear the risks alone (Kerzner, 2001). In future, I would ensure that the project contracts are signed in such a way that they cater for both sides. There is also need to consult relevant sources on the way in which the project risks should be managed and distributed. This aspect lacked in the Millennium rail project. I would also ensure that the procurement, methods used have no risks to the market. This requires using the recent method of tendering method that will ensure that there is no creation of a monopoly market. The main lesson from the project is that the project management plans should ensure that the stakeholders’ interests are catered for. This should be done through use of adequate management plans and using wide range of information on project management through sharing. As a project manager, I would take these lessons in every project I undertake. References Beckhaus, J. & Halgren, S. 2007, Sydney's Electric Trains, Australian Railway Historical Society NSW Division. Darren, G. 2002, ‘signal failure? No, it's just the Millennium train picking up steam’, Sydney Morning Herald. 16 April, viewed 10 May 2014, http://www.smh.com.au/articles/2002/04/15/1018333485325.html Kerzner, H. 2001, Project Management: A Systems Approach to Planning, Scheduling and Controlling, New York: J. Wiley & Sons. New South Wales, 2003, Auditor-General Audit Report, Performance Audit, 2003, State Rail Authority, Millennium Train Project. Nick, G., 2003, ‘Off the rails’, FairFax Digital, 2 August, viewed 10 May 2014, http://www.theage.com.au/articles/2003/08/01/1059480544829.html Prabhakar, G. P. 2008, ‘what is project success: A literature review’, International Journal of Business and Management, Vol.39, No. 1, pp.3-10. Read More