Tag Archives: cost overrun

Project Failure – Scottish Parliament

source: Asif Musthafa (via Flickr)

The Scottish Parliament overran initial costs by a factor of ten and was delayed by 3 years.  It is clear that similar to the Sydney Opera House the design was not finalized before construction and estimates were not backed by a credible cost estimation process. For example, here are the 5 finalists chosen from a shortlist of 12 in May 1998. Only one of these finalists adheres to the budget, every other proposal fails to meet the brief in terms of both cost and size. It is absurd to specific minimal criteria for a brief and then fail to shortlist finalists based on those criteria. When a project starts with this level of disregard for process, it is unlikely to ever get back on course.

Source: House of Commons Briefing (for reference EMBT/RMJM was selected)

From there, the project continues to unravel, for example the architect then added 4,000 square meters (+14%) to his design area. It is perhaps not surprising that the project manager resigned just over a year into the project because there was clear tension between the sponsors’ desire to have the Parliament ready as soon as possible and the architects’ desire for a “gestation period” to really flesh out his design together with a need to be engaged in all decision making. The lead project sponsor (Donald Dewar) and architect (Enric Miralles) sadly both died during the construction period, which further complicated the project.

Detailed reports on the project can be found in the Hollyrood Enquiry and Parliamentary Briefing and this article from Max Wideman.


It is worth noting that the Scottish Parliament has won many national and international architectural awards. This is similar to many delayed projects in that they fail specularly on time and budget constraints, but the quality of what is delivered can ultimately be extremely high, even if the apparent process in creating it was not.


The process of selecting and managing the new Scottish Parliament had no regard for credible estimates from the outset. As a result it is unsurprising that the final result bore no relation to the initial estimates. It also appears that the sponsors of the project wanted quality above all, and in that context it is not surprising that cost and time gave way to that objective.

Project Failure – Channel Tunnel

The Channel Tunnel Rail Link source: Akanekal (via Flickr)

The Channel Tunnel or Chunnel is a 31  mile tunnel running underneath the English Channel to carry Eurostar trains and freight trains between the UK and France.

Construction of the tunnel started in 1988, the project took approximately 20% longer than planned (at 6 years vs. 5 years) and came in 80% overbudget (at 4.6 billion pounds vs. a 2.6 billion pound forecast).

The tunnel wasn’t completely unprecedented. The Seikan Tunnel in Japan had similar length and depth. Nonetheless, like projects such as NASA’s missions and the Sydney Opera House, it seems part of the reason for cost overrun was the absence of many precedents and associated experience to base sound estimates off. In fact, subsequently, the Channel Tunnel has been listed as one of the engineering wonders of the world, which emphasizes its uniqueness.

The issues that caused delay resulted from three factors:

  • Changed specifications for the tunnel, there was need for air conditioning systems to improve safety that were not included the initial design.
  • The communication between the British and French teams who were essentially tunneling from the two different sides and meeting in the middle could have been improved. Theses sorts of communication issues are relatively common in delayed projects when tensions rise, Wembley Stadium is an interesting example, where poor communication meant that junior employees where often more informed about project status than senior managers.
  • The contract was bid on by competing firms, this framework will necessarily encourage the ‘winner’s curse’ of the successful bidders having the lowest and most optimistic price estimates, again the Wembley Stadium project offers another example of the winner’s curse.

Another interesting aspect of the Channel Tunnel’s forecasts were that a lot of revenue was projected to come from driving the existing ferry operators out of business. Of course, these ferry operators were the main way to cross the English Channel before the Channel Tunnel existed. However, this analysis ignored the possibility that the ferries would react to the Channel Tunnel with improved pricing and service, leading to them retaining market share. In addition the creation of budget airlines providing cheap air travel between UK and France was not foreseen. It is a good reminder that in making strategic forecasts of benefits or results you should bear in mind how competitors will react to the project you are envisioning.

Whilst it is not a project management issue per se, it should be noted that a great deal of the financial problems with the Channel Tunnel were caused by overly optimistic revenue projections, on top of the construction cost overruns, and those projections failed to anticipate that the set of options for getting from Paris to London might change, both in reaction to the tunnel and because of innovation in other areas such as the development of the budget airline business model.

See more project management case studies at www.projectcasestudies.com or follow me on Twitter for blog updates.

Channel Tunnel Drilling Equipment (source: Tony Bradbury)

The Failure of Denver International Airport’s Automated Baggage System

Denver Airport - source: Gathering (via Flickr)

Denver Airport had ambitious plans to route passenger’s bags to and from aircraft without significant human intervention. The system was called the Denver International Airport Baggage System (DIA ABS). It ran over budget by almost 30%, with an actual cost of $250M vs. $195M planned, and completion was delayed 18 months. These delays themselves are bad, but not disastrous. The problem was that the system did not function as intended. The system itself was not a trivial undertaking with 4,000 vehicles, 5.5 miles of conveyors and 22 miles of track. The design failed in several respects – the carts were often unable to cope with sharp corners in the track and loading bags directly from the aircraft failed. The sensors to determine where bags were in the system were not reliable. The design used a number of technologies that were untested. Whereas the Sydney Opera House is an example of a project with tremendously ambitious goals that simply ran over time and budget until those goals were met, the Denver Airport baggage system stayed much closer to duration and budget estimates, but the goals of the system were not met. And unlike the FBI’s virtual case file project there was no issue with vague goals, it’s just that the baggage system’s goals were clear but unrealistic.

The baggage system simply was poorly designed and poorly tested, more recent, simple computer simulations have found problems with the system, that the project itself was not able to catch until implementation.

See my book for strategies to avoid project failure.

The Failure Of The FBI’s Virtual Case File Project

Between 2001 and 2005, the FBI’s Virtual Case File project failed. The Virtual Case File project was part of a larger initiative called Trilogy. Costs overran by 89% or just over $200M. A project that should have taken 3 years, failed after 4 years with requirements still not met. In some ways this project is similar to the London Stock Exchange’s Taurus Project, where scope creep lead to the project (at least as initially envisioned) being cancelled after massive cost overruns.  This analysis draws on a very detailed report from the Office of the Inspector General, but here we focus explicitly on the project management failings.

The FBI’s Trilogy project contained three parts:

  1. Upgrading software and hardware for FBI agents
  2. Upgrading the FBI’s communications network
  3. Significantly upgrading the FBI’s case management system (Virtual Case File) to enable better access to, and sharing of, case-related information across the FBI

The first two elements of the project were completed, not perfectly or all that impressively, but roughly as planned. However, the Virtual Case File project experienced major cost and schedule overruns and never achieved its objectives. It is widely used as an example of a failed IT project.

Vague and inappropriate requirements

As with all the cases of project failure that this blog has explored (the Sydney Opera House, the 2010 Census, the Channel Tunnel, Denver Airport and the H1N1 vaccination program) the heart of the problem is vague requirements. “Trilogy’s design requirements were ill-defined and evolving as the project progressed.”

Scope creep

It’s perhaps inappropriate to use the term scope creep for a project where scope is never clearly defined. But the political climate created by the September 11 attacks and reports into the Oklahoma City bombings in March 2002 increased pressure on the project to produce results faster (regardless of what was feasible). In addition, the Hanssen espionage case, one of the most significant in the FBI’s history as portrayed in the movie Breach, raised the bar for security requirements for the Virtual Case File system. According to one report on the project. “Trilogy’s scope grew by about 80 percent since initiation of the project.” Of course, if scope is increasing faster than work is being complete, it will be impossible for any project to finish.

Scheduling by desired outcomes, not resource based estimates

In my book, I describe this as this as the King Canute approach to project management, just because you’re a powerful executive and you want something to be complete faster than 3 years, does not mean that that is possible given the scope of work and resources allocated. However, the scheduling for the Virtual Case File project focused on what was desired, not what was possible. Two quotes from the report illustrate this:

“The FBI also developed plans to accelerate completion of Trilogy because at the time the project’s 3-year modernization timeframe was considered too long.”

“The contractor disagreed with the resulting schedules, because the schedules showed that the full implementation of the project exceeded the proposed completion date of the project.”

It is easy to see these errors with the benefit of hindsight, but in the pressure of the moment it is all to do easy to massage the timeline to make it look as if you might hit the desired outcome, on paper at least.

Cost plus contracting

The interests of the FBI and the contractors working on the project were not aligned.“The cost-plus-award-fee type of contract used for Trilogy…did not require specific completion  milestones…and..did not provide for penalties if the milestones were not met.” Arguably, this is a result of vague scope, but in addition to vague language the incentives created by cost plus pricing, made it hard for the FBI to hold their contractors accountable.

Lack of clear ownership

Tellingly, a project manager was appointed only late into the project, the FBI cycled through 5 people in the CIO role in 4 years and accountability appears generally absent due to “decision making by committees instead of knowledgeable individuals.” In addition to a lack of accountability at the contractor level, there was a need for clearer accountability within the FBI. Lack of clear accountability structures is a clear theme in failed projects as the Eurofighter project shows.

See more analysis of project failure here on this blog and at www.projectcasestudies.com.