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University of Sydney

Parramatta Rail
Link Project
PMGT5886: System Dynamics Modelling in Project Management


1 PRL Project Report

Table of Contents

Table of Contents...................................................................................................2


Chaos theory tells us that the fluttering of a butterfly’s wings can trigger a tornado. System dynamics
theory describes events in a similar way and explains how events are determined. A dynamic system,
or a system whose state changes over time, is highly sensitive to conditions which may appear, when
viewed in isolation, simple or unimportant, but when viewed through their effects, are revealed to be
very powerful.

System dynamics (SD) theory, from humble beginnings as a research idea at the Massachusetts
Institute of Technology in 1958, is now applied in numerous contexts due to its great potential to solve
systemic problems. Hovmand & O’Sullivan describe how SD analysis ‘holds the promise’ of solving
various social and organisational problems (2008, p.479). SD does this by identifying bottlenecks in
systems and accurately describing and modelling the effects over time of events and decisions.
Through such identification, managers are able to develop policies to address the problems plaguing
their projects, and implement strategies to achieve better project outcomes. As a body of work, it is
now being seen in industries ranging from construction (Chritamara et al 2002), manufacturing
(Huang et al 2009), supply chain management (Yang et al 2004), and even poverty management
(Kanji et al 2007).

The following Project Report applies SD theory and principles to the analysis of a large, public
infrastructure project in NSW: the Parramatta Rail Link (PRL) project. This project is widely
considered a failure of massive proportions, a “$2.3 billion black hole” (Besser,, 2008). It
failed to come even close to planned goals in terms of scope, cost, time and quality. The overall goal
of this analysis is to facilitate learning of past mistakes so that future infrastructure development
projects are able to achieve more desirable outcomes.

The PRL project was one component of a large state infrastructure investment scheme called Action
for Transport 2010, that included various road and public transport projects to be delivered before
2010. It was announced by the then New South Wales (NSW) Transport Minister, Carl Scully, in July
1998 (Barraclough, 2003). The PRL, a 27 km mainly underground railway linking Parramatta
and Chatswood, was, at the time, the largest single publicly funded infrastructure project in NSW, and
formed a key element of the NSW government’s plans to increase capacity of the City Rail network,
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expand rail services to new areas and renew focus on Parramatta as "Sydney's second city". The
NSW government aim was to relieve stress on the rail network by eliminating the need for trains going
from Parramatta to the business centre of Chatswood having to go via Strathfield and the Sydney
Central Business District (CBD). The NSW Government's strategic study undertaken in 1992 stated
that by 2031 more than 40,000 commuter journeys from the area are expected into the so-called
"global arc" of employment centres in North Ryde, Chatswood, North Sydney, the CBD and near
Sydney airport. 18% per cent of Sydney's future housing is planned to be located to the north-west of
the Sydney CBD. The population in the North West is expected to reach 475,000 within next 25 years.
Employment in the area is set to increase by 350 percent in the same period (NSW Government,
2001). The PRL project was to provide vital infrastructure to this growing population. (A map of the
area is attached as Appendix A.)

This Project Report, commissioned by our client, the NSW Auditor-General, will examine the PRL
project to determine why the project was such a failure when assessed against the fundamental
project management benchmarks of scope, cost and time and quality and against original project
objective of expanding and improving the public transport system in Sydney and surrounding areas.

The objectives of this Project Report are:
• To identify why the PRL project was a failure;
• To apply SD analysis to determine if the project failure could have been foreseen and
• To develop a SD model for future projects to help achieve better project outcomes.

We will meet these objectives by:
• comparing the PRL project with other projects with similar characteristics;
• examining how the project was managed from its conception to the completion of the Epping
to Chatswood Rail Line; and
• analysing the effects of decisions and actions that took place within the project system and
the effects of those decisions and actions on the total project system (the feedback loops).

Undertaking a SD analysis of the PRL project was far more challenging than originally anticipated by
the group. Initial thoughts were that as the project was such a clear failure in project management
terms, that a SD analysis would be clear and straightforward. The group therefore set off on a 2
month long technical investigation of why the project cost $2.3 billion when it was originally costed at
$1.4 billion (in 1998 dollars),(NSW Government 2001), why the original project scope in terms of
railway line length was halved (ie; only the Epping to Chatswood section was completed while the
Epping to Parramatta line was not), why the tunnel option was eventually used although it cost so

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much more than the bridge option originally included in the project design, and the individual events
that led to the project as completed opening 1 year later than originally planned.

By undertaking further research into the principles, methodologies and goals of SD analysis, it started
to become apparent that by becoming bogged down with technical details of the project's failure such
as inadequate trains, compliance with Development Application conditions, gradient sizes that were
too steep, and lack of rail signallers which led to train signalling issues, we were essentially missing
the point of analysing the project from a SD perspective. Once we understood that SD analysis
involved understanding the overall structure of the PRL project system, the critical importance of
feedback processes within the project environment and the way one seemingly non-critical event can
have immense significance on the project as a whole through its iterative follow on effects, we began
to consider the project holistically and to examine the processes that followed certain events and
which gradually led to eventual project failure.

Difficulty in understanding SD modelling and how to apply SD principles to the PRL project posed a
rather large mental block to the group. A "too hard" attitude, which was largely recognised as such by
the group members, prevailed and created significant challenges in terms of taking the next steps to
move past the technical investigations to complete this Report. Viewing the completion of this Project
Report through a SD analysis lens, the perceived difficulty of the Project Report created iterative
communication problems and thereby added to the difficulty experienced by the group in completing
the Report. A SD model of this Project Report is included below at Figure 1.

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we had to resort to and rely on various secondary sources including reports. Due to restricted access to primary sources of information.5 REPORT SCOPE In this Project Report. books. We tried to gain access to TIDC officials and engage them in a dialogue about the project. we have attempted to examine the PRL project system as a whole. In doing this. and explained how and why these failures occurred. Cultural Differences Group Conflict Group Co-ordination Other subjects Nazi boss Work Pressures Lack of leadership Group Meeting and Inspiration Group Communication Work to Do Work Really Done Known Rework Undiscovered Difficulty Rework Task Completion Progress Figure 1: System Dynamics Model of group Report 1. various NSW government and company websites.4 SOURCES OF INFORMATION Primary and secondary sources of information were accessed and evaluated in the development of this Project Report. 1. We have set out why the project failed in pure project management terms. why the project failed in the broader context of expanding the City Rail network. however. to the subsequent shelving of the Epping to Parramatta section of the rail line. annual reports published by TIDC project managers. The primary sources of information consisted of legislation. academic journals and other material available online. and to the eventual completion and operation of the Chatswood to Epping rail line. We have examined the processes that affected the project from its initial announcement in 1998. we have developed a 5 PRL Project Report . little response was forthcoming from their side.

This makes the project a prime consideration for SD analysis. a description will be given of the original project scope and the amended project scope. based on the project's failure. many of these technical problems would have been averted anyway. (and we asked TIDC’s representative’s directly) we must assume that one of the major reasons for this was that because the scope of the original project was for a railway line from Chatswood to Parramatta ("the PRL project"). and original scheduled completion date.SD model that describes public infrastructure projects with a view to facilitating understanding of the risks involved in such projects. and the amended project that actually eventuated was a railway line that only went from Epping to Chatswood ('the Epping to Chatswood project'). In Section 3.2 EXCLUSIONS Due to the all pervasive nature of the politics involved in this project. The overarching goal of this SD analysis is to promote learning from mistakes made in this project so that project managers for future infrastructure projects. and so we must assume. We have not examined why Transport Ministers changed. This is because. As no reasonable reason has come to light to justify or explain this. although some of them were substantial.5. a final project report was never completed for the PRL project. 'PRL project' will refer to both the original project (Parramatta to Chatswood Rail Line) and the project as constructed (Epping to Chatswood Rail Line) depending on its use within the context of this Report.0. we will refer to the project at all times as 'the PRL project'.5. was compelled to consider it as the same project. original budgeted cost. may improve project outcomes. We did not investigate in detail the many technical problems that created delays in the PRL project. 1. for political reasons. it was considered internally within TIDC to be 2 different projects while externally. for example the Transport Infrastructure Development Corporation (TIDC). This may have meant that TIDC would have had great difficulty in completing the 1 report as the original project scope was so different to the final project scope that accurate reporting measures were unable to be made. The TIDC change of project name from 'the PRL project' to the 'Epping to Chatswood Rail Line project' will not be validated here as we are examining the entire project in terms of its original scope. TIDC. 1. that they were largely inadequate. but in this Project Report. For the purposes of this Project Report. TIDC. We were unable to get any detailed information about the communication systems that were in place between all the sub-contractors involved in the project. as opposed to the project based organisations method previously used to manage these sorts of projects. we have avoided delving into detail about the political happenings that affected the PRL project.1 ASSUMPTIONS According to the project manager. nor have we examined why transport infrastructure projects in NSW became centrally organised through TIDC in 2004. had there been better risk and change management mechanisms in place through the project. 6 PRL Project Report .

time delays and non-linearities determine the dynamics of the system. (2002. Applying these lessons learnt will facilitate better project planning and more effective risk and change management processes. This can be done through understanding project dynamics and applying the lessons learnt from past project systems to future project systems. Sterman quotes Nasirzadeh et al describing system dynamics as follows: ““The art of system dynamics approach is to discover and represent the feedback processes. SD analysis thus seeks to understand and explain how the component parts in a system work together. Chritamara et al describe it as follows: “System dynamics is a methodology for understanding certain kinds of complex problems that involve changes over time through multiple feedback loops (closed chains of cause and effect links in which information about the result of actions is fed back to generate further action)'. the PRL project comprised a large. can and do have significant impact on overall project operation and management and success. 7 PRL Project Report . connect and impact upon each other.270) In terms of this Project Report. complex system. The overarching goal of this modelling and analysis in a project management context is to achieve better project results. p. PART 2 2. which along with stock and flow structures. p. The combination of these factors will lead to better project outcomes. the affect system components have on each other and the system. Combine that with the difficulties which arise as a result of the lengthy time intervals between initial project idea and planning to eventual commissioning and it becomes an almost psychologically insurmountable task to understand how the system actually works or to consider each and every component within the project system.0 WHAT IS SYSTEM DYNAMICS MODELLING? The Oxford English Dictionary defines a system as 'a set of things working together as a mechanism or interconnecting network' (Oxford English Dictionary Online). (2008. Any large and complex project system such as the PRL will invariably have hundreds and even thousands of component parts and parties to the project. In other words. Such complexity requires a systematic understanding of how the individual project components impact each other to enable the project manager to deal with problems that arise in an intelligent and systematic way as opposed to acting reactively in crisis without consideration of the flow-on consequences of particular decisions. or the dynamics of the project system.1198) SD modelling and analysis therefore seeks to understand relationships between system components. many of which are often difficult to see and understand. and the flow on effects over time of decisions. the ways a project's components interact.

and which decisions the all-powerful actor then implements without impediment. Considering the results of large infrastructure projects in NSW undertaken over the past 20 years or so. and individuals) which may affect a project’s implementation and processes. p. inherent in all projects. a SD approach to project management recognises that there are multiple actors (organisations. 2. step-by-step process' (Szyliowicz. Conversely. SD modelling attempts to address some of the limitations of the dominant ‘Rational Model’ approach to planning and project management. 1995. SD is a methodology used to understand how systems change over time. or dynamics. interconnections and synergies between components of a complex system in order to give more confidence and predictability in the behaviour of the project system and its individual components.261).350) and further assumes a 'single. p. as well as numerous constraints which may affect any given actor's ability to implement decisions.352) whose decision making is governed by a set of specified rules. to understand “the nature of the decision making processes” (Szyliowicz. The Rational Model is premised on the assumption that a project's planning and implementation proceeds according to a 'systematic. organisation. SD modelling essentially attempts to move past the static view of a project proceeding in isolation. that is. challenge or difficulty. which are inherent in life and therefore. p.2.347) to ultimately achieve better project outcomes. systems and networks is a recipe for disaster (2007. communities. unrelated to its environment and impervious to internal and external influences and processes. p. It is a study of behaviour of different variable within a particular environment over a period of time.2 SYSTEM DYNAMICS MODELLING LESSONS RELEVANT TO THE PARRAMATTA RAIL LINK PROJECT Kunsch. SD analysis is a more realistic and useful way of managing projects because it enables project managers to deal with changes and uncertainties. by necessary extension. It is useful to consider lessons learnt from projects with similar characteristics to the PRL project which could have been applied to the PRL project to achieve a better project result. and that tax payers get the 8 PRL Project Report . all powerful actor (the state.1 HOW SYSTEM DYNAMICS MODELLING CAN FACILITATE BETTER PROJECT OUTCOMES The purpose of building a SD model of a particular project system is to understand and explain how decisions made by actors or components within the project system affect the operation of the project system as a whole. and which should certainly be applied to future projects in NSW to ensure that tax payers money is well spent. It helps to explain interrelatedness. 1995. Project managers around the world who have been responsible for large and complex projects have made many mistakes as well as a few successes. the flow-on effects of decisions and events are considered in terms of how they affect the project's operation. or leader)' (Szyliowicz. this suggestion appears to accurately reflect the reality of the situation. In addition. Theys and Brans suggest that an inability to think in terms of dynamics. 1995.

legislated. 2008. this Report will primarily consider infrastructure projects as those being most relevant to the project at hand. the United Kingdom and Australia. Community opposition to the new Denver International Airport was strong. as scope. Infrastructure projects must be judged not only in pure project management terms. Infrastructure projects include transport facilities such as roads and railway lines.68). They want the infrastructure development and they also want environmental protection. but also by whether they serve the community and expand service capabilities. they do not want such development at the expense of the environment. that even in developed countries such as the United States. In these and other projects. in other words. lessons from previous projects. although eventually overcome by the pro-airport lobby which had greater resources and the skills to use them effectively (Syzliowicz. the linking factor was that while communities are generally desirous of infrastructure development. and utilities such as telecommunication facilities. water facilities such as damns and pipes.142).infrastructure they need.3). the construction of Heathrow’s Terminal 5 saw substantial community opposition and claims that a growth in aviation climate change emissions through use of the new terminal would wipe out all savings from other sources of climate change in the UK for the next 20 years. road or rail link' is really about an ability to provide a service. complex projects that are not infrastructure related can also provide useful lessons. p.356). In a study of 6 case studies in the Netherlands. within the timeframe promised. Trethanya et al discuss how in many developing countries. if any. Infrastructure projects are a particular type of complex project.128). It would appear however. 'although most easily thought of in a physical form – a bridge. This lesson must never be forgotten as tax payers want their tax dollars used effectively. of the emphasis on values concerning environmental quality. environmental impacts associated with infrastructure are generally ignored or perceived to be of secondary importance (2008. In London. (Stop Heathrow Expansion 2007 Lobby Group). While recognising that other large. van Gestal et al found a striking similarity in all cases. p. 1995. In Australia. thus blowing out the project in terms of time and cost. These competing goals must be managed to achieve better project outcomes. Environmental Impact Statements. 9 PRL Project Report . are routinely perceived as unimportant. energy facilities such as electricity grids. broadband internet cables and phone lines (World Bank Group Sustainable Infrastructure Action Plan. 1992. 'the real function of [transport] infrastructure for example is service – the movement of people and goods' (Haley. given space and time constraints. p. p. even when identified through formal. particularly at the initial stage of the projects. Haley describes how infrastructure. environmental impacts. construction of a proposed rail bridge over community parklands as part of the proposed PRL met with such strong opposition that the bridge plan had to be scrapped and replaced with an underground tunnel. cost and schedule failures continue to plague infrastructure projects. in addition to economic development (2008. p. Governments in NSW and project managers of public projects appear to have learnt few.

1995). Instead of sharing the risks between the client and the contractor. the DIA project was $3b over budget and delayed by 16 month. Gann & Douglas. and the Sydney Cross City Tunnel. but the new technology of the Automated Baggage Handling System was only detailed after the construction started.107). The project extends over 13.2.Major projects that we examined as part of our investigation and analysis were London Heathrow Terminal 5.3 SYDNEY AIRPORT RAIL LINK 10 PRL Project Report . It studied various past projects and examines the “system of systems” (Davies. Sydney Airport Rail Link. The major cause to the project delay and cost overrun is due to the failure of the Automated Baggage Handling System. despite its complexity. In 2005.2 DENVER INTERNATIONAL AIRPORT The Denver International Airport (DIA) project is another megaproject with complex systems involved. under the new agreement. The planning phase for the London Heathrow project took 16 years.107). 2009. a robust project system was created. 2005). It also included an “integrated Automated Baggage Handling System” that was originally designed to distribute all baggage.107). p. With the innovated approach. The project was managed to finish within budget and time. 2 parallel East-West runways. 2009. 2. The project manager British Airport Authorities (BAA) developed a new approach for the T5 project. Brief descriptions of each project are described below. the project operator was forced to consider abandoning the system to save $1m per month in maintenance costs (Johnson. automatically between check-in. Its complexity is similar to the PRL project. namely the cost-plus incentive contracts also called the T5 agreement.1 LONDON HEATHROW TERMINAL 5 The London Heathrow Terminal 5 (T5) project was a megaproject broken down into 16 major projects and 147 sub-projects. Lessons from these projects were considered in the context of the PRL project. 2009. including transfers. In contrast to the T5 project. the aircraft and pick-up on arrival (de Neufville. p. The failure of the Automated Baggage Handling System created a negative feedback loop that extensively delay the project due to technical failure and further increasing the cost of the project due to delay of project. Kirk. Gann & Douglas. The Automated Baggage Handling System had a much shorter plan and design period than the T5 project. and room for a total of 12 major runways. 2008.568 hectares. Complex systems often require more time to study and design. 2.5b and was planned to be delivered on March 27. BAA assumed full responsibility for the risk and worked collaboratively in integrated project teams with first-tier suppliers to create innovative solutions (Davies. 2. p. ranging from a $2m small project to a $600m Heathrow Express underground rail station (Davies. and is largely considered a success. Denver International Airport. Gann & Douglas. The London Heathrow T5 project was budgeted $8.2.2. has 3 parallel North-South runways.

000 vehicles per day after one year. a few weeks after the toll had been reinstated. after the opening of the tunnel.2.2. In the PRL project. In contrast. in 2005.4 SYDNEY CROSS CITY TUNNEL The Cross City Tunnel (CCT) project is another PPP project initiated by the NSW State Government. government.000 vehicles per day for the first year. the tunnel operator started a three weeks tool free period. The CCT project was completed four months before scheduled. the daily usage was then increased to 53. program manager. 2. a one-way ticket from the airport to Central costs $12. community. 11 PRL Project Report .The Sydney Airport Rail Link (ARL) project is another infrastructure project similar to the PRL project. The ARL project involved construction of 10km underground rail line. The ARL project was invested by both the state government and the Airport Link Company under a Public Private Partnership (PPP). The key stakeholders that have a claim on corporate conscience in decision making of PRL project are: The PRL Company: essentially a joint venture between the Department of Transport. The project was able to complete before the opening of the Olympic Games.1km tunnel located in Sydney City. in August 2005. auditor.000.000 people use this service per day (Baker & Nixon. due to lack of system study of past experiences and over estimate of daily tunnel usage. only 25. the tunnel operator was insolvent with debts of over $500m in December 2006 (The Sydney Morning Herald. The project involved construction of a 2. the project was not able to make enough profit to cover its cost. this only indicated a success in the development phase of the project. support staff member. however the private sector focus more on monetary returns and therefore increased the cost of the usage of the train service. However. it was considered as a failure. or maintenance staff potentially affected by the development of a project. The original estimation of the tunnel usage was approximately 35. and was expected to increase to 90. 2007).e. senior manager. State Rail Authority and Rail Access Corporation. The line’s operator. Due to lack of system planning and precision in daily usage estimation in the early stage of the project. and the State Government had spent $700m and the Airport Link Company spent over $200m on the project. operations staff member. Although the CCT project was finished on time and within budget.000 vehicles were using the tunnel per day. and 5 new stations. the daily usage dropped back to 27. and within the planned budget. It was formed to manage and direct the construction of a railway linking Parramatta and Chatswood via Epping. 2006). In order to increase public acceptance. construction worker. The company was incorporated on 14 June 2000 and commenced operations on 1 July 2000. the sponsor. Airport Link Company went into receivership six months after the service opened in May 2000 (Baker & Nixon. only 14. i. The benefit of PPP was to reduce public debt.5 PROJECT STAKEHOLDERS A stakeholder can be defined as any group or individual which can affect or is affected by a project or organization. manager of users.000. The original estimation of daily usage was 48. 2. however. 2006). a stakeholder is anyone who is a direct user. However. it links the Western side of the CBD to the Eastern Suburbs. an indirect user. Due to the low usage of the tunnel.000 vehicles per day.

Rail Infrastructure Corporation (RIC) and Transport NSW. TIDC negotiates with rail organisations and authorities and also provides and develops solutions that meet the requirements of any stakeholders. RailCorp is an integral element of the provision of transport in NSW. RailCorp undertook train inspection and investigation. RailCorp: formed in January 2004.AECOM: Maunsell AECOM is now known as AECOM. and driver training on the new railway line. Maunsell have provided a broad range of technical advisory services for the planning. the facilities are handed over to RailCorp. As a result. representations reports. and preferred activity reports. TIDC: established to deliver major transport infrastructure projects for the Government as directed by the Minister of Transport (NSW) on 1st January 2004. Department of Planning (DoP): approves the feasibility study of the projects. TIDC also guarantees the project safety is given the highest priority amongst all stakeholders involved in a project. record performance. reliability and availability planning as well as patronage forecasting and inter-model transport planning. is responsible for the safe operation. State Rail Authority (SRA). the SRA had gone through sequence of re-organisation and TIDC is now responsible for development of infrastructure of rail and RailCorp owns. crewing and maintenance of passenger trains and stations. In the project. In the same year. Contract documentation and tender evaluation required to progress the scheme from concept to the award of contract. maintenance. 12 PRL Project Report . The State Rail Authority (SRA): established in 1980 as an independent authority after separating from the Public Transport Commission and was responsible for trains only. SRA provided various services including elements of tender evaluation. They were responsible for developing the technical and operational objectives with the project stakeholders. Since 1996. construction and commissioning of track. Thiess Hochtief Joint Venture and Alstom Australia Limited: TIDC awarded the contract to two leading international construction companies for two major work packages on the PRL project. The civil and tunnelling contract was awarded to THJV and ALSTOM Australia Group. The two contractors were responsible for the design. after construction. environmental impact statements (EIS). They provided technical advice and guidance in rail operations. DoP makes certain that the projects reports are shared with its stakeholders and convenes stringent environmental guidelines in the project. signal. operates and maintains the Sydney suburban and interurban rail network. due to this strategic decision by the government the PRL project was handed over to TIDC from the PRL Company. and communication works for each of the tunnels ensuring a safe and fully operational rail system between the two sites. It promotes information and quality of delivery of services. underground fire and life safety. design and construction approval and commissioning of the railway. covering environmental impact statements. geotechnical advice. After the completion of the infrastructure development by TIDC. technical guidance and expertise in the PRL project.

their own vision. Though this is the toughest part. In PRL project the progress and development of progress were not communicated properly. Minister for Finance: The NSW government funded the project to meet project costs on a cost-recovery basis and stipulated that parties were not to generate income apart from bank interest and miscellaneous registration fees. contractors and employees had no link to update status /issues of the project. The activities affecting stakeholders. the Department of Transport was responsible for the project management through to the completion of the environmental assessment process. how much time it will take and the group of people it may be inconvenience during the project. as each project stakeholder will have their own requirements. Additionally. Above all provides equitable access to transport services for all sections of the community including people with disability. were not addressed properly. and provided progress to date and future strategies for the provision of accessible transport services.The Minister for Transport. older persons and children. Many of the failures in the PRL project can be attributed to communication structure regarding its stakeholders. the daily routines of the public. Treasurer. In addition sharing the project progress is important with community as it hurdles the transport services. the Sate Rail Authority and the Department of Transport. a wide range of people were potentially affected by the way the PRL system operated. 2001) They were replaced by TIDC that was formed by the NSW government as a state-owned corporation on 1 January 2004 under the Transport Administration Act 13 PRL Project Report . Consequently. what it is going to provide them. (NSW Government. They must understand the project and then synthesize their requirements into a cohesive vision. their involvement helps in covering the risks of the project. with the development and assessment. PART 3 3. PRL project managers also made decisions under the influence of political /senior official’s pressure. It is essential to inform the public about the project. Political influence in decision making was also a major concern in the management of stakeholders. In 2000 a private company. They ensured the project followed the guiding principles for integrated accessible transport services. the Parramatta Rail Link company was established to oversee the three agencies involved: The Rail Access Corporation.0 PARRAMATTA RAIL LINK PROJECT CONTEXT Following the NSW Government’s approval of the PRL project. and their own priorities. Stakeholder consultation has always been an important component of the project or a program. external stakeholders and the media portrayed a disastrous picture of the project’s mismanagement. Employee’s involvement is important as they should know their role and the benefit organisation will gain from success of the project. As a result. Employees and Community: The PRL project is for the community so the need to involve them is of paramount importance. some of the community concerns were not answered.

1988. Delhi Road (North Ryde) and UTS-Ku-rang-gai (HETS. 7 stations were to be upgraded and there were to be 4 new stations built at Macquarie University. 2003). 2001). finds out Tangara trains not suitable 2004 Michael Costa Bob Carr TIDAC formed Jan 2004 Michael Costa Bob Carr Rail link expected to open 2006 John Watkins Morris Iemma Tangara Trains cannot be used announced Dec 2007 John Watkins Morris Iemma Track problems Feb 2008 John Watkins Morris Iemma Noise problems Oct 2008 David Campbell Nathan Rees Cracks in Tunnels Feb 2009 David Campbell Nathan Rees Line opened Feb 2009 David Campbell Nathan Rees Table 1: Project Milestones 3. TIDC became responsible for overseeing the completion of the PRL project. The table below describes the timeline of major milestones in the project. the line would travel along the existing Carlingford corridor towards Parramatta.5 Km twin bored tunnel would run from Carlingford to Chatswood and a new 240m long bridge would be built 14m above the Lane Cove River (Onelink.1 ORIGINAL PROJECT SCOPE The original project scope was for a 27 km railway line between Parramatta and Chatswood and proposed that 70% of the line would be underground. In the tunnels. 2009). Two track types which are commonly referred to as 'Direct Fixed' and 'Floating Slab' tracks. From the new Carlingford underground station. cross passages were to be spaced approximately 200 metres apart to ensure passenger safety in the event of an emergency. A 12. which both use steel and rubber base plates to mitigate noise and vibration. Time Line Event Month Year Transport Minister Premier Strategic study commences 1992 John Fahey Announcement Jul 1998 Carl Scully Bob Carr Concept planning phase commences Jul 1999 Carl Scully Bob Carr Design stage commences Jul 1999 Carl Scully Bob Carr Initiated EIS Jul 1998 Carl Scully Bob Carr EIS Release Dec 1999 Carl Scully Bob Carr Construction planned to commence 1999 Carl Scully Bob Carr Parramatta Rail Link Company formed 2000 Carl Scully Bob Carr Abandonment of bridge (Lane Cove River) 2001 Carl Scully Bob Carr Planning approval Feb 2002 Carl Scully Bob Carr THJV awarded contract (Tunnelling) Jul 2002 Carl Scully Bob Carr Alstrom awarded contract (Track and signals) Jul 2002 Carl Scully Bob Carr Construction begins 2003 Carl Scully Bob Carr Review of Epping to Parramatta Options Jun 2003 Michael Costa Bob Carr Planning approval (Tunnel under river) 2003 Michael Costa Bob Carr UTS Kur-ang-ai Station scrapped 2003 Michael Costa Bob Carr Rail Corp. Its charter was to deliver major transport infrastructure projects in NSW. were used to comply with the regenerated noise limits specified within the project's Conditions of Approval (TIDC. This section 14 PRL Project Report .0. Macquarie Park.

this along with the fact that trains had to brake down the 800 metre curving loop to be deep enough to go under the Lane Cove river created unacceptable noise levels. After a process of environmental impact assessment and community consultation with input from various councils.3 AMENDED PROJECT SCOPE The amended project scope was announced in 2003 by the then Transport Minister. The roof of the tunnel was to sit approximately 4 metres below the riverbed. The tunnels were designed to last until 2109. 2009a). 2003). and the Parramatta to Epping Rail Line section would be postponed indefinitely (Gatenby. the project faced a major scope change when the NSW government in 2001 scrapped the bridge design over the Lane Cove river National park and opted to build a new ‘cut and cover' tunnel instead (Barraclough. In the Lane Cove River National Park the bridge was cancelled and replaced with a new 'cut and cover' tunnel which was to be constructed. The project would be split into two: the Epping to Chatswood Rail Line would continue to be built although with major design changes. The new design attempted to flatten the gradient by having a 800 metre curving loop.0. 2009). The travel time between Parramatta and Chatswood was estimated to be around 25 minutes (PRL. 2003). The project forecasts expected 10 trains per hour between Epping and Chatswood and about 6 trains per hour between Parramatta and Epping.4 Billion (NSW Government. 2001) for the whole project with stage one from Chatswood to Epping accounting for 70% of the total budget and it was announced that the project would be completed by 2008. Michael Costa. The project was to be developed in two stages with stage one being the Chatswood to Epping section. before returning to twin tunnels and proceeding to new underground platforms at Parramatta. associations and local community and Green groups. (Besser 2008b) 15 PRL Project Report . a minimum life span dictated by NSW Government contract (Besser.0. 3. The Epping to Chatswood Rail Line section still comprised of twin underground tunnels but the new depth and the steepness of the new tunnel impacted in the routing of railway to maintain the desired gradient of 3% adding to the length of the tunnels. The rerouting resulted in the axing of the UTS-Ku-rang-gai station and also created unforeseen issues concerning the types of trains to be used and the track laying method. Due to these community and environmental pressures. 85% of these objecting to the Lane Cove river bridge over a popular picnic spot in the Lane Cove River National park.would require track duplication. The project budget was set at $1. 4000 submissions were received. 2001). 3. The original track laying method was designed for a flat gradient with the track laid on concrete slabs instead of a noise mitigating sleeper and ballast system. It would then return to the surface and join up with the Main West City Rail line and continue on to Westmead (Barraclough.2 DEVELOPMENTS LEADING TO SCOPE CHANGE The main development that leads to a project scope change was the release in 1999 of the Environmental Impact Study (EIS) for the PRL project.

where detailed planning and a focus on quality will give a higher chance of project success. it failed to meet the original project objectives of linking the business centres of Parramatta and Chatswood and substantially expanding the CtityRail network. The project to date only links Chatswood to Epping and was delivered one year late and $1 billion over budget (when compared to initial tender cost). In 1998 the approval led to the commencement of the concept plans and cost estimates required to design the project. time and quality.1. 3. The Epping to Chatswood line commenced operation on 23 February 2009 (Railcorp. particularly with large and complex projects. 3. Experience however. The same applies t changing the scope of the project whilst the project is underway.1 below. A project incurs the least cost during the design stages of the project and most cost near the ending stages of the project due to the work-rework loop described more fully in Section 4. In addition.3 Billion. management should be able to readily incorporate changing circumstances. four key criteria must be met to achieve a successful project outcome: scope.1 PROJECT FAILURE IN PROJECT MANAGEMENT TERMS Within the generally accepted project management body of knowledge. quality. Difficult judgements are often required. Good leadership and management skills are required to manage a successful project outcome. A critical process required to achieve the best outcome for a project is the basic management of the team. This suggests the inevitability of project failure. 2009). and worse still. A project is considered a failure when one or more of these objectives are not met.2 LACK OF METHODOLGY/PROCESS/PLANNING The failure of projects usually occurs due to poor planning with insufficient data (CPB Research News. such variations will impact a project’s intended time and cost. 16 PRL Project Report . time and cost. 2009). The final project cost was $2. 2003). In a project. The initial strategic study was taken in 1992 – six years before development approval was approved by the DoP. Planning is also a key issue. for every variation that is made to the project plans. 3.Planning approval was finally received in February 2002 (Barraclough.1. The PRL project was a megaproject which suffered from this planning failure. This requires positive communication between all members of the project and to ensure that all members have a sense of responsibility to problems encountered and the will and buy-in to resolve the issues.1 WHY THE PRL PROJECT IS CONSIDERED FAILURE The PRL is considered a failure in project management terms because it did not fulfil project objectives in cost. suggests that the actual ability to meet these four criteria is rare. scope.

giving people access to employment without having to go into the CBD to link the west and the north. the initial budget of $1. early estimates that showed an expected 40. are granted funding prior to the completion of detailed feasibility studies. In addition.4 billion was approved by the government. As such. Due to the use of old data. Following strong complaints from residents living near the UTS Ku-Rang-Gai campus due to student utilising on-street parking. This practice of funding prior to feasibility is one of the many factors that contributed to the failure of the PRL project.1.4 billion subsequently was not enough to cover the cost of the entire project.000 passengers a day failed to match newer data collected. as in the case of the Sydney Airport Link which failed to meet the forecasted patronage. the section of the railway line between Parramatta and Epping would be underutilized with the expected daily patronage of 12. The rerouting of the tunnels. As with most government projects. proceed to funding approval prior to feasibility studies being completed.000 new passengers and left an expected 5. The project was announced to the public as a rail line between Chatswood and Parramatta via Epping which would cost $1.000 passenger trips a day not justifying the cost. and passenger estimates were reduced to 12. Inadequate information at the initial project stages contributed to the failure of the project. Many of the optional data was excluded from consideration. the Environmental Impact Study and other feasibility studies began after the project funding of $1.000 passengers a day. the government feared.4 billion. This announcement had no real basis in real project costs as it was approved for expenditure by the government prior to cost and feasibility studies being undertaken. The insufficient data collected by the government prior to the announcement proved to be a substantial underestimate of actual project costs which the private sector estimated at over $2 billion even at initial project stages. This contrasts with private sector projects which rarely if ever. Pressure from the local community who rejected the design of the bridge forced the government to change the project design at the very end of the tender phase. resulted in the UTS- Ku-rang-gai station be cancelled which further reduced the expectant passenger numbers by 10. The change of design meant that the project now required the more expensive option of a tunnel increasing project cost over its budget.Public projects.3 COMMUNICATION Communication with all stakeholders is an important aspect to achieve a successful outcome of a project.000 UTS students vehicles on the local streets (PRL. the PRL project was supposed to reduce the number of cars 17 PRL Project Report . 2009). This information included an alternative solution to the rail link. In terms of scope. 3. which included looking into the Y-link option to bring the rail down through Epping Road Bridge instead of the Fullers Bridge. In 2003 the section between Parramatta and Epping was postponed indefinitely due to the change of design from a bridge to a tunnel. the initial purpose of the government was to connect the business centres of Chatswood and Parramatta. due to the scrapping of the Lane Cove River bridge. by necessity.

Part of the scope provided by the government was to provide students greater accessibility to the campus via a plan to develop a station close to the vicinity. The only alternative within the EIS study was to build a tunnel below the Lane Cove River in order to reach Chatswood. this was not the case.1. As a result of a lack of foresight. the Tanagra trains that were planned for the route had to be replaced by the millennium trains after it was discovered that the 4km incline from under the Lane Cove would cause the trains traction engines to over heat. the government’s approval for $1. as well as a requirement to loop back to Chatswood via Artarmon. Bad communication. NPA had suggested an alternative cheaper constructive route by proposing the rail bridge be built alongside the Epping Road Bridge. Another issue that was involved in the change of design caused dispute between TIDC and one of its major contractors. This alternative was not considered. the politicians. This alternative provided a direct route towards the existing rail. as the government had a scope to provide UTS Ku-Rang-Gai a station for the students and as such. In addition. and the engineering firms that was contacted to write the EIS report –poor communication and stakeholder involvement at early stages contributed to the project running over budget. The necessary 18 PRL Project Report .4 billion dollars for the entire project cannot be justified due to private sector indicating the costs of the project will be in excess of $2 billion dollars (O’Farrell. Changes to the design should have been made to incorporate the failure to build the UTS station. 3. Parliament of NSW. However. However following strong objection to the Lane Cover river bridge thus the plan to construct the UTS Ku-Rang- Gai station was axed. From this. This included an assessment made by the National Parks Association (NPA) in Sydney submitted for the PRL EIS report firmly objected the proposal to build either a bridge or a tunnel at the Fullers Bridge location (Tucker A. this assessment was taken out of the final EIS report. However in the PRL project there was a failure of management when they were. 2002). the alternate route around Chatswood was rejected and was never placed into the EIS study. this alternative meant the UTS Ku-Rang-Gai Station would be missed. Human resource management plays an important role in the life cycle of projects ensuring that projects are not delayed because of staff shortages.parked outside the campus. This dispute was again due to communication issues between the government and the engineering firm as the cost of installing additional floating slab tracks was not priced at contract stage. unable to source sufficient qualified signal engineers for testing and commissioning of the new infrastructure asset. as no other options were available through their EIS study.4 MERGERS AND ACQUISITION /HUMAN RESOURCES MANAGEMENT A key management issue affecting the project was the major restructure of the State Rail Authority renamed Railcorp. as one example. This was partially due to allowing 719 employees to take voluntary redundancy during the restructure. However. 4th May 2000). planning and risk management in initial planning stages did not consider this alternative plan and as such no mitigation strategy was developed to deal with this problem. it seemed that communication was a key issue between the local community.

scale and costs. p85). only 3 permanent staff and two contractors were available consequently leading to delays in commissioning projects and therefore increased project costs (AUDIT NSW. such that they can cover up the failure of the entire project by providing only half of what was expected. However. had expectations that the project would be delivered in accordance with the political announcement. to enable to the public to have more confidence in the announcements by the politicians. 3. 2008. 19 PRL Project Report . 3.2 BENCHMARKING THE PARRAMATTA RAIL LINK PROJECT WITH HEATHROW TERMINAL 5 PROJECT For the purpose of this Project Report. we identified past large infrastructure projects that have similarities with PRL project in terms of scope.5 PUBLIC PERCEPTION When the concept of connecting the two business centres of Chatswood and Parramatta with a new railway line was presented to the general public in 1998 the majority of the public welcomed it. via Strathfield and Sydney CBD in order to access the business centre at Chatswood. At the same time. and has been disappointed when the project was unable to be completed to this budget. However. Additionally. the first one hundred days of travelling using this rail line would be free. there is still a large portion of the general community that are still unsatisfied with the government’s management with the Parramatta Rail link. the public. It would have been better if the announcement for funding were made after feasibility studies were completed. However. North Sydney as their final destination rather than Chatswood.1. late delivery and system underperformance costs tax payers dearly and challenge public confidence in civic leaders. the government had attempted to keep the community happy short term.number of engineers needed for testing and commissioning a project of this size was a team of 16 people. This is important since the historical pattern of cost escalations. This was a government initiative to relieve stress on the rail network at the same time diversifying the different number of destinations available. The PRL line would reduce the amount of trains going from Parramatta. The overall project is seen as a failure to the general population. By providing these services. statistical data provided by the Guardians (local residents of Lane Cove) showed that 70 to 80% of commuters on the PRL would have St Leonards. due to the unrealistic budget of $1. it can be seen that the government had tried to cover up this fact by upgrading the Technology Park Corridor within the vicinity of Macquarie Park and North Ryde station. rather than before. Although a portion of the community that lives around the Epping and Chatswood area is satisfied of the rail link. The government’s failure to gain and provide accurate information during and after the announcement of the megaproject has been perceived by the public as a failure.4 billion set at a political level at project announcement stage. due to their inaccessibility to Chatswood via a direct route.

Although public perception of the Terminal 5 project at London Heathrow International Airport is a failure. The primary objective for both the PRL Project and the Heathrow Terminal 5 Project was substantial capacity increase. within the original scheduled timeframe. we can connect this results to the project management of PRL project. efficient transport infrastructure to enable further growth of Parramatta. As discussed in Section 3. For the purpose of better understanding the principles behind both of projects. no. the PRL project failed to provide significant. The terminal achieved the first full schedule of operations 12 days after opening (April 2008).5bn (established in 2003). public infrastructure. it hasn’t help to change public perception about this project. In project management terms. Vol51. patronage. Furthermore. Although primary operations and functions of Terminal 5 went back to normal within reasonably short period of time. including rumours of sabotage. integration with existing network as well as an inability to provide modern. the project achieved its goals. It was delivered within the original budget of $8. the root cause of the problem was the decision to go ahead with the opening. expansion of the CityRail network.By learning the lessons from past experience as well as benchmarking the performance of firms delivering public infrastructure. and despite problems experienced at the opening. it met all quality standards and achieved an exemplary safety record. buses). This helps to identify mechanisms to control the project through its life cycle. “measurable” outcomes in terms of capacity increase. we conducted a SWOT analysis (Table 2 and Table 3) which enabled identification of key strengths and weaknesses as well as opportunities and threats. The airline misplaced over 20000 bags and was forced to cancel 501 flights. However. modern office facilities for London to become global financial hub. Underground. the Terminal 5 Project met its primary objective by increasing capacity from 60 million passengers per year to 96 million. although it was widely acknowledge that British Airway’s stuff had insufficient training and familiarity with the terminal’s facilities. PRL Heathrow Inter Terminal 5 20 PRL Project Report . Several factors contributed to this chaotic opening. It provided a linkage between efficient transportation system (Airports. it has strongly contributed to UK’s economic growth by enabling London to grow from within. The disrupted opening cost British Airways $31 million in the first five days (BA annual report 2008).1. (California Management Review.2 2009).

storing materials fabrication and construction • Construction site in a close Weaknesses • Lack of contractor involvement at proximity to Europe’s busiest the planning and design stage motorway • Insufficient recognition of major risks and problems threatening megaprojects (lessons not learnt from the past) • Lack of strong leadership • Shortage of qualified stuff to install and test signalling system Table 2.SWOT Analysis (Internal) PRL Ext Heathrow Terminal 5 21 PRL Project Report . • Strong political support • Plan is both supported by business • Enables further development of and airline industry and UK Macquarie Technology Park government • By going underground local • Strong leadership community is satisfied and • Implementation of project environmental impact on Lane management software tools Cove River National Park is offering up-to date information minimised about scheduling. sequencing and scope changes • Creation of new “cost-plus” type of contract • Subdivision of the project into four Strengths main areas • Early contractor involvement at the design stage • Introduction of a system replication and standardised sub-processes • Off site “virtual testing nal • Lack of local community • Risk of cost and time overruns involvement associated with integrating new • Insufficient public inquiry technologies • Doesn’t address importance of • Need for usage large customised communicating process and elements resolution where significant • Project faced logistical challenge of change has been introduced having only one main entrance to • Lack of concurrent engineering the site with limited space for tool to integrate planning. design.

highly competent mangers overlooking 300 staff with capabilities in design.2 2009). PRL project had more of an SD approach towards project management in that the Heathrow project had a more dynamic approach to risk management. it has become quite apparent that Heathrow Terminal 5 project. as opposed to. (See Figure 2) 22 PRL Project Report . Such detailed planning facilitated project success. however management was able to cope with these problems due to their otherwise superior planning techniques. scope changes and delays. T5 project team examined and utilized oil and gas offshore oil platform project management. traditionally undertaken by prime contractor. They did fail to properly plan for problems encountered with new technology and in their assessment of environmental concerns. 3. The Heathrow managers considered the project life cycle. • Increase capacity of City Rail • Enhancement of economic growth network of the UK by expansion of London’s Opportunities • Expands rail services to new areas major hub airport • Enables Parramatta to grow as • Re-instate or improve flight “Sydney’s second city” connections to UK cities • Enhances expansion so called “global arc” of employment centres in North Ryde. They also used software tools enabling up-to date process mapping. Chatswood and North Sydney ernal • Environmental issues • Environmental impact • Infrastructure would not last • Local community uproar regarding appointed time noise pollution and traffic • Unstable political environment congestion on major corridors • Underutilization of the railway line linking airport and the city Threats by not achieving the daily patronage of 12000 trips/day Table 3. detecting errors. Heathrow managers performed a systematic benchmarking study. Furthermore. The project managers in the Heathrow project formed a strong leadership team of 10 charismatic. the long term nature of the project and the importance of stakeholder and contractor buy in. Vol51.2. no.1 PROJECT LIFECYCLE COMPARISON To further understand key aspects of the PRL Project and Heathrow Terminal 5 Project we performed a Project Life-cycle Analysis where 4 different project phases have been identified. In addition to digital prototyping and off-site fabrication. integration. of every major UK construction projects over £1bn undertaken in past 10 years and every international airport opened in past 15 years (California Management Review. undertaken between 2000 and 2002.SWOT Analysis (External) By undertaking a SWOT Analysis. and project management.

insufficient recognition of local community opposition as well as environmental issues  The design phase: o T5 -. Tony Gann 2008)). thanks to “cost-cut” type of contract and collaborative effort of major stakeholders.Figure 2 Problems identified:  The planning phase: o T5 . subject to 700 planning conditions such as the diversion of two rivers to meet strict environmental conditions (Andrew Davies. the project has been “saved” o PRL – inability to use Tangara trains due to gradient of a track  The operational phase: 23 PRL Project Report .Lack of systematic past project research. development of three different designs to meet changing requirements of a client and public inquiry conditions o PRL – lack of contractor involvement and miscommunication causing several design changes  The construction phase: o T5 – collapse of The Heathrow Express Tunnel.significantly longer planning phase partially due to public inquiry (longest in UK planning history. o PRL .

the dynamic effects. The U. p. In the same way. PRA was engaged by a company called Litton Industries who had contracted with the U. Navy disagreed and refused to pay for the overruns on the basis that the specification changes. it can be seen how the project failed so spectacularly. Navy. and facilities for the public opening. of the project director. Project costs ballooned to overruns of approximately $1. were of a 'minor nature'. of these scope changes are examined. Litton argued that these project costs were a result of numerous changes to specifications requested by the U.S.S. o T5 – although trials and “soft-openings” have been performed to prepare people. when viewed statically. 2007. A SD analysis therefore shows that scope changes by themselves may appear. processes. Michael Costa.119). a consulting company focussed on bringing system dynamics to the real world. Roberts' PhD R&D work led to the establishment of Pugh-Roberts Associates. Inc.S. The review requested on 3 June 2003 by the then Minister for Transport. The project does not meet the goal of substantially expanding the City Rail network. The PRL project as built suffered from a failure to meet the original project objectives as it did not link the business centres of Chatswood and Parramatta. severe problems with baggage handling system have been experienced o PRL – “discovery” of track noise problems and cracks in the tunnel PART 4 4. to cause limited disruption to the project. and possibly even more obviously (in that no-one has tried to argue that the scope changes to the PRL project were minor). p. Navy to design and build 2 new naval ships.5 Billion (in year 2000 dollars). The Navy hired its own consultants to find holes in the PRA model however their analysis of the model actually assisted in the development of an even more accurate model which eventually led to the inevitable finding that these ‘minor’ changes created major problems and greatly escalated project costs.0 A BETTER PROJECT OUTCOME THROUGH SYSTEM DYNAMICS MODELLING Edward Roberts was one of the first people to apply SD concepts. repeated scope changes caused a ripple effect which gradually blew the project costs out by more than 100%. tools and techniques to real projects in a practical way (Roberts. 24 PRL Project Report .1). (PRA). The general community consensus however is that the project as built is a 'railway to nowhere'. through numerous. the Ministry of Transport stated that the 'network capacity benefits provided by the Parramatta Rail Link are primarily achieved by the implementation of the Epping to Chatswood section of the project' (NSW Ministry of Transport. systems. We can take the lesson learnt from this shipbuilding case to understand how project costs in the PRL project came to such an astronomical figure for such a small percentage of the project scope. The Navy was then forced to concede the effect of the changes and repaid the shipbuilder. However. when the flows on effects.

25 PRL Project Report . In other words. It is only by focussing on this SD analysis that solutions may be found to consistently poor project performance in large. the capacity of the CBD network is stretched to breaking point. Project size for example. This means that all commuters living in the North-west. Cost may be another. If the project managers (and relevant politicians) were able to see the bigger picture of the project rather than getting bogged down with technical and cost problems. and the people of NSW are left with a $2. the decision to chop the scope in half may never have been made and the project could have achieved its goal to link the business centres and the high growth areas of Sydney. There may be similar actors involved.3 Billion bill for a 'rail line to nowhere'. Commuters are still forced to funnel through the CBD. In essence therefore. time another. infrastructure projects. the broad project objective of improving public transport facilities in the Sydney area was not met. still need to go via Sydney CBD to reach Sydney's so called 'second city'. complex. there will always be identifiable factors with which to build a system model to understand the decision making processes.The rail line as built does not link Chatswood to Parramatta. may be one factor of similarity or difference. relationships. and time effects of decisions within the system. it is always possible to identify system similarities from other projects. or there may be similar external political considerations. Regardless of the project. there may be similar environmental issues. the area where 1/5th of Sydney's growth is forecasted to take place. changing the project scope severely affected achieving the purpose of the original project. Although no 2 projects are exactly the same.

+ 7 .1 SYSTEM DYNAMICS MODEL FOR THE PARRAMATTA RAIL LINK PROJECT 1 - Funding 11 Idea for Project +/ . +/ . +/. Community + Management 33 3 + 31 32 2 Community Political Will 12 Opposition/ Support 29 40 + Public Perception +/. +/ . . 34 35 36 - 6 15 13 8 - Budget +/ . Design Change Restructure of 18 + Managing 16 22 Department + 41 24 Labour Schedule Delay Shortage 14 + 17 + 4 21 42 + + 5 Change in government/ 9 + + + + Minister Work to Do + Work Really Done 28 + + + Cost Escalation + + 23 Undiscovered Known Rework Rework 39 26 25 27 Technical Problems 38 Project Commissioning Figure 3-System Dynamics Model of Public Infrastructure Projects (Diagram Notes are at Appendix B) 26 PRL Project Report .4. 39 19 Constraints + + 30 Scope Change 37 +/- + + Comunication 10 + 20 .

There was at this stage.1. As shown in the SD model in Section 4. The system structure described by this model shows how system component behaviour affected the system’s operation and also how the system structure itself influenced system component behaviour. restructuring the government department (or public company) which is responsible for the project will have significant impact on project operations. Ministerial and department changes led to changes to political will which in turn affected the funding of the project as well as directly contributing to the amount of work to do as those working on the project were forced to learn new reporting and management structures. Similarly. Community support (or opposition) also had significant impact on the project’s development. True to SD principles. Staff who have been working on the project may be lost.This SD model in Figure 3 shows the flow of events. significant time and effort may be diverted from project implementation towards understanding and becoming familiar with new reporting and communication structures. The iterative effects of the design change can then be seen to add to cost and schedule delays. strong political support for the idea which resulted in substantial funding being allocated to what. in the case of the PRL project when Michael Costa became Transport Minister. at the time. managers of public projects need to anticipate the challenges that are inherent in such projects. of the PRL project. however the ‘softer’ effects such as design changes also significantly impacted the project works. a change of Minister affects the political will and funding for the project. Apart from the impact on political will. Scope and design changes led both directly and indirectly to cost and schedule blowouts through the iterative effects on the project system.2 WHAT SHOULD HAVE BEEN DONE TO ACHIEVE A BETTER PROJECT OUTCOME Public projects by nature are beset by political challenges to a much larger extent than private projects. Therefore. Funding for long term infrastructure projects is usually required over more than one term of government making such funding somewhat of a political football. was to have been Australia’s largest ever infrastructure project. this model also describes and may be applied to other public infrastructure projects. The original need for better public rail services resulted in the development of the plan for the project. Sometimes such a change will benefit the project. Such changes will inevitably have an impact on the 27 PRL Project Report . such a ministerial change will be to the detriment of the project. 4. sometimes. the immediate effects of this system component are most clearly seen in the resulting design change from the bridge to the tunnel. Ministerial changes had a direct impact on project scope. once this is identified as a risk factor. A comprehensive breakdown of the individual flow-on effects is included as Appendix B. processes and effects.

are developed for the purpose of benefiting the public in some way. There is another important consideration for public infrastructure projects that must always be kept in mind when making decisions about whether to proceed with or amend such projects. When the project inevitably spirals out of control in terms of cost and schedule as a result of political restructuring. While lengthy EIS was completed for the PRL project in 1998. by definition. public confidence in government provision of important infrastructure is eroded. the purpose was to provide an important link between the business centres of and around Chatswood in the North. often at the expense of project scope. on project costs as at a minimum. Once government itself recognises the challenges that such restructuring poses. once started. it appears that community support for the bridge design was largely assumed as a given. Therefore. Unrealistic expectations come initially from governments who don’t understand the above implications. as was experienced with the PRL project. Another area where the PRL project suffered severely was in judging the level of community opposition to developing infrastructure through environmentally sensitive areas. Whether the project is a rail line. The lesson to be learnt here is that community support for infrastructure developments must not be taken for granted even when community support for the actual infrastructure is strong. When the PRL project was announced. Governments must therefore take greater care in acknowledging community views in early stages in the infrastructure planning process in order to avoid late design changes which iteratively add to cost and schedule. The real level of community opposition in terms of actual numbers is somewhat unclear in this project. and of Sydney’s so called ‘second city’. Parramatta. Employment for this growing population was expected to be provided in the North and Western regions and avoid the need for commuters to enter the CBD to get to their place of work. The public then bases their expectations on what has been promised at initial project stages. or broadband facilities. Ideally. However. an electricity substation. It seems that the Government assumed that the community would be so pleased with the additional rail line that they would automatically agree to the design proposed by the Government. opposed it vehemently and were able to marshal vital Opposition support to back them. would be overseen and funded to its completion in the same way that most private projects are. What is clear however is that those who did oppose the bridge design over the Lane Cove River. and particularly the significant cost impacts. a public project. responsive change management policies and procedures. if ever. Providing public transport facilities to this rapidly expanding population was 28 PRL Project Report . it should be able to better manage the risks by implementing effective. the overarching purpose is improving services to the community. the very nature of public projects and the political cycle means this will rarely. be possible. it is essential that the funding government is aware of the on-going implications of such restructuring on project outcomes so that such effects may be minimised.project schedule and most likely. All public projects. preliminaries and overheads over a longer timeframe will add costs.

By involving stakeholders in decision-making acquire and draw public support in decisions-making & its implementation. These principles are adopted progressively more by decision-makers as a practical means of putting decisions into effect (Dana Meadows.1 GROUP MODELLING FRAMEWORK FOR STAKEHOLDER MANAGEMENT The computer simulation models and systems thinking could be powerful tools relating people in making conscious and informed choices about their future in democracy. The need to provide these facilities must always be considered when decisions are made about whether to proceed with a project. 2000). the project failed to meet the overall objective of substantially expanding the City Rail network and improving rail capacity by reducing the number of people funnelling through the CBD to access employment. to make social decisions and the assumptions to be more transparent and open to public discussion. unlike private projects. In the PRL project the tradition approach was adopted in decisions making causing prone to challenge & conflicts in complex environmental. Conflicts among different stakeholders with different environmental management perspectives and goals also are increasingly widespread (Sexton et al. scientific and technical issues within the society of stakeholders. Felix Rauschmayerd and Heidi Wittmerd). will still be undertaken where they produce no little or even no profit because of this overarching need to provide community services and facilities. In the case of the PRL.therefore an important and worthy goal. facilitated discussions.2. System Dynamics plays a influential role in structuring stakeholder contribution. uncertainty. The Government should have considered this before making the decision to half the scope and then trying to justify the scope change by quoting statistics to say that most of the capacity usage would be met by completing only the Epping to Chatswood section of the line. the decision was made at the political level to cut the project scope in half so that the rail line did not link the business centres as was originally planned. Commuters in Sydney’s west and Parramatta are still now required to funnel through the Sydney CBD to access employment. However. Unfortunately. 29 PRL Project Report . 1999). (Riku Varjopuroa. Jenny Hatchardc. when project costs began to expand exponentially as a result of design changes and government and project manager restructuring. the traditional methods often perceived as one-way communication to public involvement. The PRL project outcome shows how crucial it is for those responsible for public infrastructure projects to be aware of the overarching purpose of improving community services and facilities. 4. But public projects. social dynamics and value conflicts etc. and public hearings which frequently leave participants dissatisfied. Cost is of course an important consideration which is why Public-Private partnerships are entered into in the first place. A public project does not actually have cost as its primary consideration. which depend heavily on conveying information and capturing stakeholder input through information campaigns. Tim Grayb.

(1998)). and institutions is tougher than mechanical/ engineering/ computational problem. making decision on issues to be implemented in project (Krystyna A. In such cases. System dynamics has the potential to improve public participation in decisions making by providing a framework of Group modelling (Schmidt et al. laws. Choosing an option can be resolved by giving stakeholder’s the option of choice and decide. involvement of people to judge the criticalities is required for making management decisions. discuss the issues in the public meetings & capture the information into simulators to understand future dynamics of issues & of stakeholders (later. eliciting participant views about problem causes and system connections and identifying best possible solution. The structure of the discussion depends is an art / skill which sometimes includes ‘‘weighing-and-ranking’’ exercises to identify stakeholder priorities. When simulation models are built. As William Ruckelshaus (from Baden) said that the persistent problems in managing problem are not due to a lack of knowledge about environment or project requirements. facilitator plays a crucial role in structuring discussion among stakeholders. this will help in judging the stakeholder mind model & altering the perception of stakeholder). Create the categories at the time of registration of issue. At a minimum then.The System thinking research states that science is not sufficient in making-decision. values. but rather to lack of attention to the stakeholders in the system. 30 PRL Project Report . involve stakeholders in making decisions process and input data in simulator applications. The registration of the issues gathered is a lengthy process but this will make the entire system more transparent and provides participatory educational framework to persuade stakeholders to help implement decisions. Stave). As managing people having different needs. The framework of group modelling for stakeholder involvement has- • problem focus • seeking problem causes in system structure • focus on solution levers • feedback tool for learning and policy design • process documentation The Group building model can be implemented in three phase strategy where: Phase I. framing them in structure to register issue. The group modelling is a process of categorise issues. system dynamics offers a consistent and rigorous problem-solving framework for identifying the scope of the problem. understand the present dynamics of stakeholders with respect to particular issues. they can provide an internally consistent tool for comparing the effects of alternative solution options. The solutions to this will require broader public education. Phase II. involvement and participation in the decision-making process.

be controlled. Group model building and system dynamics have been used widely to improve organizational management in project related to ecology & environment like fisheries management. Time adds a significant degree of complexity to project systems and as everything cannot be foreseen. What is still unknown is the actual degree by which one component will affect another in the project system. While some areas of project planning must rely on historical data. Dietz and Stern (1998) note that the way public evaluate policies may alter as they learn about the way policies affect the things they value. we recommend flexibility in risk and change management approaches. The decisions of stakeholders can be further confounded by ecosystem dynamics and changing human values. 4. The diagram in Section 4. System dynamic offers stakeholder involvement into three categories based to achieve on the intended outcome (Sterman 1994): • public awareness: sharing current and upcoming project problems. the ability to respond to risks as they occur is essential. This 31 PRL Project Report . such historical data should only ever be one source of risk information. This will allow for some degree of static risk management policies to be effective in managing these risks. The things they value may also change based on changes in environmental or social conditions.1 has assisted in identifying the risk factors for public infrastructure projects. Above all. water management. foreseen or unforseen. The goal of achieving better project outcomes will be reached when management plans are able to adapt to change and risks as they occur and when managers are proactive in seeking out and mitigating risks. government policies and actions. where possible. Failure to respond to risks which materialise as a result of external forces is a result of management not being able to respond to new risks. This means that there is a known degree of unknown risk which should. • public education: providing information so the public can understand the boundaries in which decision has to be implemented. The use of group modelling concept involving stakeholders describes a new dimension found in system conceptualization and problem scoping. and • public participation: the public has an opportunity to assist in decision-making or takes some action to support policy implementation.Phase III: The simulation results sometimes can help project management team to change the perception of stakeholder/s once they become part of group / topology. increasing public knowledge that a problem or issue exists. through insurance and contract conditions. materialise and impact project operations. like time & cost. or possibly transferred.3 POLICY SUGGESTIONS FOR FUTURE PROJECTS Projects fail when risk factors.

Keep design changes to a minimum. particularly once the project has started.0 LESSONS FROM PARRAMATTA RAIL LINK PROJECT TO APPLY TO FUTURE PROJECTS Basic lessons for project managers that should be learnt and applied to future projects for better project outcomes are: • Understand that changing minister responsible for overall project implementation will impact the political will. • Understand that even minor design changes can have significant impact on project costs and schedule through an iterative effect. and schedule of the project. Plan for such considerations. • Consider the overarching goal of public infrastructure is to improve and expand services to the community. while appreciating the need for infrastructure. Where design changes become necessary. Communicate with the community so that there is better community understanding of the cost of money increasing and affecting project costs. use effective change management mechanisms to effectively manage the effects of the changes. Where there are gaps in the communication strategy found during project implementation. Engage the community early and often in the planning and implementation stages. • Evaluate different funding models to determine the most appropriate model for each project. funding. • Understand than project risk is increased through the long time frames between public project idea and announcement and project completion and commissioning. Plan for effective management of the project over the entire duration of the project.mechanism of responding to risks on the go is called dynamic risk management and it is a critical part of effective management. • Ensure effective project communication strategies are in place. Always keep this in mind when making decisions to change a project scope. Regularly monitor those communication strategies to determine if they are facilitating project implementation. PART 5 5. 32 PRL Project Report . • Understand that restructuring the managing department of a project will have far reaching impacts on cost and schedule for projects already under implementation. Plan for these effects. will not support the development of such infrastructure at the expense of environmental concerns. Consider alternatives. use effective change management mechanisms to improve project communication. Ensure effective change management mechanisms are in place. • Understand that the community. Don’t simply go with the ‘in vogue’ funding option. This management tool is particularly important when the project life cycle spans 10 or 20 years as it is difficult to plan to a detailed level over such long periods of time. • Plan for inflation and accommodate it within project feasibility studies.

33 PRL Project Report . p. we may have hope that project outcomes may yet be achieved.5. Through implementing better risk and change management processes. This contrasts with most private sector projects where project funding is only agreed to once detailed feasibility studies have been completed. The political reality is such that announcement and funding for these projects occurs prior to the completion of feasibility studies which determine how much a project will actually cost. We applied a SD perspective and determined that many components of project failure could have been foreseen. we agree with Hovmand et al that it will be useful for more project managers to acquire at least a basic understanding of the principles of SD (2008.1 CONCLUSION In this Project Report we have therefore identified why the PRL project was a failure in pure project management terms as well as in terms of large public project goals. This iterative process can substantially affect the overall project outcome and it will be useful to have a better understanding by which to manage this process. We suggest that more research in done into the detailed effects of funding processes for public sector projects.486). Lack of public confidence leads to negative political will which then negatively affects project funding.2 SUGGESTIONS FOR FUTURE RESEARCH From the conclusions of our analysis. Public expectation therefore accords with initial project announcement details and when such expectations are not met. public confidence in the success of public sector projects is eroded. We provided a SD model for future projects which has identified the risk factors for use in better project planning. 5. mitigated and avoided.

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(p.28) 38 PRL Project Report .4 APPENDICES APPENDIX A: (Map of Sydney Rail Expansion Plans) Source: TIDC Annual Report 2006.5.

Design change (15). Budget constraints change the funding: - 3. Budget Constraints (7) 30: Scope Change leads to Design Change: . Change in Minister – leads to change in political will: - 5.Design change leads to further scope change. Political Will directly impacts on project budget: +/- 8. Change in funding leads to scope change: - 12: Change in political will leads to scope change: - 13: Change in political will leads directly to work to do/rework: + 14: Restructuring department leads directly to work to do/ rework: + 15: Change in political will leads to design change: + 16: Design change leads directly to Work/Rework Cycle: + 17: Design Change leads directly to cost escalation: + 18: Design change leads to scope change: + 19: Scope change leads directly to cost escalation: + 20: Scope change leads to schedule delay: + 21: Schedule delay leads to cost escalation: + 22: Scope change leads to more Work/Rework: + 23: Known Rework leads to cost escalation: + 24: Design change leads to schedule delay: + 25: Technical problems lead to schedule delay: + 26: Technical problems lead to cost escalation: + 27: Technical problems lead to Work/ Rework again: + 28: Change in Minister leads to scope change: + Then Cost escalation (19). Change in Minister – leads to more budget constraints: - 6. Funding – leads directly to Work to Do: + (leads into Work/Rework Cycle) 4. 39 PRL Project Report . Change in funding again leads to more work/rework to do 11. Change in Minister – leads to restructuring of managing department: + 10: Restructure – leads to less political will: - 7. Strong political will – means lots of funding: + 3. Scope change (12). Budget constraints leads to lower budget: - 3. Budget also impacts political will: +/- 9. Less political will leads to budget constraints: - 6. Idea for project – means strong political support: + 2. Opposition leads to decreased funding (2) Change to political will leads to work/rework (13).APPENDIX B: Notes for PRL System Dynamics Model (from Section 4. Schedule delay (20) 29: Community support/ opposition impacts political will(can increase or decrease political will): +/- Support leads to increased funding . Change in funding leads to change in Work to Do – leads to more work/ rework 7.1) 1.

Strong political will leads to funding (2) leads to work to do (3) . design change (35) 38: Technical problems require communication 39: Technical problems lead to scope change 40: Public Perception affects political will 41: Labour Shortage leads to Schedule delay 42: Labour shortage leads to Cost Escalation 40 PRL Project Report .leads to Funding changes (11).Lack of political will leads to decreased funding (2) and more work to do (3) 33: Community management (or mismanagement) affects Public perception of the failure/ success of the project 34: Public perception affects Public Opposition/ Support which in turn affects Design change (35) which effects Work to do (16). leads to greater political will) . Schedule delay (24) 36: Good Public perception encourages good communication about the project / Bad public perception discourages communication about the project In the same token. politicians happy. level of communication affects Public Perception (39) 37: Level of communication affects Community Opposition/ Support .31: Community Opposition or Support requires Community Management 32: Effective/ Good community management leads to increased political will (public is happy with politicians. changes in political will (29). Cost escalation (17).

41 PRL Project Report .