Project management strategies used for the Sydney Harbour Tunnel construction

Project Management Strategies Used for the Sydney Harbour Tunnel

This study examines the project management strategies that were used for the construction and administration of the Sydney Harbour Tunnel. The research method used for this purpose consisted of a review of the relevant peer-reviewed, scholarly, corporate and governmental literature concerning the Sydney Harbour Tunnel project. This approach is highly congruent with the guidance provided by various social researchers who emphasize the need to review what is known about a given topic before formulating opinions and to identify existing gaps in the body of knowledge. For instance, Fraenkel and Wallen report that, "Researchers usually dig into the literature to find out what has already been written about the topic they are interested in investigating. Both the opinions of experts in the field and other research studies are of interest. Such reading is referred to as a review of the literature" (2001: 48). Likewise, Wood and Ellis identified the following as being useful outcomes of a well conducted literature review:

1. It helps describe a topic of interest and refine either research questions or directions in which to look;

2. It presents a clear description and evaluation of the theories and concepts that have informed research into the topic of interest;

3. It clarifies the relationship to previous research and highlights where new research may contribute by identifying research possibilities which have been overlooked so far in the literature;

4. It provides insights into the topic of interest that are both methodological and substantive;

5. It demonstrates powers of critical analysis by, for instance, exposing taken for granted assumptions underpinning previous research and identifying the possibilities of replacing them with alternative assumptions;

6. It justifies any new research through a coherent critique of what has gone before and demonstrates why new research is both timely and important (2003: 51).

Aims and Objectives

The overarching aim of this study was to deliver a comprehensive review of the relevant literature to provide the background for the Sydney Harbour Tunnel project and an analysis of the project from various project management perspectives. In addition, the review of the literature was used to provide an assessment of the project performance of the Tunnel project compared to competitors, the respective pros and cons of the strategy that was used in the Tunnel project compared to other strategies, followed by an analysis of the findings and recommendations and a conclusion.

Background and Overview

Background information of the project in relation to the research topic.

The City of Sydney has grown both in geographic size and population in recent years, necessitating solutions such as that provided by the Sydney Harbour Tunnel project. For instance, according to Muhammad and Low, "The Sydney Harbour Tunnel [hereinafter alternatively "the Tunnel"] provides a road link between north and south of the Sydney Harbour. It is a 2.3 kilometers long, dual carriageway, road link between the Warringah Freeway, north of Sydney Harbour and the Cahill Expressway, south of the Harbour" (2006: 4). A case study of the Tunnel by Allen notes that the facilities consist of two separate land tunnels on the north side of the Harbour, each just under a kilometer long and a further two separate land tunnels south of the Harbour, each just under half a kilometer long. These are joined by eight concrete immersed tube units that rest in a trench on the bottom of the Harbour, providing just less than 1 km of tunnel under water. The various sections combine to provide two separate carriageways, each carrying two lanes of traffic [see Figure 1 below] (Allen 2006). The Tunnel also includes a one-kilometer section that is situated beneath the Harbour that was constructed by the immersed tube method (Sydney Harbour Tunnel 2010).

As to the overall purpose of the Tunnel, Muhammad and Low advise, "The main aim of the Harbour Tunnel was to provide additional access between the northern and southern parts of Sydney which was possible until then only via the Harbour Bridge. It was argued that the Tunnel would reduce congestion on the Harbour Bridge and its approaches, reduce travel distance and travel times on the Harbour crossing, and improve the reliability of the crossing (2006: 4).

Figure 1. Overhead View of the Sydney Harbour Tunnel

Source: Muhammad & Low 2006: 6

Some key facts about the Sydney Harbour Tunnel are provided in Table 1 below.

Table 1

Key Facts about the Sydney Harbour Tunnel

Key Fact

Date/Name/Costs

Proponent

NSW Department of Main Roads

Companies involved

Transfield and Kumagai Gumi

Legislation

The Harbour Tunnel Act, 1987

Construction started

Tunnel opened for public

Total Contracted cost

AU$553.8 million

Actual construction cost

AU$738 million

Toll agreed in 1986

AU$1

Toll on 1992 start of tunnel

AU$2

Length of tunnel

2.3 km

Number of traffic lanes

4

Figure 2. Interior View of Sydney Harbour Tunnel

Source: Video Smoke Detection -- Sydney Harbour Tunnel (2007)

Past Practices, Current practice and Future Direction of the Sydney Harbour Tunnel

The Sydney Harbour Tunnel project was a collaborative effort between the Government of Australia and the private sector, a trend that is becoming increasingly popular in many regions of the world. When the payback has been completed at the end of the contract period, the BOT facilities are then transferred to the ownership of the government or local authority which granted the concession in operational condition (Badawi 2003). The amount of time varies according to the type of project, but most infrastructure development projects of this type involve contractual periods of 25 years Clark & McDonald 2003). A case study by Allen notes that, "Opened in 1992, the Tunnel is now in the [18th] year of its thirty-year concession term under private company management, before being transferred to the State Government. At that time SHTC is obliged to hand over a tunnel in good condition and capable of at least another seventy years of service" (2003: 1).

The approach adopted by the Australian government to construct the Sydney Harbour Tunnel is representative of an increasing project management trend in the country. According to Muhammad and Low, "The Sydney Harbour Tunnel mega-transport project [was] built as a public-private partnership on a build, own, operate and transfer (BOOT, or BOT) basis" (2006: 2). Similarly, Gates advises that, "Infrastructure development is commonly organized as BOOT (Build-Own-Operate-Transfer) projects. Australia's Sydney Harbor Tunnel is being built on a BOOT basis" (2000: 126). This point is also made by Farazmand who advises, "Variations on contracting [that are] increasingly becoming popular in Australia include granting build-own-operate (BOO), build-own-operate and transfer (BOOT), or build-transfer-operate (BTO) concessions by means of which governments push more of the responsibility for the provision and operation of infrastructure such as the Sydney Harbour Tunnel to private enterprise" (2001: 151). Likewise, Hakim, Seidenstat and Bowman note that the tunnel project is just one of several such projects using this funding method in Australia in recent years: "Private bridge, tunnel, and highway projects are also proliferating around the Pacific Rim. Australia's New South Wales has three build-own-operate-transfer toll highways under development, as well as the $750 million Sydney Harbor Tunnel" (1996: 169).

Some of the more salient project management highlights from the Tunnel projects are described in Table 2 below.

Table 2

Sydney Harbour Tunnel Project Analysis

Project Management Phase

Description

1) Project Initiation

1. Construction commences on tunnel project in 1988; project officially completed on August 29 and tunnel opened to traffic on August 31, 1992 (Barker 2000: 347, 355).

2. The magnitude and unique nature of the Sydney Harbour Tunnel Project required extensive investigation and discussions with the relevant authorities regarding policies and procedures associated with environmental and industrial issues (Cunneen 1991: 215).

2) Project Planning (budgeting and cost estimation)

1. In March 1986 the Premier of New South Wales, Neville Wran, announced that a feasibility study for the Tunnel provided by a private consortium of Transfield and Kumagai-Gumi was favourable (NSW Auditor-General 1994: 250).

2. As the Transfield-Kumagai Joint Venture proposed the project directly to the NSW government, the normal tendering procedure was not followed (NSW Auditor-General 1994: 250).

6) Project auditing and project termination

1. In 1994, an inquiry was completed by the NSW Auditor General Report on the Sydney Harbour Tunnel. The Auditor General found many flaws in the justification of the tunnel. He concluded that 'Guidelines on Private Sector Participation in Infrastructure Provision' had not been followed in this project (NSW Auditor-General 1994).

2. The Auditor General also found that Sydney Harbour Tunnel was completed simply because the Government of the day and the Authority were eager to pursue the project (NSW Auditor-General 1994:258).

Project Performance Compared to Competitors

Given the unique qualities that characterize the Sydney Harbour Tunnel project, across-the-board comparisons with competitors are problematic; however, some useful metrics for general comparison include the fact that the entire construction of the Tunnel was successfully completed without a single death (Hopkins 1999). In addition, unlike some of its competitor, there were no significant cross-cultural issues that hampered the construction process while a tunnel project in Hong Kong was marred by serious cultural conflict among the project management team who were Asian and Swedish and the workforce which was comprised of mostly of Chinese and some Thai engineers and technicians (Dadfar & Gustavsson 1992).

Pros and Cons of the Strategy used in the Project Compared to Other Strategies

Because resources are by definition scarce, the funding strategy used by the Australian government can be viewed as innovative in that it succeeded in achieving the goals of the NSW Department of Main Roads in improving the flow of traffic in the Harbour region. This strategy has a number of advantages. For example, Badawi reports that, "In today's global economy, the governments of many countries have resorted to build-operate-transfer (BOT) or build-own-operate-transfer (BOOT) schemes to promote private, foreign and national investors to finance, design, construct, and operate large-scale infrastructure and development projects" (2003: 60). These foreign and national investors are granted the right to generate revenues from the projects they build in return for a mutually agreed upon amount of time in order to recoup their investments and realize an appropriate profit (Badawi 2003). Thereafter, the sponsoring governmental entity receives the entire project in a condition that generally allows it to be operated for several more decades. This would appear to be a win-win approach, but some critics argue that the built-own-operate-transfer approach carries significant taxation problems that are not characteristic of other funding approaches (Badawi 2003).

Analysis of the Findings and Recommendations

The tunnel shares approach roads with the [77-year-old Sydney Harbour Bridge and since its opening has dramatically eased the cross-Harbour traffic bottleneck which existed in Sydney (Allen 2003: 2). In 2005, the annual average daily traffic volumes using the tunnel was 86,800 vehicles, compared with 161,000 vehicles on the Sydney Harbour Bridge (Sydney Harbour Tunnel 2010). Taken together, the foregoing analysis and outcomes provide the basis for the following recommendations:

1. Regularly reevaluate the efficiency of current IT systems in place to ensure that the performance of these legacy systems is satisfactory and to identify opportunities for improvement.

2. Reduce the toll charges for private traffic to encourage more drivers to use this alternative to reduce the demand on the Sydney Harbour Bridge.

Conclusion

The research showed that many analysts believed that the Sydney Harbour Tunnel was ill-conceived and that the powers-that-be were largely responsible for railroading the project through to fruition without using the normal tendering processes that are used with public projects of this magnitude. Despite these criticisms, the research also showed that the Tunnel has been successful in mitigating the flow of traffic in and around the Sydney Harbour Bridge and that the project has been effectively managed. Finally, the research was consistent in emphasizing that the build-own-operate-transfer model can be used for even the largest public works projects, making this alternative worthy of consideration by cash-strapped governments around the world today.