Johannesburg, South Africa
AN IN-DEPTH LOOK AT PROJECT MANAGEMENT AND ECONOMIC TRENDS AROUND THE GLOBE–ONE CITY AT A TIME
>>ON THE MAP
BY SANDRA A. SWANSON
JOHANNESBURG, SOUTH AFRICA
BREAKING WITH APARTHEID, THIS URBAN CENTER CHARTS A NEW COURSE WITH A BOLD ECONOMIC VISION AND MASSIVE INFRASTRUCTURE PROJECTS.
Johannesburg is at a crossroads. South Africa's largest and arguably most vital city is on the cusp of becoming a world-class player. But to make the grade, “Joburg” must overcome pressing issues such as high crime, an unskilled workforce, a restrictive urban plan and a legacy of the discriminatory practice of apartheid.
Fortunately, Johannesburg's leaders are acutely aware of the city's troubles, and they have a plan: Joburg 2030. The ambitious economic roadmap aims to radically remake the city through a series of coordinated programs geared at creating sustainable economic growth.
But the city's timing may not be ideal.
As the global economic crisis deepens, Johannesburg is forced to confront vulnerabilities in its traditional economic sectors. The once-mighty mining sector—the city's economic bulwark—is struggling, and despite a move towards diversification in media, finance and telecom, Johannesburg has a long way to go.
One bright spot is the Fédération Internationale de Football World Cup 2010, which will be hosted in South Africa. Johannesburg will feature prominently during the tournament, which has prompted a wide array of projects that have helped prop up the city's economy—at least for the short term. But to improve its long-term prospects, the city will have to tackle some deep-seated issues.
“The road ahead, given the difficult global environment, is indeed going to be a tough one,” said Johannesburg's mayor, Amos Masondo, in his State of the City address in February. “Part of our response should seek to ensure that government, business and labor work together to keep the damage to our economy at an absolute minimum.”
Gold Reef City Themepark
That may be easier said than done.
Although South Africa has shown continued growth for the past decade, the global economic downturn is clearly taking a toll. During the final three months of 2008, the country's GDP shrank by 1.8 percent. South Africa's Minister of Finance Trevor Manuel doesn't expect that trend to continue, though. In a speech earlier this year, Mr. Manuel predicted the country's economy would grow 1.2 percent in 2009—the lowest growth rate since 1998. But to some, even that's too optimistic.
Research conducted by Bank of America Corp. suggests the country's economy could actually shrink 0.6 percent. That's no surprise, considering more than half of South Africa's export market depends on the United States, Japan and Europe—nations currently reeling from the economic slump.
Despite the grim forecasts, Mr. Masondo is determined to see Johannesburg defy the trend. In his February address, he said the South African government plans to spend more than ZAR780 billion on large infrastructure projects during the next three years, including power stations, roads and railways, water and sanitation upgrades, and housing construction.
JUMPING ON THE BROADBAND WAGON
Johannesburg's infrastructure overhaul isn't limited to big new sports stadiums. City officials announced in February that the first phase of a broadband network project would launch in April, with the entire rollout expected to take three years.
“This is as essential as the provision of water and electricity, and will also help improve response times to crime and emergencies because the city's closed-circuit television network will be linked,” said Parks Tau, member of the mayoral committee for finance and economic development, in a press release.
The city began assessing potential technology partners in October 2007, when it launched the first of 11 trial networks. In 2007, the project budget was estimated at ZAR500 million; by 2009, that figure had doubled. Eventually Johannesburg chose to partner with Ericsson, and, although a service fee hadn't yet been announced in early 2009, the project has been touted as offering “affordable broadband access.”
A robust broadband network will help address telecom needs during the 2010 World Cup, but city officials are also focused on the long-term payoff.
“The benefits and possibilities of a digital city are numerous for not only the city and its entities, but for residents, business, hospitals, educational institutions, tourism and entertainment,” said Jason Ngobeni, executive director for Johannesburg's economic development, in a press release.
”[Johannesburg] has a responsibility to reinforce these efforts and not merely rush into [decreasing] its 9 percent economic growth target,” Mr. Masondo said during his address. “We have a responsibility to align our programs in a way that enhances the overall efforts of government to address the country's complex challenges.”
The pending arrival of the World Cup—and the throngs of accompanying tourists—has served as a catalyst for a range of projects in Johannesburg. The list includes stadiums as well as basic urban infrastructure and transportation initiatives, all of which should offer a lasting boon to local residents long after the last match is played.
One example is Gautrain, an 80-kilometer (50-mile) rail line that will connect Johannesburg and the city of Tshwane with the O.R. Tambo International Airport, which itself is currently undergoing a multibillion rand expansion in preparation for the games. The ZAR20 billion Gautrain project—along with a rapid bus transit system, Rea Vaya—is slated for completion in time for the big event.
But the slew of ambitious World Cup projects has also invited heavy scrutiny of the city's ability to control project budgets. During his State of the City address, Mr. Masondo noted a key challenge facing the city's World Cup efforts that should sound familiar to project managers the world over: “The international financial climate is leading to price escalations.”
Last year, the South African government was already increasing its World Cup budget to ZAR12.8 billion, up from ZAR9.8 billion, according to Business Day, a South African newspaper. Project managers tied to the games are trying to keep their eyes on the metaphorical ball, but with mixed results. The renovations to Soccer City, the flagship venue for the opening and closing ceremonies, were 75 percent complete by February 2009. However, Johannesburg's long-existing infrastructure problems could still be a factor. Concerns about electrical blackouts have prompted project officials to consider purchasing generators for the Soccer City site, for example. In February, South Africa's Minerals and Energy Minister Buyelwa Sonjica estimated the backlog in infrastructure investment stands at about ZAR27 billion.
Kesavan Naicker, manager of projects at O.R. Tambo International Airport, has witnessed a change in the way local infrastructure projects are handled.
THE MASTER PLAN
Combining both vision and practicality, Johannesburg's municipal leaders are launching a plan to transform the city. Dubbed Joburg 2030, it's full of ambitious proposals, plans and projects—and also makes it abundantly clear just how difficult it will be to get there.
The vision statement is blunt: “This is the only road to a world-class city. … There is no short road to this dream. There are no quick fixes.”
The plan tackles four big problems leaders believe are inhibiting Johannesburg's growth:
RAMPANT CRIME: A Johannesburg Council survey of CEOs at 385 companies revealed crime negatively influences 61 percent of any decision to invest in the city. To reduce crime, the Joburg 2030 plan calls for increased law-enforcement resources as well as stronger ties between the provincial and national agencies.
AN UNSKILLED WORKFORCE: As the city's economic focus has shifted away from mining and industrial production, the existing labor pool lacks the skills and education necessary for a new era of high-level services, such as trade and manufacturing. To build the workforce, the council has proposed a City Skills Project that encourages educational institutions “to work together to develop a culture of learning and technology.”
URBAN SPRAWL: Johannesburg's history is enmeshed with the legacy of apartheid, and nothing symbolizes this more than the city's layout. Johannesburg's municipal boundaries were created with the intent of separating ethnic groups—which left the city lacking an urban core. To make matters worse, the current transportation system fails to accommodate a population that travels long distances to work. The city's “wing span” has also stretched municipal finances, as services such as electricity have to be sent out to so many outlying areas.
The Joburg 2030 plan calls for “a new city boundary and two main movement corridors,” a radical shift from its current collection of disparate community centers. Also, historically black townships will be redeveloped and residential housing will be closer to business opportunities and essential services. The Joburg 2030 plan outlines projects in several key areas, including telecom, transportation and utilities.
HIV/AIDS: Between 1997 and 2006, the number of AIDS-related deaths increased by a staggering 91 percent, according to an October 2008 report by Statistics South Africa. Although the effects of the HIV/AIDS epidemic will linger for decades to come, the vision calls for education and medical advances to curb the skyrocketing rates of disease. According to the report, urban leaders recognize that if Johannesburg is to become a true urban capital, the quality-of-life standards for its residents must improve as well.
ON THE MOVE
For decades, Johannesburg has lacked an essential component of urban life: convenient public transportation. City officials are looking to change that with the launch of several major projects designed to provide world-class public transportation for Johannesburg's residents, as well as for the millions of soccer fans who will descend on the city for the 2010 World Cup.
Slated for completion in 2010, the city's rapid transit project for buses means business—right down to the name, Rea Vaya, which means “We are going” in Sotho.
The ZAR10 billion first phase, scheduled for completion in June 2009, includes the construction of 48 stations and 40 kilometers (25 miles) of dedicated bus lanes within existing roads. The city also plans to finish the second phase, which involves the construction of 102 bus stations and 86 kilometers (53 miles) of dedicated bus lanes, in time for the games.
By early 2009, residents already had a glimpse of Rea Vaya's main components. After eight weeks of construction, the first ZAR10 million prototype bus station was completed in November 2008. And in February, the first bus arrived and is currently on display at the new station.
Along with improving Johannesburg's public transport, Rea Vaya has the potential to make a significant environmental contribution as well. According to the project's website, the system is “the single largest climate-change initiative ever undertaken by the city of Johannesburg and represents a major turning point in how the city deals with congestion, pollution and greenhouse gases as a result of transportation.” Rea Vaya would reduce Johannesburg's carbon dioxide output by 1.6 million tons within the next decade if at least 15 percent of residents used the system's low-sulfur, diesel buses, the site says.
The project is also earning points for listening to its users. When the bus prototype was revealed, a cross section of stakeholders ranging from disabled residents to commuter organizations were invited to offer their feedback by using voting booths adjacent to the prototype bus.
“We see Rea Vaya as a collaborative effort, a project that belongs to everybody,” said Rehana Moosajee, the city's member of the Mayoral Commission for Transportation, in a press release. “These votes will be used to guide the finishes used on the remainder of the buses that are currently being constructed.”
And the Rea Vaya project's influence may extend well beyond local transportation issues.
“Other cities are watching the Rea Vaya work very closely and are using our experience in the design of their own systems,” said the South African government's Minister of Transport Jeff Radebe, speaking at the launch of the first Rea Vaya station last year. He noted that Cape Town, Nelson Mandela Bay and Tshwane were close to finalizing their own station prototype designs.
RIDING THE RAILS
High-speed rail is about to become a reality in Johannesburg. First announced in 2000, the ZAR20 billion, 80-kilometer (50-mile) Gautrain rail project will provide Johannesburg residents and visitors with a direct link to the O.R. Tambo International Airport.
The project is a public-private partnership between Gauteng's provincial government and Bombela, a consortium of international partners and local stakeholders.
Construction on the Gautrain project began in September 2006, and the entire project is slated to wrap up in 2011.
The rail line will include 15 kilometers (nine miles) of tunnels, with 96 rail cars reaching speeds of 160 kilometers (99 miles) per hour.
The construction did create some problems for local residents, though. As a result of the tunneling, part of a busy Johannesburg road collapsed in July 2008. Although no one was injured, the incident snarled traffic for weeks.
And that's not the only issue the project has encountered.
Concerns have been raised about the project's first phase, which may not be completed in time for the start of the World Cup. But project head Jack van der Merwe doesn't seem to be worried. “We're working on a lot of sites. Some of these are ahead of schedule, and some are behind. In general, we're still within the timeframe we have set ourselves,” Mr. van der Merwe told Engineering News.
If the project cannot be completed in time for the tournament, he told the publication, then the government “will have to go to a plan B. … We can't compromise on safety, or standards, or anything like that.”
IN THE AIR
Johannesburg's O.R. Tambo International Airport is already Africa's busiest airport, with more than 18 million passengers passing through in 2007. And that figure is expected to reach more than 21 million by 2010. To manage the increase in traffic, Airports Company South Africa, which owns and operates South Africa's main airports, has initiated a host of upgrade projects.
To begin with, the Tambo airport will receive a ZAR8 billion new terminal to ease traffic flow and cut processing time. The airport will also receive extended runways and taxiways to accommodate the massive Airbus A380. Also in the works: a new ZAR1.8 billion central terminal building that will link Tambo's domestic and international terminals, and connect to the Gautrain high-speed rail.
ON THE ROAD AGAIN
Johannesburg is paving the way for a successful World Cup event in 2010, and that includes road upgrades.
In July 2007, construction began on five kilometers (three miles) of the highway that connects Soweto with Soccer City, the site of the World Cup's opening ceremony.
The project is part of a larger effort to improve the city's roads. The South African National Roads Agency Ltd. has funneled ZAR11.5 billion into road upgrades for Gauteng, the province in which Johannesburg is located.
Several years ago, “infrastructure project management rested largely with the specialist disciplines to various degrees, with architects or engineers being the project managers as an extension of their mainstream responsibilities,” he says. “The first-generation project managers, in my opinion, were typically these individuals.”
The city learned the hard way that the old method didn't lead to effective project management.
“Unfortunately, good architects and engineers are not necessarily good project managers,” Mr. Naicker says. “As project management became recognized as an essential discipline, so did the realization of the traits and skills needed.”
For today's project manager, Mr. Naicker says those skills include adaptability, perseverance, conflict management and creativity.
Johannesburg's economic struggles will likely bring even more recognition to those vital traits.
“If anything, the current crisis will highlight the value of [an] effective project management approach to almost all aspects of the business,” says Mr. Naicker. “Value must now be demonstrated and quantified and not remain as a statement in the project charter. Clients want to be able to bank this benefit upfront.”
JC Kruger, PMP, has also observed shifts in the city's project management dynamics. Currently director of Greybeards Inc., a Johannesburg-based consulting firm, Mr. Kruger has spent more than three decades in the project management arena.
The mining and minerals industry is one sector being forced to change. “The skills shortage, good margins and lax time schedules on mining projects resulted in mediocre project managers being tolerated,” Mr. Kruger says. That luxury is no longer an option in an economic climate with heightened competition—for any organization.
“Companies in all sectors have significantly reduced their capital project budgets,” says Werner Meyer, PMP, managing director of ProjectLink Consulting pty Ltd., Centurion, South Africa. “Only essential capital projects are conducted, and the management of cost is critical.”
This is not to say there aren't opportunities, however.
“Companies seem to have shifted their focus from developmental and expansion projects to internal optimization projects,” Mr. Meyer says. “The challenge for project managers is to develop their understanding of how businesses work.”
The Fédération Internationale de Football Association World Cup is no small affair. One of the world's biggest and most anticipated events, the World Cup promises to bring millions of people to South Africa and Johannesburg. To give all those zealous fans a nice place to watch “the beautiful game,” Johannesburg has been working to construct and upgrade its stadiums.
Consider this the crown jewel of World Cup sites. Set to be complete by July 2009, the project was originally estimated to cost ZAR1.2 billion, but by August 2008, inflation and exchange rates pushed it up to ZAR2.6 billion.
But cost overruns aren't the only things that are of concern.
“What is keeping me awake at night is the fact that we are building a stadium that is bigger than Wembley” and at one-third the cost and in half the time, Mike Moody, project director, told Engineering News in late 2008. “Other challenges include power shortages and labor disputes arising from the high cost of living—and we have a lot of subcontractors.”
Staking its claim as the largest stadium on the continent, Soccer City will have capacity for 94,700 people.
PHOTO COURTESY OF WIKIPEDIA
ELLIS PARK STADIUM
Completed in February 2008, this project came with all the usual stadium upgrades—increased capacity, new lighting, a new entrance façade and a new parking garage.
The precinct surrounding the venue is also in for a ZAR2 billion makeover. Plans call for projects to pave roads, improve street lighting and install mosaic art on street pillars. A recycling program will involve door-to-door residential education initiatives and the establishment of a recycling center.
Orlando Stadium first opened 50 years ago—but today it's looking younger than ever. That might have something to do with the fact that the structure was actually demolished and then rebuilt.
Construction began in May 2006 and by November 2008, the stadium itself was complete—on schedule and within its ZAR280 million budget. The revamp increased seating capacity from about 24,000 to 40,000.
Built in 1951, Rand Stadium has hosted top soccer teams from around the world. Now it's set to continue that tradition, following a ZAR76 million overhaul. The stadium was demolished in 2006, and construction on the replacement was completed by January 2009. The new incarnation can hold 24,000 spectators—an increase over the older structure's 15,000.
And they'll need the credentials to prove they're up to the task.
“Many companies are setting up project management offices, and there is a big need for suitably qualified project managers and consultants,” Mr. Meyer says.
Training had lagged, but Mr. Kruger says it's getting an upgrade, thanks to the country's 2001 Skills Development Act. That legistlation provided incentives to train employees and mandated all qualifications to undergo a third-party verification.
But even sound training and preparation may not be enough for the next generation of project managers, given the scale of the economic turmoil permeating every corner of the world.
“On the mining and minerals front, the short-term picture is critically bleak,” says Mr. Kruger. “Major mining houses summarily cancel projects halfway through, and retrenchments at large international project management and engineering companies run very high, flooding the job markets with project-related personnel. Project managers still in charge of projects find themselves with severely tightened purses, and I am not sure they all know how to handle that, considering the fat years we come from.”
To make matters worse, organizations want projects to generate revenue as early as possible, putting enormous strain on their project schedules.
“Most new projects will feel severe pressure from shareholders, clients and execution contractors who, in a tough and very competitive market, have cut their margins and made promises difficult to keep,” Mr. Kruger says. PM—
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