Project Management Institute

Back on track

A forsaken peruvian metro project is revived through a carefully coordinated public-private partnership and ample transparency.

by Sylvia Wolak photo by Gihan Tubbeh

Christy garcía-godos Naveda, ProInversión Private Investment Promotion Agency, Lima, Peru

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Construction on the Lima Metro project stopped abruptly in 1986, leaving unfinished pillars abandoned in the center of the Peruvian capital—the ruins of a dream derailed.

The project was cut short during a period of financial crisis caused by hyperinflation, social tension and threats from the Maoist group Shining Path (Sendero Luminoso), which carried out several attacks on Lima's fledgling infrastructure in the 1980s.

In recent years, however, Peru's economic situation has improved dramatically. The nation now leads the way among Latin American economies with an 8.8 percent growth rate in 2010.

As the economy recovered, the Peruvian government began reinvesting in public works projects and merged several agencies to create ProInversión Private Investment Promotion Agency in 2002. The agency's mission is to entice private companies to invest in the public sector, establish general project requirements, and fund portions of construction and operations.

The project plan eliminated failed components while recycling ideas and materials that remained viable.

—Xavier Roca, ALG (Advanced Logistics Group), Barcelona, Spain

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PHOTO COURTESY OF CETL

A rapid-transit system is badly needed in the sprawling capital city of 8.9 million. Lima's northern districts have experienced rapid population growth and have become major industrial hubs. It now takes a bus two hours to travel between the northern and southern districts, according to Christy García-Godos Naveda, railways project manager at ProInversión, Lima, Peru. “The train will make the trip in less than 35 minutes,” she says.

The city had already invested US$320 million in the now-idle first seven stops of Line 1, but after two decades, it was clear that resuscitating the old system would demand a new project management strategy.

The reworked plan involves refurbishing the existing 6.1-mile (9.8-kilometer) stretch of metro in addition to creating nine new stations and 7.5 miles (12.1 kilometers) of electric train tracks, according to the project tender. The ultimate goal is to radically reduce residents’ commute, with the added benefit of significantly reducing pollution and congestion, Ms. García-Godos Naveda says.

ALG (Advanced Logistics Group), a transportation, infrastructure and supply chain consulting firm in Barcelona, Spain, conducted a thorough study of the public's mobility needs and how public transportation concessionaires can meet them.

Two engineering and construction companies, Odebrecht in Brazil and Graña y Montero in Peru, joined forces with the Peruvian government to form the Consorcio Tren Eléctrico Lima (CTEL). In 2009, the federal Ministry of Transport and Communication granted the consortium the Lima Metro construction project. The contract was given a deadline of 18 months to complete the infrastructure.

img THE “FOUR R'S” OF RESTARTING PROJECTS

Research: “Estimation of demand has been one of the most critical issues on the Lima Metro project,” says Christy García-Godos Naveda of ProInversión, Lima, Peru.

Be extra cautious when restarting a project that has already been heavily invested in. Old project scope standards may no longer apply.

Review and Revise: Look at the project with better oversight and renewed vigor. Amend the plan by providing clear goals based on your research.

“We establish levels of the quality of services, and the concessionaires need to fulfill that,” Ms. García-Godos Naveda says. When all parties are aware of their duties and expectations, you'll run into fewer problems.

Reuse: Start fresh—but don't start with nothing. Just because a project has failed doesn't mean that all of its elements need to be scrapped.

For the Lima Metro project, it was particularly important to “define a model that allowed the reuse of the trains that had already been purchased to improve the project's finances,” says Xavier Roca, ALG (Advanced Logistics Group), Barcelona, Spain.

The project plan eliminated failed components while recycling ideas and materials that remained viable, he says.

The project's scope entails more than just the metro line. “The train is going to be connected with bus and other transportation systems that the city of Lima has started in the last year,” Ms. García-Godos Naveda says.

In addition, the new design meant that 26 cement pillars from the original construction had to be demolished.

The Lima Metro megaproject's budget is projected to be US$440 million. The public-private partnership (PPP) model between CTEL and the government helps reduce financial risk, says Xavier Roca, a project manager at ALG, Barcelona, Spain.

OUT IN THE OPEN

Because the Lima Metro project involves both government and private investors, one of ProInversión's major project management mantras is that transparency is key.

“If you want to have a good process, you need to give all the information required to all the parties,” Ms. García-Godos Naveda says. That includes external stakeholders. “It's very important to have the ability to hear different positions and also to understand the requirements of all the parties.”

ProInversión routinely publishes project documents and announcements on its website.

“You can't hide information or give information to one group and not to all the others,” she adds. “Everything is published, and nothing is hidden from the public.”

Managing a project of this magnitude involves major coordination before any of those documents are submitted. This includes constant contact with the Ministry of Economy and Finance, the Ministry of Transport and OSITRAN (Organismo Supervisor de la Inversión en Infraestructura de Transporte de Uso Público, or the Supervising Agency of Investment in Public Transport Infrastructure Facilities).

“Coordination is carried out through administrative procedures, in addition to regular meetings and formal contacts between the agencies to coordinate aspects of infrastructure and rolling stock,” Mr. Roca says.

US$320 million
The previous investment in the project before it was stopped

US$440 million
The projected budget for the current project

85
The number of train cars involved, each with the capacity to hold 210 passengers

16
The number of metro stations to be built, each capable of accommodating 3,000 commuters

13.6 miles
(21.9 kilometers)
The length of Lima Metro's Line 1

This high level of cooperation and transparency, however, can cause delays. “The contracts need to be supervised by different institutions and they take their time in giving their opinions and comments to the project,” Ms. García-Godos Naveda says. “We then need to incorporate their comments, which takes longer.”

LEARNING BY DOING

Ms. García-Godos Naveda closely monitors the budget and schedule in relation to the scope of the project.

“These aspects are at the same level of importance because if we have a project on time but with no possibility to finance it, the project will not run,” she says.

Because many of Peru's infrastructure projects are first-time initiatives, their management is an education in itself. The Lima Metro in particular has had difficulties in estimating potential demand due to a lack of studies and published information, Ms. García-Godos Naveda says.

“For all of us, it's the first time we are running this type of project because we don't have a big rail culture in Peru. So we have been learning by doing,” she explains.

To get up to speed, ProInversión works with a diverse group of partners and consultants. The team of 44 includes lawyers, engineers and economists.

With 97 percent of the civil works completed as of February, project teams were on schedule to wrap up construction on Line 1 in March, after which CTEL will begin mechanical installations. The final touches should be finished by June, with trains beginning to run the next month.

The next project for Lima Metro, extending Line 1 by another 7.4 miles (11.9 kilometers) with 10 new stations, is in the works. It's estimated to cost an additional US$600 million.

The city's ultimate goal is to have seven interconnected lines spanning across its various districts. PM

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK MAY 2011 WWW.PMI.ORG

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