Project Management Institute

Train delay

 

CASE ANALYSIS
Train Delay A best-of-breed approach
slows Taiwan’s high-speed
railway project.

IN 1996, Taiwanese entrepreneurs founded the Taiwan High Speed Rail Consortium (THSRC) to develop a railway connecting the northern end of Taipei with southeastern Kaohsiung. Trains would make the 346 km (216 miles) trip in less than 90 minutes, traveling at speeds up to 300 kph (188 mph). Siemens, the German firm which developed the high-speed rail, InterCityExpress (ICE), created a joint venture with its French competitor GEC Alstom, manufacturer of the high-speed Train de Grande Vitesse (TGV), to win the business. Two years later, the group’s Eurotrain— a mix of both technologies—successfully tested.

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The first sign that the project might be off track was in December 1999 when THSRC dissolved its partnership with Eurotrain and began negotiating with Japanese engineering group JR Shinkansen. While there was speculation about the reason for the change—an article from the European Chamber of Commerce Taipei suggested that the government was pressuring THSRC to help the nation improve its relationship with Japan and there may have been cultural differences between Eurotrain and the Taiwanese project teams—Eurotrain’s approach had been working.

The project team began construction work in 1999. Shinkansen agreed to supply trains, equipment and services ready for use on 31 October 2005.

The project lost speed because managers underestimated the extra effort and risk level associated with using a best-of-breed (BOB) approach, says Oliver F. Lehmann, PMP, vice president of professional development for PMI‘s Troubled Projects Specific Interest Group. The approach, combining superior components and technologies from different sources, requires integrating parts that were not originally developed to work together.

While most of the components are available in Japan, the project had to adapt to certain European standards and technologies, such as high-speed turnouts and a bi-directional signaling system, that were in place because of Eurotrain’s initial involvement. Integrating their proven Shinkansen formula with unfamiliar elements caused the majority of the project’s problems, Mr. Lehmann says.

But, technology wasn’t the only issue; funding for the NT$459.0 billion (US$13.6 billion) project also remains a problem. As of January 2005,THSRC had not been able to collect the 25 percent of the funding from investors necessary to secure the rest from bank loans, which added to the technical difficulties already plaguing the project. In April 2005, THRC missed another fundraising deadline when it failed to reach its NT $6 billion goal. Arthur Chiang, THRC vice president, told the Taipei Times that despite an NT$100,000 fine for each day after the 31 March deadline that the group fails to raise the money, the project will be completed on time.

“The team would have done better by using one proven formula, be it from Europe or Japan. Working together with just one supplier for the entire system and adhering to the standards would have made the project faster and cheaper to complete,” Mr. Lehmann says.

Financial woes aside, Mr. Chiang told The China Post that construction is ahead of schedule and the project will be completed by the 31 October 2005 deadline. Even if construction could be finished on time, the necessary final safety testing—which is extensive because it must take into account the additional risks typical for a BOB approach—will make the original deadline tough to meet. In addition, according to Railway Gazette, the time constraints leave no time to solve unexpected problems if they arise.

“A team running a best-of-breed project needs a strong position regarding money and time available,” Mr. Lehmann says.

If you know of a troubled project in which a project manager could have (or did) save the day, share your lessons learned. Contact pmnetwork@imaginepub.com.

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.

MAY 2005 | PM NETWORK 1

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