Create a business case for establishing a Dundee Tram System
Instructions: You have recently been appointed by the Dundee City Council who is seeking to develop a tram system of its own but they have concerns over the problems that Edinburgh had with their tram project. Your assignment is to write a report on the prospective Dundee tram system as a project – considering what is likely to go well and what not so well. Your report should therefore focus on the project management aspects including the key risks e.g. loss of money and overrunning its schedule and not meeting the performance requirements expected from an infrastructure project of this type.
Part A: Project Plan Presentation notes and slides Part B: Main report
Part A (20%) involves preparing the presentation of your business case and project plan as detailed in the assignment brief below.
Part B (80%) involves the creation of a detailed business case, project plan, and schedule, and discussion of other relevant issues.
Solution.
Create a business case for establishing a Dundee Tram System
Summary
Project Management Triangle. 2
Possible success/ failure factors for this project 5
Considerations concerning future operations. 5
A brief overview of the Edinburgh Trams Saga. 8
Project Management Issues and Pitfalls. 11
Project Management Triangle. 14
Possible success/ failure factors for this project 20
Considerations concerning future operations. 20
List of Tables and Figures
Table 1: Timeline of Estimated Project Costs. 9
Table 2: Stakeholder Analysis. 17
Figure 1: Edinburgh Trams Systems Initial Proposal 8
Figure 2: GanttChart of Project Timeline. 16
Organizations and institutions regularly undertake projects, which are geared towards helping the entities, realize their existential objectives. This includes not only business organizations, but, more so, non-profit entities such as governments and local authorities. In order to make the most out of these projects, astute project management practices are essential. For businesses, such project management practices are critical in ensuring that the corporation realizes its profit-maximization or stakeholder value maximization objectives. The aim is usually, therefore, to keep the costs of the project as low as possible and to complete the project within the shortest time possible. In essence, there is usually a greater or rather, a more material/tangible incentive towards proper project management within private enterprises than in public entities. Consequently, the imperative of astute project management practices will tend to be mired during the management of a public entity project, an assertion that is validated by the Edinburgh Trams incident.
The Dundee City Council wishes to establish its own tram system akin to the Edinburgh Tram System, while avoiding the pitfalls of the latter. In order to do so, it is essential to gain an understanding of the issues that hampered the Edinburgh Trams project. These issues are explored and discussed from a Project Management perspective.
A brief overview of the Edinburgh Trams Saga
Edinburgh Trams is a tramway that is operated by Transport for Edinburgh. Transport for Edinburgh is the organization that is tasked with the management of public transport in the city of Edinburgh. It has created Edinburgh Trams, an entity that is tasked with the management of the tramway system. Edinburgh Trams only recently began its operations on May 31st 2014, when the tramway officially began its operations. While the tramway only recently began its operations, the idea of a tramway was conceived over a decade ago. Transport Initiatives Edinburgh (TIE), an entity established for identifying strategic transport solutions for Edinburgh, introduced the proposal for a tramway in Edinburgh. TIE submitted its tramway proposal in September 2002, with the initial proposal suggesting three tramway lines as the most effective solution (Auditor General, 2007). These three tramway lines were a northern loop to connect Granton and Leith to the City Centre, A western line that would connect the city centre to Edinburgh Airport, and a south Eastern line that would connect the city centre to the new Royal Infirmary. Eventually, only the first two lines received the support of the Scottish executive with two bills being presented to the Scottish Parliament in January 2004. Royal Assent to these bills was granted in spring 2006. The diagram below illustrates the approved tramlines.
Figure 1: Edinburgh Trams Systems Initial Proposal
Source: Tram Facts 8″ (PDF). City of Edinburgh Council. 2006
A review of the costs associated with the projects revealed that construction of the entire network in one phase would be unaffordable. Consequently, the project was split into four phases. Phase 1a was an 18.5 kilometre stretch connecting Edinburgh airport and Newhaven. Phase 1b, the second phase, was a 5.6 kilometre stretch connecting Haymarket to Granton square. Phase 2 was to link the prior to phases from Granton square to Newhaven, effectively completing the loop. The final phase, phase 3, was to be an extension of the tramway line, form Ingliston to Newbridge North. The four phases are illustrated in the diagram above.
One of the major project issues, which was of particular concern, is that of cost. The cost of the Edinburgh Trams project kept shifting upwards. In 2003, at the time of the conception of the project, it was estimated that the entire project would cost £375m (Devine, 2012). Eventually, the project was completed at a total cost of £776 million. At one time, there were worries that the cost of the project would reach £1 billion (Devine, 2012). The table below provides a breakdown of the cost estimates for the project at various stages.
Table 1: Timeline of Estimated Project Costs
| Time (Year) | Estimated Project Costs |
| 2003 | £375 million |
| 2004 | £473.5 million |
| November 2005 | £714 million |
| January 2006 | £570 million – Phase 1 |
| November 2006 | £592 million – Phase 1 |
| April 2007 | £593.2 million – Phase 1 |
| 2014 (Project completion) | £776 million |
The project faced other issues asides from cost. These includes not only issues related to project management, but also, issues related to the tramlines as a project. On project management, the time aspect, whereby the project was completed much later than anticipated, affected the tramways project. Moreover, the completed project was a severely truncated version of the initially intended project. These issues will become more apparent in the ensuing discussion on project management failures. However, it is important to note that the project also faced political opposition, which was perhaps related to the nature of project management. In particular, the Scottish National Party (SNP), had vowed to shoot down the project in its 2007 manifesto, but they were outvoted in the Scottish Parliament (Henderson, 2011). Moreover, the Scottish government announced that there would be an inquiry into the whole Edinburgh fiasco. The Edinburgh Tram Inquiry was established in June 2014 by the then first minister Alex Salmond (Rutherford, 2016). This inquiry has proved to be costly, having gobbled up more than £3.7 million so far. These costs are arguably transferrable to the total cost of the project, considering the inquiry has been set up because of the poor performance of the project.
The Edinburgh’s trams saga is evidently a scenario that any council or other entity or institution would wish to avoid. The key to doing so lies in incisive project management practices. Some of the project management issues that the Edinburgh project suffered from are discussed.
Project Management Issues and Pitfalls
One of the most essential concepts underpinning project management is that of the triple constraint. Taylor, who indicates that the triple constraints form the backdrop against which all processes, phases and activities of the project management process are performed (2008), corroborates this notion. The triple constraint considers three aspects as being critical factors to the success of a project. These are scope, cost and time (Taylor, 2008). Scope defines the sum of all project deliverables, including products and services. Cost refers to the money, labour and entirety of resources that will be required to complete the project. Finally, time/schedule is the period that will be required to meet the project objectives. The theory of triple constraints is also conceptualized as a triangle, the triple constraints (or the project management) triangle. This triangle is particularly essential during the early stages of the project, and can be a useful tool in understanding the needs of the customer. Kerzner (2010), however, argues that the triangle is not the ultimate project management tool since it is possible to complete a project within the triple constraints yet not satisfy the customer. Kerzner’s argument is however concerned with a more holistic definition of success, which includes a much wider range of stakeholders. The current arguments are in particular regard to project completion, which is considered successful if it occurs within the triple constraints.
In terms of the project management triangle, the Edinburgh trams project can hardly be considered as successful. This is because the project was not completed within any single constraint. At the time that the project was launched, the triple constraints were £375 million for cost, two tramway lines for scope and completion by 2009 (time) (Rutherford, 2016). The final cost of the project was more than double the initial projections meaning the cost constraint was not met. The scope constraint was also not met since the final deliverables of the project do not correspond to what was initially targeted. The Herald Scotland (2014) notes that the tram network was truncated such that it stops at York place in the city centre, whereas it had been scheduled to reach the waterfront at Newhaven. Finally, the project was also not able to meet the time constraint. The Herald Scotland (2014) reports that the project was delayed by more than three years. Considering that the project was initially scheduled to be complete by 2009, and ended up delaying until 2014, the total delay was 5 years.
Project planning is one of the most essential components to successful project completion. Planning allows project managers to identify possible future constraints and risks and take appropriate action to mitigate or minimize these risks (Kerzner, 2009). Failures during the planning stage are likely to adversely affect the entire project and hamper its timely completion within the constraints. Some of the essential issues during the project planning process are the definition of working requirements, quality and quantity of work required, and resources needed, scheduling of activities and the evaluation of risks (Kerzner, 2009). A review of the Edinburgh Trams fiasco does not readily reveal the planning issues since an audit of the project had been done prior to the commencement of works. This audit had been commissioned by the Scottish Cabinet Secretary for Finance and Sustainable Growth and was carried out by the auditor General (Auditor General, 2007). The audit found the systems used to develop the cost and time targets to be robust. Moreover, the audit also found that the project management and organization was sound. Finally, the audit also found that adequate risk management procedures existed.
While the existence of project planning issues is not outright, the Edinburgh Trams project nonetheless faced acute project challenges. One of the project planning challenges is incorrect assumptions about the time certain elements would require. For instance, the time required to obtain parliamentary approval was not clear and this made it impossible to provide accurate timescales for project delivery. This scenario was also experienced in other stages of the project, meaning that the project delivery time had to be shifted continuously. Consequently, this also had an adverse effect on project costs since the cost estimates had to be revised continually to account for inflation. Another planning problem has to do with the management of risks and constraints. One of the most significant problems that the project faced was the threat of project cancellation by the SNP in 2007. This led to time overruns, which were further exacerbated by delays in MUDFA work (Lowe, 2010). The net effect was that the TIE had to revise completion dates. Other issues had to do with disputes involving the construction company contracted by TIE, which further significantly delayed the project’s timeline with associated cost implications.
The overall objective of the Dundee Trams System is to introduce a tramline system of transport in the city. The tramline system will allow the city of Dundee to harness the advantages associated with tram transport systems including improved transport. Below are the objectives of the Dundee Trams System
- To improve public transport in Dundee City
- To reduce traffic congestion in Dundee
- To promote accessibility in Dundee and improve the local economy
- To promote sustainable transport in Dundee
- To reduce the environmental damages associated with traffic
- To promote social benefits
The project management triangle has already been discussed as the combination of the three project constraints of time, cost and scope. This section provides a discussion of these project constraints, their material requirements for this specific project and their significance to the project. It has been highlighted that according to (Kerzner, 2010), the project triangle is not the ultimate tool for project success. It is however significant since it is the backdrop against which all other project management activities will occur. Further factors that will lead to project success with regards to the project management triangle include a prioritization of the constraints, since all constraints are not equal and their importance varies depending on project. The constraints will also need to be evaluated alongside secondary factors that may include legal requirements or ethical imperatives. These issues could even rove to be more significant than the triple constraint. For example, in the current case, secondary factors that may be of significance include routes and public acceptability since these issues will ultimately affect the uptake of the tramline. Stakeholder consideration will also be important, if the Edinburgh case is anything to go by. It will be important to ensure that all stakeholders and their expectations are taken into consideration. Kerzner (2010) indicates that for any project, it is important that there is a consensus between customers and contractors on what will constitute a successful project. In the current case, this may be expanded to include the diverse range of stakeholders who will be part of the project. It will be important to determine what the expectations of the different stakeholders are so that political issues and other disputes do not affect the project in the same way that they did the Edinburgh trams system. The constraints are now discussed.
Scope refers to the specific outcomes of the project and the expected deliverables from this project. This includes not only the products, but also the services that are expected to result from this project. Scope is an important constraint to the project as it identifies activities and the resources that will be required to do this. Therefore, scope has a direct and translatable impact on both time and cost. The scope can also provide visible outcomes that can act as tangible project milestones to evaluate the progress of the project. Management of project scope is essential to avoid project creep, which arises out of scope creep. Project scope management involves having a clear definition of the scope of the project including everything that is in the scope of the project. Scope creep defines a scenario whereby the initial objectives of the project change, and has the adverse outcome of increasing the cost and time required to complete the project. Scope creep may also increase the complexity of the project. Changes in scope are inevitable (Kerzner, 2009), but scope change management can be used to manage changes to the scope of the project and avoid the adverse effects of scope creep.
The scope of the current project is the establishment of a tram system in the Dundee City. Important scope considerations include the distance to be covered by the tram system and the towns and centres it will pass through. Another critical issue is whether the project will be completed in a single phase or in a number of phases. Scope plans will then be developed for each phase of the project.
Cost refers to not just the financial costs of the project. Additionally, the cost aspect of the project also envisages the entirety of resources that will be required to attain the project’s objectives. Cost is determined largely by the scope of the project. Yet, cost also significantly impacts on the scope of the project whereby shortages in financial or other resources may necessitate the truncation of the project’s scope. It is therefore essential to manage project costs using budgets. Costing may be achieved using the ground-up or top down technique. The ground-up technique would be effective as it would allow for the most realistic cost estimates to be collected (Maylor, 2010). This will also improve accountability. Since every supervisor will be responsible for providing cost estimates based on their evaluation of resource requirements, this may also help to avoid contractual conflicts such as those between TIE and BSS.
The table below presents a budget of projected cost estimates for the Dundee Tram System. The estimates are derived based on similar endeavours in other locations, including the Edinburgh tram system. The Edinburgh Tram system cost £71.4m/km, a figure that is well over three times above the average cost per kilometer reported in several other cities in the northern hemisphere, at £22.7m/km (Ferreira, 2015). Assuming a worst-case scenario, especially considering that, Dundee is also a Scottish city; the project is estimated to cost twice the average figure in other cities, meaning it will cost £45.4m/km. If the Dundee Trams System covers 10km, then the estimated total cost for the entire project would be £454 million.
This is the third side of the triple constraints triangle. Time is essential to successful project completion and is in itself a resource that requires budgeting. Project time envisages a schedule of the various activities and milestones during the project completion period. Just like cost, time will also be affected by scope creep, although this can be mitigated by allocating extra resources. Effective project time management will involve breaking down the project into a series of activities and tracking the individual progress of these activities. The Gantt chart below presents a breakdown of the various milestones for this project and their completion schedules.
Figure 2: GanttChart of Project Timeline
This deals with the management of quality, which is rather an elusive concept especially due to the subjectivity of the term quality (Maylor, 2010). There are different perspectives on quality management and since quality means different things to different individuals, it is imperative to choose the right quality management approach. An important viewpoint is that of quality as an outcome of expectations and perceptions. As noted, the current project involves multiple stakeholders who have different expectations. Of the several quality management approaches, perhaps the most relevant one for this project is the economic perspective. This perspective weighs the costs and benefits of quality project management against those of failure. The relevance of this approach is underscored by the fact that the project is not being undertaken for business purposes and that project cost is one of the most significant consideration. Management of economic cost will also be essential in gaining political support for the project in light of the Edinburgh fiasco.
Stakeholders are any individual or group individuals who have an interest in a particular project. Stakeholder analysis is important in identifying the different stakeholders for a particular project as well as their expectations. For the Dundee Trams project, some of the stakeholders include the Dundee City Council and its employees, citizens of Dundee city, contractors who will be involved in the construction of the tramway, lobby groups, and governmental authorities. Each of these stakeholders will have different expectations, with different constraints being the most important for different stakeholders. The table below presents tentative hypothesized descriptions of various stakeholder expectations.
Table 2: Stakeholder Analysis
| Stakeholder | Expectation | Constraint |
| Dundee City Council | Adequate political goodwill from the executive and parliament Government support in funding the project Timely completion of the project in its fullest scope | Scope, time, cost |
| Dundee Citizens | Minimal disruptions to their daily routines Enhanced convenience and public transport efficiency | Time, scope |
| Scottish Parliament | Proper project management and timely completion Cost of the project to taxpayers to be kept at a minimum | Time, cost |
| Scottish government | Efficient project management Minimization of project costs and timely completion of the project | Time, cost |
| Contractors | Fair and competitive selection of contractors Fair and favourable provision of funding to the project | cost |
The constraints of the project have already been discussed under the project management triangle. Apart from constraints, the project faces several risks that threaten its successful completion. One such risk is that of project creep, which involves changes in the scope of the project consequently affecting cost and timely completion of the project. Another risk is lack of funding/affordable funding for the project. The government may be unwilling to fund another tram project after the Edinburgh fiasco. More importantly, the government may be even more unwilling to provide consents and approval for a similar project. Other risks include stakeholder non-compliance, as witnessed with the Edinburgh project where certain stakeholders such as the SNP and BSS (the contractor) were uncooperative to the project (Lowe, 2010). This would negatively affect the timely completion of the project.
Communication is an important component of any effective management process. Various channels of communication will be used including verbal and written communication. In particular, a combination of written and electronic communication will especially be used to improve the quality of communication and avoid misunderstandings between stakeholders. Electronic communication will be essential in speeding up communication between stakeholders. Nonetheless, all essential communication will be done through print.
Possible success/ failure factors for this project
The triple constraints are important determinants of project success. However, other factors are critical to the success/failure of the current project. These factors have been identified based on the careful evaluation of the Edinburgh fiasco. They include the following
- Political goodwill – one of the factors that hampered the Edinburgh Trams system is lack of political goodwill from the SNP
- Communication – Successful communication is key towards understanding the expectations of various stakeholders and avoiding misunderstandings
Considerations concerning future operations
In the
implementation of this project, it is also important to consider future
operations such as the expansion of the Dundee Trams Systems to cover a wider
geographical area. Another issue is the possible interlinking of the Dundee
Trams systems with the trams systems of other cities.
Auditor General, 2007. Edinburgh Transport Projects Review, Edinburgh: Audit Scotland.
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[Accessed 2 August 2016].
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[Accessed August 2016].
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Lowe, J. G., 2010. Edinburgh trams: a case study of a complex project.. Leeds, UK,, Association of Researchers in Construction Management, pp. 1289-1298.
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Rutherford, N., 2016. Cost of inquiry into
Edinburgh tram project hits £3.7m. [Online]
Available at: http://www.bbc.com/news/uk-scotland-edinburgh-east-fife-36826048
[Accessed 01 August 2016].
Taylor, J., 2008. Project Scheduling and Cost Control: Planning, Monitoring and Controlling the Baseline. Florida: J. Ross Publishing,.
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Edinburgh trams fiasco. [Online]
Available at: http://www.heraldscotland.com/opinion/13178941.Questions_remain_over_Edinburgh_trams_fiasco/
[Accessed 2 August 2016].