How to ensure another Chunnel, WPPS, or Big Dig doesn’t happen to you.
Rilck Noel is a managing director, Energy & Utility Practice, at Protiviti. Contact him at rilck.noel@protiviti.com. Terrel LaRoche is a director, Capital Projects & Con-struction Practice, at Protiviti. Contact him at terrel.laroche@protiviti.com.
In the 1970s and ’80s, the South Texas Nuclear Project (STNP) and Washington Public Power Supply System (WPPSS) epitomized large utility projects spinning out of control. In the ’80s and ’90s, The Channel Tunnel underwater rail project connecting France and the UK, known as the Chunnel, ran 80 percent over budget plus 140 percent over forecasted financing costs. With revenues that were less than half of projections, the Chunnel was described by Business Week as “a financially disastrous pipe dream.” In the United States, Boston’s Big Dig, the Central Artery/Tunnel Project re-routing downtown traffic into a 3.5 mile tunnel, became America’s most expensive highway project as costs quintupled to more than $14.6 billion in 11 years.
Many large projects, particularly multibillion-dollar, mega-infrastructure public projects, “have strikingly poor performance records in terms of economy, environment, and public support,” concluded Flyvbjerg, Bruzelius, and Rothengatter in their 2003 study Megaprojects and Risk.