elevated city train stationThere are many examples in the field of construction where the final cost of public infrastructure has far exceeded the initial budget. In this article, we will comment on some of the most striking cases of Spanish architect Santiago Calatrava and how adequate project management could have solved the budgetary problems derived from poor administration of the resources. 

Santiago Calatrava is a Spanish architect born in the early 50's in the city of Valencia. His main creations include large urban structures that redefine the landscape and the city environment. In the beginning, his work begun to reap a lot of success in Spain, especially in his home town of Valencia. Now his work can be seen in European capitals and other parts of the world.

As a result of his brilliant career, he has received awards of international esteem such as the Prince of Asturias Award (1999) or the National Architecture Prize (2005).

However, his career has also been littered with controversial media related to the low functionality and high overhead of his buildings. We will review some examples.

Ground zero station (New York)

After the fateful attacks of 11 of September of 2001, the City council of New York and of New Jersey wanted to construct a new terminal station designed to connect the PATH to the New York City Subway.

The original concept of the project was a structure that evoked the wings of a Phoenix. In the same way a phoenix resurges from its ashes, New York City in particular and the United States would be able to re-construct from the personal and institutional damage produced by the attacks.

Originally, the Valencian architect presented an estimated project of 1.8 billion dollars. After a series of extensions and extra costs, the construction ended considerably later than planned and with an extra cost that almost doubles the original forecasts.

For its final cost, it earned the "honorable" title of being the most expensive station in the world. Compared to New York’s famous Grand Central Station, after taking into account the original budget of this station and adjusted for inflation in the years since its construction began, Calatrava’s station has doubled the cost of Grand Central Station.

On the other hand, if we compare this with other public infrastructures, such as the George Washington Bridge, known as the most crossed bridge in the world in terms of people and vehicles, we see that it presented an overrun of approximately four times more. Of course, for these calculations we have adjusted the cost of the bridge for inflation.

It could be argued that a higher cost might be justified by greater utility or the expectation of obtaining a higher economic return from its use. Analyzing the specific case, the New York station built by Calatrava does not meet this criterion.

Calatrava’s station amasses a daily passage of approximately 42,000 passengers, which is hugely contrasted by the 208,000 that transit through Grand Central Station.

Taking into account the data previously used stating that Calatrava’s station is double the cost of Grand Central Station, we can deduce that the daily cost per passenger ends up being approximately 10 times more.

In short, this project, despite resulting in a spectacular monument, has failed to meet the needs of customers and has not respected the original budgets.

Other monuments by Calatrava with similar problems

Although the works of Calatrava are spread throughout the world, some of the most representative works at national and international level and that have presented management problems similar to those of the Ground Zero Station in New York, are the following:

  • The Reina Sofía arts palace and the Agora of the City of Arts and Sciences in Valencia. The construction, currently part of the landscape of Valencia, involved a significant overrun with respect to the original budget and at the time, also had serious maintenance problems.

  • Puente Zubizuri (Bilbao), Vistabella bridge (Murcia), Alamillo bridge (Seville), suspension bridge (Jerusalem) and some others. All of these bridges have presented problems soon after construction. In some cases, the stability of the structures was affected, which has meant it necessary to introduce components that were not in the original plans. In other cases, the problem lay in practical utility. For example, the floors had been constructed of glass, with the consequent risk of slips for pedestrians. After some denunciations by these, the usual solution established by the municipalities has been to cover them with carpets, which again increases the cost of the project and also subtracts aesthetic beauty from the result.

  • Obelisk of the Caja in Plaza Castilla (Madrid). This monument, commissioned by Caja Madrid to celebrate the 300th anniversary of its foundation. It was originally designed to be moving. Just two days after its inauguration, the mechanism began to fail, so it had to be stopped. Since then, he has been stationary.

How to solve these problems through project management?

Proper project management has much to contribute in cases such as these. Some of the tasks that a project team can perform through the appropriate systems are:

  • Construct realistic budgets, that satisfy the needs of the project without extra costs.

  • Carry out useful projects for the intended end result. Synchronizing the complexity of a project to the practical needs. The correct alignment between the project and the needs of the clients is what guarantees the final satisfaction and allows for entering issues into the budget that are going to imply an added value in the face of customer satisfaction.

  • Make constant measurements of the budgetary status, to ensure that, throughout the evolution of the project, it continues to be respected. If this is not the case, detecting deviations early will allow the appropriate corrective measures to be taken.

  • Getting a project to have the desired reach not only in utility and functionality, but over time. Selecting the materials and methods of construction that obtain a satisfactory product for the client, also in terms of its usefulness.

  • Predict possible difficulties or risks that may arise during the execution of the project, and take the necessary measures to mitigate their effects or to look for alternatives in case they arise.

  • Provide solidity and reliability for the company during this project and for future projects. A company that fulfills its word in terms of budgets and quality of the final product supplied has guaranteed customer satisfaction and a greater brand image that will in turn attract more clients in the future.

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phone, dollar, manifying glass, balance, credit card, calculatorOne of the main functions of the CIO is to estimate and plan projects that will take place in the near future. And this, for some management positions requires pure reflection and strategic vision, from the CIO. Which represents an extra capacity of creating consensus and balance among the C level.

Let’s suppose that the organization where you work is proactive and start budgeting for the following year a few months before it begins. Say that the CIO has the task of drawing up a list of projects that will be implemented next year. In addition, of course, to value that list economically, plan the resources available, align it with the overall company strategy, etc.

"For the CIO it becomes a test of ability to search for consensus and balances"

The demand will have to be considered, which shall consist of the ideas and needs of all other organizational units.

Many of you will agree with me that the demand for business units do not usually come in an orderly manner.

This scenario, repeated year after year, can be relieved or hindered depending on organizational culture factors: the more mature ones will have orderly processes tabulated that will make this process, in theory, a path of roses. But this is not always the case, right?

The proposal we are making in this article to survive the planning and budgeting processes, which is to link the rest of the management team with the criteria for project evaluation and selection in order to find consensus in the early stages of the process.

Basically, it is articulated through a weighting system in stages, trying to isolate each one of them until it reaches a stage of selection. Let's look at it in more detail.

Phase 1. Assess business objectives in the planning and budgeting

Nothing to do with the projects. Simply extract the objectives and criteria of the strategic plan and assign values.

There are several methods to do this. In this case we have chosen the "pairwise comparison". Although we might have used the "ask the boss" or any other more orthodox methods.

planning and budgeting

With this method (either executed in an application or in a spreadsheet) we will obtain an assessment of the objectives, putting one over another, which is what we want at the end.

This is an example resulting from the previous comparison between pairs.

planning and budgeting

The key to this process is not so much the correction from the point of view of content, but rather the composition of the people who made this assessment: for a CIO concerned about the alignment of IT with the business and the subsequent support of the organization projects, it would be essential that this step is performed by the steering committee. This will be allow him to be personally detached of the foundation of future decisions.

In large organizations, this process can be repeated by business units which will not necessarily prioritize objectives in the same way.

Phase 2. Assess projects against these targets

The next step is to make comparisons of the value contribution of each project to each of the business goals.

In this case, we decided to use a qualitative method with Harvey Balls, where projects are rows and columns objectives. Here we say if the project adds value to the goal or not so much.

planning and budgeting

As in the previous case, these evaluations provide a "base 100" scoring for projects. But the key here is that the projects are not valued in relation to themselves, but are weighted by the prior evaluation of the objectives.

The result would be something like this:

planning and budgeting

Phase 3. Selected projects

Now it will be easier to select projects that may or may not be undertaken, with budget constraints according to value creation criteria.

planning and budgeting

In conclusion:

The work life of the CIO could be greatly simplified:

  • Because it has implied other directors in valuations, especially the one related with objectives and criteria.
  • Because it provides a scientific and professional decision-making support system.
  • Because it encourages the rest of the organization to have a cross-company and objective view of the initiatives

This short article aims to offer a proposal to focus strategic planning of projects in a solid form and strengthen the role of the CIO in organizations. We encourage you to leave any thoughts in the comment box below.


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