University of the Cumberlands Week 7 Honolulu Elevated Rail Project Case Study

Case 13.3 “Dear Mr. President—Please Cancel our Project!”: The Honolulu Elevated Rail Project

This
case is a great current example of a very expensive project that was
kicked off because of an assumed need—to relieve congestion in downtown
Honolulu through an elevated urban rail system. Critics argue that in
addition to having a ballooning cost, the actual planning was poorly
conceived, leaving Honolulu with an intrusive and ugly rail system
through the downtown area, ruining panoramic views, and impeding
traffic. Additionally, advocates underestimated the power needs for the
rail system, requiring the transport authority to renegotiate
electricity fees for the system. Finally, the original costs that were
assumed for the project were calculated during an economic downturn and
with the economy booming again, the costs of the project have gone up
dramatically. All of these elements points to a state Governor who is
anxious to be rid of the project and hoping that President Trump will
deny additional federal funding, in which case the project will likely
be cancelled.

Questions

1. Why
   are public works projects like the Honolulu Rail project nearly
   impossible to stop once they have been approved, even if later cost
   estimates skyrocket?
2. Project
   Management researchers have charged that many large infrastructure
   projects, like this one, suffer from “delusion” and “deception” on the
   parts of their advocates. Explain how “delusion” might be a cause of
   ballooning budgets in this project. How does “deception” affect the
   final project budget overruns?

Case Study 14.1—New Jersey Kills Hudson River Tunnel Project

This
case illustrates the challenges in making an early termination
decision. Often, particularly in the case of public projects, there is a
real difficulty in stopping a project once it has gotten “on the
books.” As a result, projects with huge cost overruns, like Boston’s
“Big Dig” are allowed to continue almost indefinitely. New Jersey
Governor Chris Christie made a tough call in deciding to cancel the
Hudson River Tunnel project because he was given a number of rosy
projections that did not match the actual costs incurred to that date.
This is a great case to let students pick sides: should Christie have
cancelled the project or not? There are arguments to be made that the
need was strong (although others could argue that the need was
over-sold). On the other hand, the history of the project to date and
the uncertainty about future federal funding made it a real gamble,
especially during a time of economic recession.

Questions

1. How
   would you respond to the argument that it is impossible to judge how
   successful a project like this one would have been unless you actually
   do it?
2. Take a position, either pro or con, on Christie’s decision to kill the ARC. Develop arguments to support your point of view.
3. In
   your opinion, how clearly must a large infrastructure project like ARC
   have determined its need, costs, and so forth before being approved? If
   the criteria are too stringent, what is the implication for future
   projects of this type? Would any ever be built?