Qualitative Analysis of the HS2 Railway Line Project - Case Study Example

Qualitative Analysis of the HS2 Rail Project Name Institution Lecturer Course Date Introduction It is worth considering that all projects have risks and uncertainties that are associated with them. The effects of such risks, in some cases, may be so significant that the projects end up failing. It is so unfortunate, however, that a majority of project managers often fail to conduct risk analysis, which is crucial in evaluating the risks and uncertainties that face projects. This has resulted into failure of major projects thereby resulting into massive losses being undergone by individuals, companies and governments. Even after successful completion of such projects, they end up causing more harm than good, thereby failing to meet their desired goals and objectives. Risk analysis is a very crucial element of project management that is often either ignored or not done properly (Heldman and Mangano 2011: 163). Performing a qualitative risk analysis involves identifying risks associated with the project under consideration and determining their impacts on the project (Heldman and Mangano 2011: 163). The process also involves ranking the identified risks with respect to how they affect the project and the project objectives The outcomes of a qualitative risk analysis include risk identification and their causes, risk ranking and risk categorization based on their impact and priority. All these lead to an exceedingly crucial step of qualitative risk analysis process, risk response (Kerzner 2009: 766). Planning for risk responses is a process that involves deciding the actions that will reduce the threats posed by the risks. This paper seeks to prepare a critical report on the proposed HS2 railway line project that will run from London to Birmingham to Manchester and finally to Leeds. The paper conducts a qualitative risk analysis by identifying the main risks that could affect the project, and it outlines the most appropriate ways of dealing the identified risks. The HS2 Railway Line Project The proposed HS2 railway line will connect two major cities, London and Birmingham, which will cost the government about £32 billion to complete (Castles and Parish 2011). The railway line will serve trains traveling at about 250 mph, which will help in reducing travelling time along the cities that will be served by the railway (BBC News 2012). Further, it is expected that the project will lead to economic harmonization across UK (Castles and Parish 2011: 16). Specifically, it is expected to close the economic gap existing between the North and South through job creations in the various parts of UK. Further, the project will help in reducing carbon emission by the transport industry since it will be carbon neutral and will not have adverse impacts on the climate. Project Evaluation UK is not in the economic position to try such a major project, taking into consideration that the economy just survived a major economic crisis. Instead, the government should invest in other less expensive project and desist from competing with other countries, such as China and the United States. An analysis conducted by the Institute of Economic Affairs (2011) shows that this project is associated with major economic flaws, which makes it unworthy for investment. If the government insists on carrying on with the project, probabilities are high that it will not materialize since it is associated with several and significant risks and uncertainties. The table below shows some estimated benefits arising from a qualitative analysis conducted by the government on the project. Table 1: Perceived benefits of the HS2 rail project (Department of Transport 2012: 25) Perceived benefit Business purposes Other purposes Total Reduction in train crowding 1800 4900 6700 Improvement in reliability and flexibility 4100 1100 5200 Reduction in journey time 18700 5800 24500 Other impacts on rail users 2900 2600 5500 Other diversified impacts 1200 900 2100 Overall benefits 28800 15300 44100 Provisions for risk and optimism bias, arising from the government’s quantitative analysis, do not appear to be adequate. The government was optimistic in estimating rail demand, which, when coupled by the extended demand timescale, makes the project risky and uncertain, thereby not worth investing. For example, the government claims that rail demand will have increased by over 267% by 2033 (Institute of Economic Affairs 2011). Economic analysis, on the other hand, indicates that this demand will only be realized in 2043 (Institute of Economic Affairs 2011). This implies that the government’s claims do not have a valid support. In addition, the government exaggerated the benefits of the rail including the time saving (and associated economic benefits) that will be realized using the high-speed trains (Institute of Economic Affairs 2011). Further, considering the high speed projected (225 mph), the project will not result into environmental sustainability since it will demand extensive electric energy (Institute of Economic Affairs 2011). The Institute of Economic Affairs gives some alternatives to the HS2 project. 1. Allow the existing rail networks to run into their full capacity 2. Upgrade the existing networks, which will be cheaper than the HS2 project. This alternative will also lead to a good Benefit-Cost Ratio of 2.7 to 5.2 as opposed to the HS2 project (1.8 to 2.5). 3. Build a conventional line of not more than 200 kph, which will be cheaper to construct, and will involve less damage to the environment. Main Risks that Could Affect the HS2 Project and How to Deal with Them 1. Political Risks Divergent Political Opinions The United Kingdom has a multiparty political system. Ministries are politically led since they are headed by government ministers, who are members of the cabinet (Wright 2003: 16). Countries within the United Kingdom are politically divided and categorized into parliamentary constituencies, each of which elects a political leader known as the Member of Parliament (MP) (Wright 2003: 16). The project may experience resistance from the opposition, although this is not so significant considering that the project was initially established by the current opposition side (BBC News 2012). The project might face opposition from political leaders of the constituencies not being served by the railway. This may lead to divergent views about the project and its impacts. Further, politicians may influence the public to oppose the project. Political Considerations and Persistence The UK government has appraised several large projects, some of which have shown undesired results. For example, the political system was persistent on the 2012 London Olympic Games to the extent of underestimating the cost in order to ensure that the games were held in London (Castles and Parish 2011: 6). The same scenario may be affecting the HS2 project, which would be a major risk facing the project. The government may be underestimating the costs while overestimating the benefits since it is competing with other countries, such as China and USA. Further, politicians from the places served by the rail, such as London, may push for the project. Dealing with the Political Risks It is important to ensure that all political parties are involved, in the project, to avoid political bias. Political considerations and persistence can be prevented by involving non-political or non-government parties to appraise the project. 2. Technical risks Track Failures The proposed high-speed rail is expected to run trains at about 250 mph. If completed, the proposed rail will have the record of running trains at the fastest speed in the world. However, this speed is so high that the rail risks failing due to rail vibrations. According to Gilligan (2012), such speeds are risky since they could result into amplification of rail vibrations, which lead to frequent rail failures. Considering that, the rail will be serving multiple trains at a time, the risk of rail failure increases. Current high-speed rails run at lower speeds than this. For example, Britain’s Eurostar runs at 186 mph (Taylor 2009: 64) while France’s TGV Est runs at 200 mph (Ferguson-Kosinski 2010: 15). Dealing with Track Failure Risk The rail should be critically analyzed with respect to excessive speeds and vibrations. If excessive speeds pose a great danger to rail stability and durability, design speed should be reduced to an optimum value that will deliver the desired goals without compromising rail safety. It would be worth reducing the speed (reduce its economic benefits) in order to reduce the risks involved in terms of frequent track failure and the expenses involved in repairing failed tracks. Insufficient Electric Energy Trains running on the high-speed rail will be electric powered, implying that demand for electricity will increase. If there is no improvement in electricity generation, there might be insufficient electricity power for the train and current demand. According to the Parliamentary Office of Science and Technology (2007), there are plans to close nuclear power plants and coal plants, which, when combined, produce more than half of electricity in UK. Closure of these key electricity generating facilities will imply reduced electricity generation, which is a major technical risk facing the HS2 rail project. Dealing with Insufficient Electric Energy Excessive train speed will imply a high-energy requirement. Design speeds should be reduced if electric energy required is not sufficient for the current design speed. This strategy will also save on risks of track failure as outlined above. Alternatively, the government should be encouraged to invest in renewable energy to ensure that electric energy will be sufficient for the trains. This would include diverting the government’s plan to phase out nuclear energy, which produces a significant amount of electric energy. Repair and Maintenance Ease of repair and maintenance, while considering their cost, is crucial when evaluating whether a project is worth investing. It should be considered that the HS2 project is a complicated project (taking into consideration the excessive speeds associated with it). Therefore, repair and maintenance of the rail and the trains is a significant risk facing the project, considering that this will be the fastest rail speed in the world. Complicated and demanding repair and maintenance implies that the objectives will not be met since a stalled train or a damaged rail implies reduced capacity. Dealing with the Repair and Maintenance Risk It is worth determining the probability of failures and maintenance required. The HS2 project is a complicated project (taking into consideration the excessive speeds associated with it), which may require complicated repair maintenance procedures, which might be expensive in the end. Since high-speeds will contribute to excessive failures, which will demand frequent repairs, design speed should be reduced to about 200 mph, which has already been proved effective in other countries. Further, rail complexity should be reduced by reducing the number of trains operating on the rail at any single time. Economical Risks Displacements Homes and businesses will be displaced during construction. This will be associated with economic risks in the form of compensation. Tourism The project will interfere with natural woodlands and wildlife sites, which are key tourist attraction sites of great economic value. This is a great economic risk in that the project will lead to reduced income from such tourist attraction sites. Economic Impact due to Environmental Deterioration The project will interfere with the landscape, which will lead to environmental degradation and destruction of the natural beauty. According to BBC News (2012), the project will require making tunnels and cutting across hills as a way of reducing environmental destruction. However, it should be considered that making tunnels and cutting across hills will result into extensive damage to the natural beauty and will result into destruction of the natural beauty. Further, it will interfere with water catchment areas, such as hills and forests, which may interfere with the hydrological cycle, which will have a negative economic impact. Dealing with Displacements, Tourism and Environmental Deterioration Risks It might be cheaper to increase the length of the rail but avoid interfering with wild life sites, woodlands and crucial natural resources. The long-term economic benefits of the natural resources, woodlands and wildlife sites should be analyzed, which should be compared with the cost of avoiding them in terms of rail distance. Further, they should be compared with the economic cost of doing away with the project and improving on the current rail network. This will aid in deciding whether to interfere with the economic resources, continue with the HS2 project but avoid the resources or do away with the HS2 project, which will save the natural resources. Delayed Project Benefits According to the Institute of Economic Affairs (2011), full project benefits will be realized by 2043 (31 years from now). UK economy is still unpredictable considering that UK just survived the 2008 economic crisis and needs time to recover (Institute of Economic Affairs 2011). Dealing with Delayed Project Benefits It is possible to shorten the project time frame, which will hasten project benefits, but at an increased cost. Therefore, it is worth conducting an analysis on the costs, benefits and practicality of hastening the project, which should be compared benefits and costs of carrying the project as planned. This is essential in deciding whether to hasten the project, do it as planned or do away with it. Economic Loss Associated with Loosing the Current Network Once completed, the current network, including the rails and trains will be rendered useless. The severity of this economic risk depends on their economic value. Dealing with the Economic Loss Associated with Loosing the Current Network If possible, the current rail should be integrated with the new rail project, which will minimize the risk associated with loosing the current rail. If it is not possible, the cost of the current rail and facilities should be analyzed and compared with the perceived benefits of the proposed rail. Further, the costs, benefits, ease and speed of upgrading the current rail, to meet the desired objectives, should be analyzed. If it is easier, faster and cheaper to upgrade the current rail, the proposed project should be dropped and the new rail upgraded. If it is not practical to upgrade the new rail, to meet the desired goals, the proposed rail should be constructed. If the economic benefits of the proposed rail are inferior to the cost of doing away with the current rail, the proposed project should be dropped. Conclusion It is apparent that the HS2 project is associated with major flaws, which might plunge UK into another economic crisis. Provisions for risk and optimism bias, arising from the government’s quantitative analysis, do not appear to be adequate. The government was optimistic in estimating rail demand, which, when coupled by the extended demand timescale, makes the project risky and not worth investing. There are several risks facing the project. A qualitative analysis of the major risks facing the project has been conducted. Bibliography BBC News. January 10, 2012. HS2: High Speed Network Gets Go Ahead. [Web] Accessed 13 April 2012. Castles, C., and Parish, D. 2011. Review of the Economic Case for HS2. London: Royal Automobile Club Foundation. Department of Transport. 2012. Economic Case for HS2: Updated Appraisal of Transport User Benefits and Wider Economic Benefits. A Report to Government by HS2 Ltd. London: Author, 25. Ferguson-Kosinski, L. 2010. Europe by Eural 2010: Touring Europe by Train, 34th Edition. Guilford: Author, 15. Gilligan, A. Feb 19, 2012. High Speed Rail Link ‘At Risk of Derailment’ Because of 225mph Trains. [Web] Accessed 13 April 2012. Heldman, K., and Mangano, V. 2011. PMP: Project Management Professional Exam Review Guide. Indiana: John Wiley & Sons, Inc., Institute of Economic Affairs. July 19, 2011. New Analysis Shows Serious Economic Flaws in High Speed 2 Plans. [Web] Accessed 13 April, 2012. Kerzner, H. 2009. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. Hoboken, NJ: John Wiley & Sons, Parliamentary Office of Science and Technology. 2007. Electricity in the UK. [Web] Accessed 12 April 2012. Taylor, N. 2009. Live & Work in Britain. Crimson Publishing, 64. Wright, A. 2003. British Politics: A Short Introduction. Oxford: Oxford University Press, 16 Read More