OPIM 5894 ADVANCED PROJECT MANAGEMENT California High Speed Rail – Risk Management Team 3

California High Speed Rail 2 Cost Overruns  Underestimating true cost of HSR rail construction compared to similar other projects (based on 2008 dollars)  Channel Tunnel Rail Link, UK - $199 million  HSL Zuid, Netherlands - $133 million  TGV Taiwan, Taiwan - $130 million  …  California HSR, US - $52 million

California High Speed Rail 3 Cost Overruns  Inability to start project  Inability to finish project  Inability to meet regulations (Assembly Bill 3034)  Increase in fares by changing operating costs causing fares to creep closer to airfare costs  Estimated cost at time of article: $55 billion  Estimated cost as of January 2012: $98.5 billion  Underestimation of project costs  Analysis of the cost of the high speed raid project in China revealed that the cost of elevated track was approximately double the cost for at-grade track and the cost of tunnels was double the cost of an elevated configuration

California High Speed Rail 4 Delays  Increase in price of material, labor, land, inflation leading to a budget change  Lost interest from private investors  Lost Federal funding for project  Government policy changes (federal, state, town)  Right of way tracks get used for another project instead

California High Speed Rail 5 Delays  Increase in price of material, labor, land, inflation leading to a budget change  Lost interest from private investors  Lost Federal funding for project  Government policy changes (federal, state, town)  Right of way tracks get used for another project instead

California High Speed Rail 6 Piecemeal Funding  If any funders fail to deliver, project will fail  50% of financing has to be secured before state bonds can be used  Private investors not willing to commit money up front without guarantee of project start, leading to delays

California High Speed Rail 7 Simulation

California High Speed Rail 8 Mitigating Risk  Selection of an initial operation segment as soon as possible  Focus should be on San Jose to San Francisco and Anaheim to Los Angeles due to heavy population  Involve private sector in project design  Negotiate with Federal Government to relax regulations  Lobbying within local governments to increase support for funding  Incentives for involved parties to share profits

California High Speed Rail 9 Questions?