Reference no: EM133134482

Case study source:

The Sidney Opera House construction: A case of project management failure (eoi.es)

The Sydney Opera House is one of the best-known iconic buildings, recognized around the world as a global symbol of Australia. The Danish architect Jørn Utzon won the architecture competition set out by the New South Wales government for the new building in 1957, and the construction started in 1959. The project was originally scheduled for four years, with a budget of AUS $7 million. It ended up taking 14 years to be completed and cost AUS $102 million. The Sydney Opera House could probably be seen as one of the most disastrous construction projects in history not only from the financial point of view but also for the whole management plan. Lets analyze the main reasons that led to it. First of all, at the beginning of any project goals and objectives have to be clearly defined by the client to provide a guideline for what the project must complete. There are three main factors: time, cost, and quality. In the case of the Sydney Opera House the last one was the most important, as it was an almost unrestricted goal of the project and the reason why it was launched. No indications regarding time or cost limits were either provided for the competition. Thus, the architects were allowed total freedom in their designs. After Utzon was selected, he presented his "Red Book" in March 1958, which consisted of the Sydney National Opera House report. It comprised some indications such as plans, sections, reports by consultants, etc. The funds came almost entirely from a dedicated lottery, so the project was not a financial burden for the government. Regarding time planning the goal was to complete the construction at the end of 1962 and have the grand opening at the start of 1963. The project should have lasted four years. The main stakeholder was the architect, but Utzon was much more concerned with the design aspect rather than time and costs objectives, which proved problematic. During the project, Utzon collaborated with Ove Arup, who was in charge of the structure and the engineering. With some other subcontractors, the team was in charge of mechanics, electrics, heating and ventilating, lighting and acoustics. There was no real project manager, but rather collaboration between Utzon and Arup. The other main stakeholder was the client, the state of New South Wales. This encompassed the Australian government, which launched the competition for the project, and especially the Labor Premier, Joe Cahill. A part-time executive committee was created to provide project supervision but the members had no real technical skills. The government eventually became an obstacle to the project team by inhibiting changes during the progress of the operations and thus contributed to cost overrun and delays. Finally, the public was an indirect stakeholder because they were concerned with the projects success. There appeared to be problems from the start of the project that was divided into three stages: Stage 1 was the podium, stage 2 was the outer shells, and stage 3 was the interiors and windows. Apparently Utzon protested that he had not completed the designs for the structure, but the government insisted the construction had to get underway. In addition, the client changed the requirements of the design after the construction was started, moving from two theatres to four, so plans and designs had to be modified during construction. Regarding the project's budget the initial estimation was drawn on incomplete design drawings and site surveys which later lead to disagreements. The contractors for the first stage successfully claimed additional costs of AUS $1,2 million in 1962 due to design changes. When it was completed in 1963, it had cost an estimated AUS $5.2 million and it was already 47 weeks over schedule for the whole project. Stage two became the most controversial stage of the entire construction. As costs were rising a new government stepped in and monitored all payments being requested by the Opera House. By the end of stage one, Utzon submitted an updated estimate of the projects total cost as AUS$12.5 million. As more payments were being delivered and no visible progress was seen, the government began withholding payments to Utzon. Stage two slowed down and in 1966 Utzon felt he was forced to resign from the project as his creative freedom was restricted, and therefore could not bring his perfect idea to fruition. The project was then taken over by three Australian engineers, and stage two was completed in 1967 with a total cost of AUS$13.2 million. When Utzon walked out of the project, he did not leave any designs or sketches to work with as he was convinced that he would be called back to the project once the new team failed. This was not so, and due to the lack of designs to work with, new ones had to be created based on the current structure of the Opera House and many unforeseen complications were found. Evidently this caused a huge increase in the estimate of the total cost of the project, which came to AUS$85 million. This came as a shock and nearly an insult to Utzon who had been fending off the Government from rising costs for years. The news that they had agreed to that budget, which was more than four times Utzon's original estimate, was evidence that he had been unjustly treated. Apparently, there were a lot of delays and cost overruns. The original cost was to be 7 million dollars and its construction was supposed to be completed by 26 January 1963. But this was only on paper. The reality was quite different. The Sydney Opera House ended up costing 102 million dollars and was completed in 1973. Many experts in project management say its construction is an example of poor or bad project management. But should we always measure the success of a project by the triple constraints of cost, schedule and quality? Utzon was losing control of the situation and had an undesirable pressure under him. The initial cost was (Aus) 7 million dollars and in the end it has cost (Aus) 102 million dollars and a total of 14 years to be constructed, 6 more than it should be*. The Arup, engineers contracted for the engineering part stayed until the end of the project but Utzon left in the end , after designing the roof but not concluding. During the project, Utzon collaborated with Ove Arup, who was in charge of the structure and the engineering while subcontractors were in charge of mechanics, electrics, heating and ventilating, lighting and acoustics. There was no real project manager, but rather collaboration between Utzon and Arup. When the construction started there was no clear concept of how the roof might be constructed. It's not that the estimates were wrong; it's that there was nothing to base the estimates on in the first place. Much of the delay and cost overrun was caused by iteration on roof design and lack of Data, eventually landing on a solution that constructed the roof out of interlocking tiles, but this solution was only discovered after a lot of time and effort The other main stakeholder was the client, the state of New South Wales (Australian government). A executive committee was created to provide project supervision but the members had no real technical skills. It was hard to keep two of the key stakeholders happy, the minister David Hughes and the SOHEC - Sydney Opera House Executive Committee so he decided to quit blaming the first of lack of cooperation but in fact even the acoustic consultants did not agree between each other and as a result of all these changes of plans and misunderstandings the Sydney Opera House - finished by three local architects - still did not had the proper acoustic, which was the first main factor that lead to a new opera house*. Nowadays the Sydney Opera House is already seen as profitable since its cost was already covered by the revenue made from customers (tourists mainly) but further improvements on accessing conditions were taken. Stakeholders Before going back to the subject it is needed to take into account that a failed project is a project that is cancelled before completion, never implemented, or damaged in some way. Other reasons that why projects fail are an absence of commitment, a bad project organisation and planning, a bad time management, lack of managerial control, extra costs among other problems. Queen Elizabeth II inaugurated the Sydney Opera House in 1973, after 17 years of redesigns, underestimates and cost overruns. By 1975, the building had paid for itself, thanks mainly to the lottery system that was created to help its funding. Utzon was never to return to Australia, never to see the final result of his work that was recognized as an incredible feat of architecture. In 2003 the architect was honoured with the Pritzker Prize for architecture, the most renowned architectural prize in the world.

1. Explain the consequences of underestimating the initial planning in this project and ways to address this problem

2. Recommendation on what you would have done differently.