Holding Down Costs of Megaprojects: The Madrid Subway Example

Holding Down Costs of Megaprojects: The Madrid Subway Example

Holding Down Costs of Megaprojects: The Madrid Subway Example

Imagine that at some point in your life, for your sins, you part of a panel to evaluate different methods of construction for a megaproject–say, an extension of a light-rail public transit system.

Let’s also say that your goals are that the project should get done reasonably soon and at reasonable cost. What are some flashing red lights that suggest the plans may be going off-kilter?

Bent Flyvbjerg tackles this question in his essay, “Make Megaprojects More Modular,” written for the November-December 2021 issue of the Harvard Business Review. The key lessons are suggested by the subheading is: “Repeatable design and quick iterations can reduce costs and risks and get to revenues faster.” If someone starts talking about calling in famous architects for new designs, or famous artists for unique decorations, be wary. If they start talking about custom-designed components, be even more wary. Sure, be a little creative if you can. But design the project to happen in reasonably sized bites, each one briskly implemented, using readily available off-the-shelf components and technology. Flyvbjerg gives several examples of success stories. One is from the guy responsible for expanding the subway system in Madrid.

Manuel Melis Maynar understands the importance of scalability. An experienced civil engineer and the president of Madrid Metro, he was responsible for one of the largest and fastest subway expansions in history. Subway construction is generally seen as custom and slow by nature. It can easily take 10 years from the decision to invest in a new line until trains start running, as was the case with Copenhagen’s recent City Circle Line. And that’s if you don’t encounter problems, in which case you’re looking at 15 to 20 years, as happened with London’s Victoria line. Melis figured there had to be a better way, and he found it.

Begun in 1995, the Madrid subway extension was completed in two stages of just four years each (1995 to 1999: 56 kilometers of rail, 37 stations; 1999 to 2003: 75 kilometers, 39 stations), thanks to Melis’s radical approach to tunneling and station building. In project management terms, it offers a stark contrast to the experience of the Eurotunnel, which has cost its investors dearly. Melis’s success was the result of applying three basic rules to the design and management of the project.

No monuments. Melis decided that no signature architecture would be used in the stations, although such embellishment is common, sometimes with each station built as a separate monument. (Think Stockholm, Moscow, Naples, and London’s Jubilee line.) Signature architecture is notorious for delays and cost overruns, Melis knew, so why invite trouble? His stations would each follow the same modular design and use proven cut-and-cover construction methods, allowing replication and learning from station to station as the metro expanded.

No new technology. The project would eschew new construction techniques, designs, and train cars. Again, this mindset goes against the grain of most subway planners, who often pride themselves on delivering the latest in signaling systems, driverless trains, and so on. Melis was keenly aware that new product development is one of the riskiest things any organization can take on, including his own. He wanted none of it. He cared only for what worked and could be done fast, cheaply, safely, and at a high level of quality. He took existing, tried-and-tested products and processes and combined them in new ways. Does that sound familiar? It should. It’s the way Apple innovates, with huge success.

Speed. Melis understood that time is like a window. The bigger it is, the more bad stuff can fly through it, including unpredictable catastrophic events, or so-called black swans. … Traditionally, cities building a metro would bring in one or two tunnel-boring machines to do the job. Melis instead calculated the optimal length of tunnel that one boring machine and team could deliver—typically three to six kilometers in 200 to 400 days—divided the total length of tunnel he needed by that amount, and then hired the number of machines and teams required to meet the schedule. At times, he used up to six machines at once, completely unheard of when he first did it. His module unit was the optimal length of tunnel for one machine, and like the station modules, the tunnel modules were replicated over and over, facilitating positive learning. As an unforeseen benefit, the tunnel-boring teams began to compete with one another, accelerating the pace further. They’d meet in Madrid’s tapas bars at night and compare notes on daily progress, making sure their team was ahead, transferring learning in the process. And by having many machines and teams operating at the same time, Melis could also systematically study which performed best and hire them the next time around. More positive learning. A feedback system was set up to avoid time-consuming disputes with community groups, and Melis persuaded them to accept tunneling 24/7, instead of the usual daytime and weekday working hours, by asking openly if they preferred a three-year or an eight-year tunnel-construction period.

The worry, of course, is that rules like this will make the megaproject boring and perhaps low-quality. But quality problems are often what arise when using new designs, custom parts, and new technologies–especially when it comes time to repair and replace parts of the system. Also, is the purpose of the megaproject to do a job for society–in this case to get people from A to B–or is it to give politicians a pretty place for a press conference? Flyvberg writes:

But go to Madrid and you will find large, functional, airy stations and trains—nothing like the dark, cramped catacombs of London and New York. Melis’s metro is a workhorse, with no fancy technology to disrupt operations. It transports millions of passengers, day in and day out, year after year, exactly as it is supposed to do. Melis achieved this at half the cost and twice the speed of industry averages—something most thought impossible.

Manuel Melis Maynar understands the importance of scalability. An experienced civil engineer and the president of Madrid Metro, he was responsible for one of the largest and fastest subway expansions in history. Subway construction is generally seen as custom and slow by nature. It can easily take 10 years from the decision to invest in a new line until trains start running, as was the case with Copenhagen’s recent City Circle Line. And that’s if you don’t encounter problems, in which case you’re looking at 15 to 20 years, as happened with London’s Victoria line. Melis figured there had to be a better way, and he found it.

Begun in 1995, the Madrid subway extension was completed in two stages of just four years each (1995 to 1999: 56 kilometers of rail, 37 stations; 1999 to 2003: 75 kilometers, 39 stations), thanks to Melis’s radical approach to tunneling and station building. In project management terms, it offers a stark contrast to the experience of the Eurotunnel, which has cost its investors dearly. Melis’s success was the result of applying three basic rules to the design and management of the project.

No monuments. Melis decided that no signature architecture would be used in the stations, although such embellishment is common, sometimes with each station built as a separate monument. (Think Stockholm, Moscow, Naples, and London’s Jubilee line.) Signature architecture is notorious for delays and cost overruns, Melis knew, so why invite trouble? His stations would each follow the same modular design and use proven cut-and-cover construction methods, allowing replication and learning from station to station as the metro expanded.

No new technology. The project would eschew new construction techniques, designs, and train cars. Again, this mindset goes against the grain of most subway planners, who often pride themselves on delivering the latest in signaling systems, driverless trains, and so on. Melis was keenly aware that new product development is one of the riskiest things any organization can take on, including his own. He wanted none of it. He cared only for what worked and could be done fast, cheaply, safely, and at a high level of quality. He took existing, tried-and-tested products and processes and combined them in new ways. Does that sound familiar? It should. It’s the way Apple innovates, with huge success.

Speed. Melis understood that time is like a window. The bigger it is, the more bad stuff can fly through it, including unpredictable catastrophic events, or so-called black swans. … Traditionally, cities building a metro would bring in one or two tunnel-boring machines to do the job. Melis instead calculated the optimal length of tunnel that one boring machine and team could deliver—typically three to six kilometers in 200 to 400 days—divided the total length of tunnel he needed by that amount, and then hired the number of machines and teams required to meet the schedule. At times, he used up to six machines at once, completely unheard of when he first did it. His module unit was the optimal length of tunnel for one machine, and like the station modules, the tunnel modules were replicated over and over, facilitating positive learning. As an unforeseen benefit, the tunnel-boring teams began to compete with one another, accelerating the pace further. They’d meet in Madrid’s tapas bars at night and compare notes on daily progress, making sure their team was ahead, transferring learning in the process. And by having many machines and teams operating at the same time, Melis could also systematically study which performed best and hire them the next time around. More positive learning. A feedback system was set up to avoid time-consuming disputes with community groups, and Melis persuaded them to accept tunneling 24/7, instead of the usual daytime and weekday working hours, by asking openly if they preferred a three-year or an eight-year tunnel-construction period.

The worry, of course, is that rules like this will make the megaproject boring and perhaps low-quality. But quality problems are often what arise when using new designs, custom parts, and new technologies–especially when it comes time to repair and replace parts of the system. Also, is the purpose of the megaproject to do a job for society–in this case to get people from A to B–or is it to give politicians a pretty place for a press conference? Flyvberg writes:

But go to Madrid and you will find large, functional, airy stations and trains—nothing like the dark, cramped catacombs of London and New York. Melis’s metro is a workhorse, with no fancy technology to disrupt operations. It transports millions of passengers, day in and day out, year after year, exactly as it is supposed to do. Melis achieved this at half the cost and twice the speed of industry averages—something most thought impossible.

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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