Five Lessons from 19th Century Mega-Project Management
July 21, 2023|Paul Lewis, Principal, Deutsche Bahn
Sources and citations are often best if they are published within the past few years. But sometimes it is the oldest of references that provide the most compelling insights into today’s pressing issues. This includes addressing the high costs and long timelines associated with building rail infrastructure, something that public agencies in the United States are currently working to address.
While recently cleaning out my bookshelf, I decided it was time to pitch “Elements of Railroading” by former railroad executive Charles Paine. Published in 1885 by the Railway Gazette, I have had the book for years, yet I do not know where it came from nor have I ever read it. Before tossing it, I decided to see if there was anything of interest. As the binding actively disintegrated while I flipped pages, I found the first chapters to be all about best practices for building new railroads in the 1800s, which were among the first true mega projects.
I quickly realized that the lessons in the book were surprisingly similar to recommendations for bringing costs and timelines down for today’s rail mega projects, including from Eno’s project delivery work and what I have learned working for Deutsche Bahn. Five lessons from the 1880s stand out to reinforce current best practices.
1 – Hire a quality project management team
“One engineer, however competent, is physically capable of only a certain amount of oversight.”
The book repeatedly cites the importance of having a qualified, in-house design and construction oversight team. Railroad companies frequently attempted to save costs by starving their oversight staff, and Paine repeatedly shows examples of how insufficient oversight creates more costs in the long run. “It would be better for the company that the chief engineer should err in having too many competent assistants, rather than by having employed too few.”
Not only does it make sense to have a well-structured and sufficient number of staff, but it is also worth the money to attract top talent. Managing large infrastructure projects requires frequent decision-making, so hiring experienced leadership makes for informed and quick decisions. “If a sufficient number of assistants have been engaged, the low rate of pay allowed has not been enough to secure men of experience to decide wisely the innumerable problems which must be promptly settled.”
Having a solid, in-house oversight team is even more important for today’s challenges. Too often the public sector does not have enough staff, does not give them the right support, and outsources too much decision making to consultants. As was recommended then, project sponsors, regardless of whether they are public or private sector, need to have sufficient, high-quality, and empowered staff that can lead a project and its contractors through design and construction.
2 – Ensure sufficient planning before construction
“It is a mistaken economy which strives to accomplish cheap surveys, or a cheap supervision of the construction of the railroad.”
The book discusses how many railroads would skimp on the planning phase of the contract, not putting enough time into finding the best route, determining the condition of the soils, and recording accurate measurements. The drive to move to design and construction before the line was sufficiently planned resulted in numerous anecdotes about high construction and operating costs years after the road was finished. Taking time is essential: “Let no haste, or other considerations, tempt an engineer to permit any excavation to be attacked, before all the cross-sections of the survey have been taken which will be required for an accurate estimate.”
Much like ensuring enough spending on project oversight, it is also important to ensure thorough planning is completed before construction. Today, too often project sponsors rush to begin construction (or environmental review, which did not exist 140 years ago) and they forgo important planning of the project. While it might be tempting, it is best to spend more time on the planning end of the project to ensure that final design and construction go smoothly.
3 – Manage project risk
“Shrewd contractors are on the look-out for such instances of neglect, and will take advantage of them, when the claim, as the often do at the last, and underestimate.”
Paine did not mince words about opportunistic contractors taking advantage of the risk of insufficient planning. Ensuring high quality inputs, including specifications, designs, and utility location is essential to limiting risk. Building a new railroad in the late 1800s followed the traditional design-bid-build approach, with in-house managers overseeing multiple construction firms to clear the necessary land, conduct grading, and laying track. Construction firms bid on the work based on the designs competing for the work and were selected competitively based mostly on the lowest bid. Paine states that if too much construction risk is put onto contractors, including for inaccurate designs, they either bid too much or they engage in one of the biggest challenges for mega-project: change orders.
Similarly, the book discusses the challenges with fixed cost contracts for measurable outputs, like laying track by the mile. “If track is laid by contractors, the proper allowance of them per mile should be determined and delivered to them upon receipts.” Itemizing time and materials for construction contractors is another best practice that is helpful today, ensuring that most of the price of a potential change order is already part of the contract, limiting unnecessary risk on the private contractor and the project sponsor.
4 – Invest in community engagement
“In setting out upon a railroad survey, it is not uncommon for a party to proceed like an army in the enemy’s country, without the smallest regard to the rights of the proprietors over whose land they must pass; trampling growing crops, throwing down fences, cutting valuable trees, appropriating fence rails or fence boards to make stakes, and afterward expressing surprise at the unfriendly disposition of the owners of the soil, The dislike of the railroad company and of railroad men which this first impression engenders, frequently endures, in an agricultural community, for many years after the railway has gone into operation.”
This excellent quote and following sections summarize the challenge of a railroad working with communities along the project route. It also shows how neglect for affected communities can make project progress difficult. Much of railroad building in the United States in that time was worse, particularly with indigenous communities whose rights were often ignored. But the author goes on to show how investing in steps to engender friendly relationships with those living along the route is worthwhile.
Today there are regulations and high expectations for community engagement. Project sponsors do well when they go beyond the standardized box checking exercises, hire staff to communicate with affected residents and businesses, and transparently record their concerns. Investing in community engagement does not mean agreeing to all their requests, but it does help create good that will benefit the project overall.
5 – Learn from others
“… with all the information which he may derive from text-books and from the published examples of the works of others.”
The book itself is a compilation of best practices meant to communicate to other project sponsors the risks of some approaches and the rewards of others. Publishing books and manuals were one of the best ways to share ideas in 1885. Today, the ability to travel to or call project leadership counterparts in all parts of the world is a distinct advantage for sharing challenges and lessons. If we are serious about bringing the cost and timelines down of new projects in the United States, we can still follow best practices from 140 years ago and use today’s technology to make it happen.
Paul Lewis is a Principal Consultant with Deutsche Bahn E.C.O North America
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