Megaprojects are at the heart of resolving South Africa’s energy problem by increasing supply capacity. Two of these, however, namely Medupi and Kusile, coal-fired power stations, have been mired in controversy, largely because of how much longer they will take to complete than originally planned for, and indeed, how much more they will cost. Take Medupi for instance, the first unit of which became operational in 2015, an estimated three years behind schedule. It was forecasted to cost R70bn, but this cost projection had escalated to R105 bn in 2014 just prior to it being synchronized with the grid. A report produced by the University of Pretoria estimated that Kusile will cost a staggering 40 times more than the R80 bn that was originally projected, with a final cost in the region of R1449 trillion and R3279 trillion. The first unit of Kusile was switched on in August 2017, four years behind the original schedule. Both Kusile and Medupi are only expected to be fully completed in 2020, despite construction having started in 2007.Several compelling reasons have been put forward for the massive escalation in costs as well as the delays to the schedule. Under budgeting at the outset of the project appears to have been an issue, particularly the real cost of the project often being underestimated. For instance, the UP report’s revised estimated cost for Kusile project considered externalities over the fifth-year life span of Kusile such as the plant’s broader environmental and societal impact. Issues relating to biodiversity, air pollution, greenhouse gas, output, damages to roads, noise and water quality were accounted for. Beyond budgeting concerns, the Dentons report produced by the law firm of the same name and commissioned by Eskom 2015 to investigate issues pertaining to poor performance of the plants, high energy costs and financial challenges, inter alia,further identified reasons as to why the plants were running behind schedule and over budget. Some of these reasons included inadequate front planning, poor project integration, as well as lack of feasibility studies. For instance, the Minister of Public Enterprises, Lynne Brown suggested in 2014 with reference to Medupi and prior to the release of the Dentons report, that critical aspects such as environmental permits, geotechnical surveys and subsequent design work were not completed prior to the commencement date, resulting in additional delays.
- Project constraints if poorly managed are likely to have negative impact on the overall success of a project. Discuss with reference to the case study some of the reasons why the Kusile and Medupi projects may not be successful (12)
- Explain why Kusile and Medupi projects are referred to as mega projects in the case study. (8)
- As the project manager of both Kusile and Medupi mega projects, prepare the contractual agreement that binds the stakeholders to the project. The agreement must include all the key information. (12)
- The high costs and rampant schedule delays in the project management contributes adversely to successful operation of the project. (a) Identify two risks for each category of the high costs and rampant schedule as mentioned in the case study.(b) Discuss why the project manager needs to consider risk as part of the budget allocation (15)
- With reference to the case study, what are some of the critical lessons aspiring project managers might take away from the Medupi and Kusile experiences? Motivate your answers. (5)
APPLICATION OF PROJECT TOOLS
Using the grid below, design the Gantt Chart for the project milestone as realized by both projects namely Medupi and Kusile. (5)
|Accommodation||1 week||5-9 May|
|Logistics||3 weeks||12-30 May|
|Catering||1 week||19-23 May|
|Assessment||1 week||2-6 June|
Get Answers on Megaprojects Case Study
Answer 1: Project constraints are defined as those limitations that have a direct relevance on the performance of the project. They play a major role in the overall success of a project, as they act as barriers in the successful accomplishment of the project goal. In the given case of Kusile and Medupi, it is evaluated that there are many such project constraints that directly affected the success of these projects. The major reason that it identified for the failure of Kusile and Medupi is the lack of proper planning and survey work carried out before initiating the work on this project. As a result of this, there are issues identified in the form of cost exceeding the expectations, and huge delay in the performance of these projects……….
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