for debt—then they will be much
more realistic in project design and
much more efficient in project execution,” he says. When companies put
their own money on the line, “they
understand the risks and they do a
better job of managing costs.”
Mr. Anderson believes the public-private partnership model, in all of its
versions, must become the standard
for infrastructure development in the
United States.
Whether the money is public or
private or a combination of the two,
being able to stretch project funds is a
basic requirement these days.
“With the downturn in the economy,
there is an increased level of scrutiny
on all supplies and accounts,” says
Man Chai, PMP, senior project manager at the Brisbane City Council,
Brisbane, Australia. “And there is a
greater element of caution in project
decision-making.”
Project leaders need to keep tight
control over budgets and risks—
and pay close attention to the companies they choose to work with.
“You have to be sure whoever gets the
job is financially secure,” he says.
“And that’s a lot more complicated in
this economy.”
Companies that were financially
solvent six months ago could be in
trouble today, and financial audits
don’t always tell the whole picture. “In
Australia, our financial year is from
July to June and the crisis began in
September,” he explains.
To hedge that risk, Mr. Chai
invests time in extra due diligence,
rechecking public records on current
projects and asking potential contractors to open their books on unaudited
ones. “This helps us to be sure they are
in a situation to sustain a project for
two years,” he says.
CRISIS AVERTED
It’s not just contractors. In the world
of infrastructure megaprojects, new
crises arise every day. And project
After Hurricane
Katrina, you
couldn’t bid
anything because
material and
commodity prices
were way over
our estimates,
and no one knew
how to price a
long-duration
project.
—MICHAEL SCHIPPER, GREATER CLEVELAND REGIONAL
TRANSIT AUTHORITY, CLEVELAND, OHIO, USA
managers need to be prepared to
address them as quickly as possible to
prevent impacts on the schedule or
budget, says Michael Schipper, deputy
general manager of engineering and
project management at the Greater
Cleveland Regional Transit Authority,
Cleveland, Ohio, USA.
