Case 13.3 “Dear Mr. President—Please Cancel our Project!”: The Honolulu Elevated Rail ProjectThis case is a great current example of a very expensive project that was kicked off because of an assumed need—to relieve congestion in downtown Honolulu through an elevated urban rail system. Critics argue that in addition to having a ballooning cost, the actual planning was poorly conceived, leaving Honolulu with an intrusive and ugly rail system through the downtown area, ruining panoramic views, and impeding traffic. Additionally, advocates underestimated the power needs for the rail system, requiring the transport authority to renegotiate electricity fees for the system. Finally, the original costs that were assumed for the project were calculated during an economic downturn and with the economy booming again, the costs of the project have gone up dramatically. All of these elements points to a state Governor who is anxious to be rid of the project and hoping that President Trump will deny additional federal funding, in which case the project will likely be cancelled.Questions
Case Study 14.1—New Jersey Kills Hudson River Tunnel ProjectThis case illustrates the challenges in making an early termination decision. Often, particularly in the case of public projects, there is a real difficulty in stopping a project once it has gotten “on the books.” As a result, projects with huge cost overruns, like Boston’s “Big Dig” are allowed to continue almost indefinitely. New Jersey Governor Chris Christie made a tough call in deciding to cancel the Hudson River Tunnel project because he was given a number of rosy projections that did not match the actual costs incurred to that date. This is a great case to let students pick sides: should Christie have cancelled the project or not? There are arguments to be made that the need was strong (although others could argue that the need was over-sold). On the other hand, the history of the project to date and the uncertainty about future federal funding made it a real gamble, especially during a time of economic recession.Questions
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