Tag Archives: Risk

A Big Project from Initiation to Closing – a Canal: Panama

Apart from wars, this is the most expensive undertaking in the world. It was a huge engineering project that started in the mid-1800’s and that employed thousands, cost millions of dollars, and took years to complete.

We will follow the story of the Panama Canal project as documented in Identifying and Managing Project Risk by Tom Kendrick. We will also discussed the latest canal expansion project to be completed by the year 2014.


Part 1: Anatomy of a Failed Project:
The first Panama Canal project was a failure. The work the began on 1881 by Ferdinand de Lesseps, the builder of the Suez Canal, which triumph earned him the nickname “The Great Engineer,” but this project was abruptly stopped 8 years later.

It has been said that the canal failure was due to improper Risk management planning. It is important to pay attention and take into account lessons learned on projects from the past and not just plan for the future. Mistakes were made for a long, long time until finally it failed.

Risks were not identified effectively or were ignored, and the primary risk management strategy seems to have been “hoping for the best.”

Planning for the project was also a low priority. De Lesseps paid little attention to technical problems. Many engineers voted against the canal project due to technical difficulties but De Lesseps ignored the views of those who disagreed with him. He believed that need would result in innovation, as it had at Suez, and that the future would take care of itself.

The original estimates of the volume of excavation required started to rise, to 120 million cubic meters-almost triple the estimates provided in the original plan. As the magnitude of the effort rose, De Lesseps made no public changes to his cost estimates or to the completion date.

About Panama:
Panama is in the tropics, and torrential rains for much of the year created floods that impeded the digging and made the work very dangerous. The frequent rains turned Panama’s clay into a flowing, sticky sludge that bogged down work, and the moist, tropical salt air combined with the viscous mud to destroy the machinery. There was also the issue of elevation. The continental divide in Panama is not too high by North or South American standards, but it does rise to more than 130 meters. For a canal to cross the central portion of Panama, it would be necessary to dig a trench more than fifteen kilometers long to this depth, an unprecedented amount of excavation. Digging the remainder of the eighty-kilometer transit across the isthmus was nearly as daunting.

Funding for the work was a problem, as only a portion of the money that was raised was allocated to construction (most of the money went for publicity, including a very impressive periodic Canal Bulletin, used to build interest and support).

Diseases like malaria and yellow fever were also troublesome and killed many workers. Eventually, thousands of workers died, creating a negative publicity and the idea of a sea-level canal doomed.

Project Status:
the Canal Bulletin reported good progress (regardless of what was actually happening). As the project continued, many changes were made but not disclosed or reported out. The opening of the canal eventually delayed and millions of more dollars spent for less than 1/5 completion.

Failures to raise funding, De Lesseps liquidated his company and the project ended. The French empire collapse with the most costly project in history.

With no post-project analysis, the French and many investors lost over $300 millions, decade of work and no canal including many lost of lives (workers who came to Panama).

In conclusion, while it seems as the possible idea of a sea-level canal became the impossible task; nevertheless, the project management practices of those years could have been beneficial with the appropriate objective, better communication and the appropriate risk management plan.

You can not effectively manage the resources, time and money in a project unless you actively manage the project scope.

Identifying and Managing Project Risk by Tom Kendrick
Wikipedia-Panama Canal

Part2: U.S.A Construction of the Panama Canal

Part3: Future-Building the New Canal