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The London Millenium Dome - the billion dollar tent

London's Millennium Dome is a classic example of mismanagement and starry-eyed optimism about the future that in its grandiose exuberance fails to consider the bottom line.

British Prime Minister Tony Blair hailed the project when he came into power in 1997, but in the end was desperate to save face and dissociate his government from this financial fiasco just before the election for his third term.

Designed by Lord Falconer, the Dome cost approximately $650 million to build and had an overall budget of slightly more than $1 billion, which was supposed to be financed by corporate sponsorships and revenue from ticket sales. In the end the total income was about $350 million.

The Dome opened with the Queen of England sitting front row, but allegations of mismanagement and fraud were already swirling beneath the glitzy surface. After the gala New Year's 2000 celebration, it immediately became apparent that attendance projections were wildly inflated and another $250 million had to be drawn from National Lottery grants to keep the Dome operational through the end of this year.

In November 2000 the government agreed to turn the "black hole of Greenwich" over at a fire-sale price of $177 million to the Legacy consortium, owned by Robert Bourne, a millionaire with close ties to the Labour party.

Not a bad price considering that Legacy would be getting the whole structure for less than one-fifth of what the British government has sunk to build this futuristic tent.

Will Witt comments:

"An absolutely classic case of no control from start to finish" - and just think what a billion dollars would have done to the morale of Londoners and the prestige of the Labour Government if it had divided this money amongst the London Boroughs to spend as they thought fit on Millenium celebrations!

Bomfords Group

The Bomfords group, a UK fresh produce supplier with about 2100 employees and a turnover of about $300 million per annum has just gone bust (June 2007)

This has been blaimed on the cost of building a packing shed that spiralled out of control. The original budget was for $7 million and the final cost hit $18 million.

Will Witt comments:

"The mind boggles" - How can a shed cost two and a half times the original estimate and how can a company of this size just pour money into it until it went bust!

The West Coast Main Line

The West coast main line railway is not only £300m over budget but it is still prone to overcrowding and will need even more money invested in it to meet the predicted increase in passengers.

That's what chairman Edward Leigh said as the Committee of Public Accounts published a report that looked at how Network Rail, the Department for Transport (DfT) and the Office of Rail Regulation (ORR) had managed to drive down costs, deliver service improvements, and learn lessons for other major projects.

Leigh said: “The programme to modernise the West Coast Main Line was collapsing under the weight of its own ambition until the Strategic Rail Authority stepped in. Together the SRA and Network Rail turned the programme around. Passenger numbers are up, journey times are down and trains are more likely to run on time. But the public are having to stump up a lot of money. Network Rail expects to overspend its allocation for the programme by £300m. The total projected cost of the upgrade has now hit £8.6bn, an increase of £6bn since the original estimate. Network Rail has improved control over costs but there is ample room for improvement: for instance, by benchmarking costs for track renewals and signalling work in order to able to challenge contractors’ prices better."

He went on: “It is not as if spending on such a heroic scale is the end of the story. Demand for the services on the West Coast Main Line has grown more quickly than expected and some parts of the route are already at or near capacity. It is extraordinary that in only eight years time the line once again may not be able to meet demand. The DfT and the ORR must explore with Network Rail and the train operating companies every measure they can to enable greater use of the existing tracks, increase train capacity and minimise disruption to services from work on the track and signalling. There must be no suggestion that, following the expenditure of billions of pounds on the line, railway passengers should simply have to resign themselves to the stress and inconvenience of chronic overcrowding.”

Will Witt comments:-

So let's summarise the situation:-

It has cost 3 x the original budget and it still don't work - what a way to run a railroad!

The Eurofighter

Original budget for the UK's 232 fighters was $14 billion dollars.

Cost outcome is now forecast at $38 billion dollars or $164 million each and delivered about 4 and a half years late

Will Witt comments

Yes that's right $164 million each - can you imagine how one quite small aeroplane can cost that much? - and what are they for? - who is the enemy?

This money should obviously have been spent on unmanned aircraft where you get a lot more capability for a lot less money without risking the lives of very expensive pilots.

The Portsmouth Millenium Tower - renamed Spinakker Tower

This project began in 1995, although construction of the tower did not begin until 2001, and was not completed until mid-2005, due to repeated delays and extra funding requests by the contractor. This was six years later than the planned opening date of 1999, chosen to coincide with Millenium celebrations. The tower, originally referred to as the Portsmouth Millennium Tower, was accordingly renamed the Spinnaker Tower.

The project was massively over budget, with an overall cost of about $70 million for the tower alone. Taxpayers were not meant to fund the tower, but Portsmouth City Council eventually contributed about $22 million towards the construction

The tower was dedicated on October 16, 2005 and opened two days later. On opening day, the Tower's project manager and representatives of the contractor and the lift contractor were stranded in the tower's malfunctioning external lift for an hour and a half. Abseiling engineers were called to rescue them.

Will Witt comments:

This is one of my favourite project disasters because it so inexplicable.

I understand that the original cost estimates were less than a third of the final cost outcome. But how can a steel tower on a piled reinforced concrete base take 10 years to design and construct? - and I love the story of the abseil rescue!

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