CASE PRESENTATION: TRAM TROUBLE VS VOLKSWAGENBY:ZANAB KHAN,KISHAN PATEL,BRIAN LUONG

HISTORY

•  A rail vehicle which runs on tracks along public urban streets• Trams are a superb component in a successful city-wide

transport system but only if the system works as a whole.• Cities that use trams also need to be serious about reducing

car traffic and increasing the number of journeys made on foot or through other modes of public transport.

TRAM TROUBLE SYNOPSIS

• The tram project is over budget in Scotland. •  Edinburgh's new tram arrived at double the estimated cost

(£375m over budget) and taking twice as long as anticipated.• Intended to reduce traffic congestion. • Reduce the carbon emissions and help the city cope with

increased demand for public transportation.

KEY PROBLEMS OF TRAM TROUBLE

• In 2005, the parliament in Scotland shelved the project when new cost estimates revealed an increase of 30% to the original budget (£375m) that was originally set for the project. • After construction in 2007 started , delays and cost overruns

accumulated.• Changes in design plagued the project between 2008 and

2009.

KEY PROBLEMS CONTINUED

• The costs were limited which lead to ongoing delays, the project scope was reduced. • People in Edinburgh had made a decision of terminating the tramline in City Centre

instead Waterfront. • The residents living in Edinburgh had to struggle with dug up roads for the best part of

seven years causing congestion and financial harm of business. • In the Guardian, tram eventually took its first passenger in 2014, at the cost of

approximately of (£ 1 billion including loan interest.

GAME PLAN OF TRAM

• Reports indicate that only a third of the originally plan was built (Figure 1 below). As built was• just 14km long and had 15 stops along way. At a cost of approximately

£1 billion, the final• cost was a massive £71.4m/km ($107.7m USD/km). As a point of

reference, the average per• km cost for tramlines completed in 17 other cities in the northern

hemisphere for the period• 2010 – 2014 was about £22.7m/km ($34.4m USD/km). Does a 314%

cost increase validate• an outcry? It would certainly seem so!

REQUIRED MATERIAL

• Chapter 8: cost estimation

• Low initial estimates (unwillingly or willingly) Creating a Project Budget

• Unexpected technical difficulties

• Lack of definition✓ Cost estimation shall follow a comprehensive scope statement and WBS

• Specification changes

• External factors

• The budget is a plan that identifies the resources, goals and schedule that allows a firm to achieve those goals

Project Plan

WBS

Scheduling

Budgeting

VOLKSWAGEN SYNOPSIS

• The Volkswagen most expensive scandal in modern history. • Volkswagen vehicle cheated on emission tests: by making its car

appear far less polluting than they are. • The vehicle emission tests shook people's confidence to purchase

the car. • In America we had many embarrassing business stories such as

the Enron fraudulent case and the BP spill in Gulf of Mexico which lead to financial disasters. • The fines of financial disaster were up 18 to 25 billion dollars has

been lost due to dive in stock price.

• US EPA explored 482,000 Volkswagen diesel cars on American roads were emitting up to 40 times more toxic fumes than permitted.• The Toxic fumes are called nitrogen oxide. • The causes of inhaling the toxic fumes includes: getting asthma

and lung illness. • VW has since admitted the cheat affects 11m cars worldwide.• The subsidiaries of Volkswagens were affected by toxic fumes

from their cars.• The failure of project is by poor decision in management and big

mistakes.

KEY PROBLEMS

OTHER PROBLEMS

• The engineers of Volkswagen intentionally designed and installed a defeat device. • Defeat Device: physical software device which detects engine

control. • Defeat Device is programmed to detect the car for emission

testing.

Relation to Class

Tram• Follow the plan or else don’t start the project at all• Being indecisive or inconclusive is wasteful • Delays will only hinder the completion of the project due to poor planning.Volkswagon• Follow the rules and regulations as well as understanding the risk that comes

into not following them. • Management’s decision making needs to be for the better of the company and

not just to cut corners to lower cost.• Honesty and trust builds relationships with consumers.

Questions?

• Do you feel as if the Tram project will prove to be beneficial in the long run?• Do you think it was worth it for Volkswagen to cheat on its

carbon emission test knowing the risks?• Any other questions?