Provide conclusion and lesson learned from this case study?

516 Chapter 14 . Project Closeout and Termination CASE STUDY 14.1 New Jersey Kills Hudson River Tunnel Project When dignitaries broke ground on the Access to the billion in their Annual Report. To share the burden of Region's Core (ARC) project in northern New Jersey in the project costs, the funding as originally proposed 2009, it was supposed to be a celebration to signal the included the following sources: start of a bright new future. Creating a commuter rail tunnel under the Hudson River was not a particularly Federal government: $4.5 billion new or difficult idea, but it was viewed as a critical Port Authority of New York and New Jersey: $3.0 need. The project was first proposed in 1995, and every billion New Jersey governor after that time had publicly sup- New Jersey Turnpike Authority: $1.25 billion ported the need for the tunnel. The reasons were com A final important feature of the funding plan lim- pelling: The entire commuter rail system connecting ited the exposure of the federal government for any New York and New Jersey was supported by only one project overruns, meaning that the government was congested 100-year-old, two-track railroad tunnel into locked into its original commitment amount only. Any overcrowded Penn Station in midtown Manhattan; cost overruns or project slippages would have to be cov- both tracks had reached capacity and could no longer ered exclusively by the state of New Jersey. accommodate growth. Passengers were making more The contracts for various parts of the project began than 500,000 trips through Penn Station every day, with to be awarded following competitive bidding in June station congestion and overcrowding the norm. The 2009, and the first tunneling contract was awarded in project was especially critical for New Jersey residents May 2010. Within little more than three months, rumbles because their commuter ridership to New York had began coming from the New Jersey governor's office more than quadrupled in the past 20 years from 10 mil regarding the viability of the project. Governor Chris lion annual trips to more than 46 million annual pas- Christie ran and was elected on the promise of reining senger trips. In the peak hours, the New Jersey Transit in what many viewed as out-of-control spending by Authority operated 20 of the 23 trains heading into or the state's legislature, coupled with some of the highest out of New York. Building the ARC would double the property and business taxes in the country. As a self- number of New Jersey Transit commuter trains, from described "budget hawk," Christie was increasingly 45 to about 90, that could come into Manhattan every troubled by rumors of cost overruns in the ARC proj- morning at rush hour. ect. Worse, all projections for completion of the project In the face of such congestion and perceived need, pointed to a much higher final price tag than the origi- the ARC project was conceived to include the following nal $8.7 billion estimate. elements: In early September 2010, Governor Christie Two new tracks under the Hudson River and the the project until his office had a chance to study project ordered a temporary halt in awarding new contracts for A new six-track passenger station, to be known cost projections more thoroughly. This issue was high- as "New York Pennsylvania Station Extension" though a supporter of the tunnel, publicly admitted that lighted when U.S. Transportation Secretary Ray LaHood, (NYPSE) under 34th Street, with passenger con- federal estimates showed the project could go between A new rail loop near the Lautenberg Secaucus that even those estimates might be low, putting his state Junction station to allow two northern New Jersey on the hook for a potentially huge new debt at a time A midday rail storage yard in Kearny, New Jersey when the economy was sour and the state was already desperately seeking means to trim runaway spending. Proponents also argued the environmental advantages of As additional evidence of highly suspect initial cost esti- the project, noting that the ARC project would eliminate mates, Christie's supporters pointed to the recently com- 30,000 daily personal automobile trips, taking 22,000 cars pleted "Big Dig" project in Boston, which started with an off the roads and resulting in 600,000 fewer daily vehicle initial price tag of $2.5 billion and ultimately ended up miles traveled. The project was expected to thus reduce costing well over $14 billion to complete. greenhouse gas emissions by nearly 66,000 tons each year. Governor Christie first canceled the contract on The ARC project was anticipated to take eight October 7, 2010, citing cost overruns for which he said years to complete, coming into service in 2017. The cost the state had no way to pay. The following day, he of the project was significant, as the Federal Transit agreed to temporarily suspend his cancellation order Administration (FTA) reported the project cost as $8.7 so that he could try to resolve the funding dilemma Case Study 14.2 517 with federal transportation officials and other project stakeholders. After taking a two-week period to ana- lyze all their options, the governor made the cancel- lation official. Christie said that given the impact of the recession and the probability of continuing cost overruns, the state could no longer afford the tunnel's escalating costs. More than a half-billion dollars had already been spent on construction, engineering, and land acquisition for a project that was budgeted at $8.7 billion, but which the governor said could go as high as $14 billion. "The only prudent move is to end this project," Governor Christie said at a Trenton news conference. "I can't put taxpayers on a never-ending hook. 32