Project Management

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Nick Foster, Tian Tian, Yulin Lu, Zhengda Wang

Project Management in the Information Age

MASY1-GC1250.100

Team Project Business Case

June 27, 2017

Contents

Executive Summary (Nick)............................................................................................................. 2

Current Situation (Tian) ................................................................................................................. 2

Recommendation (Zhengda) ........................................................................................................... 2

Options Considered (Zhengda) ...................................................................................................... 3

Goals & Objectives (Tian) .............................................................................................................. 3

Assumptions (Nick) ........................................................................................................................ 4

Constraints (Nick) ........................................................................................................................... 4

Critical Success Factors (Zhengda) ................................................................................................ 4

Costs & Benefits (Yulin) ................................................................................................................ 5

Project Delivery Schedule Summary (Yulin) ................................................................................. 5

Conclusion & Next Steps (Yulin) ................................................................................................... 6

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Executive Summary

The purpose of this project is enhance California’s economy by way of a high-speed rail line between

Los Angeles and San Francisco, in keeping with RapidTrak’s mission to expand high-speed rail service

across the country. Our project will catalyze environmental and economic benefits in the state and

greatly reduce the time necessary to travel between its two biggest cities. Total costs for the entire

endeavor are projected at $50 billion, for an estimated completion by the end of 2029.

Current Situation

Compared to systems in Japan, China and Europe, inter-city rail service in the United States is

undeveloped. The main national carrier, Amtrak, is only profitable in its Northeast Corridor line (serving

Boston to Washington, D.C.), and even the “high-speed” Acela trains that operate on this line are very

slow compared to state-of-the-art high-speed rail abroad. However, American public interest in high-

speed rail is markedly on the rise, especially in the wealthier, more densely-populated coastal states.

This comes at a time when interest in revitalizing America’s transportation infrastructure to be more

environmentally friendly is also reaching a peak.

The domestic railway industry is generally stagnant or in decline, with a lack of appropriate investment

in new technology and expert personnel leaving the workforce. Throughout the country, Amtrak

operates slow, outdated trains, mostly on tracks that are actually owned by major freight rail lines,

meaning that passenger traffic must yield to freight at all times. Domestic expertise in high-speed rail is

limited, so any attempt to implement a high-speed system here will have to import and adapt

technologies pertaining to the design and control of the trains themselves, techniques in track

construction and more.

Recommendation

Given these challenges, our attention turns to California, which has made it a priority to improve its

environment and transportation in tandem. The state’s roadways are among the most-used (and most-

congested) in the nation, with drivers wasting over $18 billion annually in lost productivity and wasted

fuel. Moreover, the air travel routes between Los Angeles and San Francisco serve over five million

passengers annually but regular delays significantly erode the time saved by flying. As passenger

volumes increase and climate and pollution become more of a concern, it becomes clear that the state is

in serious need of additional transportation options.

Therefore, California is a perfect candidate for RapidTrak’s inaugural high-speed project. Our

recommendation is to construct and operate a high-speed rail line between Los Angeles and San

Francisco, in the style of Japan’s “Shinkansen” railroad, connecting the cities of Bakersfield, Fresno and

San Jose along the way. Planning and executing the project within a single state exposes us to fewer

political and regulatory challenges. Plus, California’s government is receptive to the idea of high-speed

rail, so we expect it to be a cooperative partner.

We expect such a rail line to achieve a range of economic and environmental effects for the state,

summarized here and further elaborated throughout this document:

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• Reduced travel times

• Job creation

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• Statewide economic growth

• Greenhouse gas reductions

• Eased traffic congestion and fewer automobile accidents

Options Considered

Because RapidTrack has a nation-wide mission, we chose between three potential routes for a new high-

speed line:

• Boston to Washington, D.C.: This route would accelerate transit along the profitable and densely populated Northeast Corridor.

• New York to Chicago: Satisfies an under-served East-West route and improves economic access to/from Midwest cities like Indianapolis, Columbus and Pittsburgh.

• Los Angeles to San Francisco: Operates in a single state, serves two of the nation’s highest- value cities, and solves known, critical problems about traffic and pollution.

Within this scope, however, and because domestic expertise in high-speed rail is limited, we have to

choose whether to model RapidTraks’ line on Chinese, Japanese or European technology. Ultimately we

are attracted to Japan’s “Shinkansen” system for its excellent safety ratings and overall high quality.

Goals & Objectives

RapidTrack’s goal is to improve California’s transportation infrastructure, ease environmental pressure,

and create economic opportunity in the region. To that end, the objective of this project is to build a

high-speed rail line connecting Los Angeles and San Francisco, the state’s two most important cities.

Providing a reliable rail network can help serve the needs of national and regional area by offering

convenient access to economic centers. We hope to achieve the following objectives by way of our high-

speed line.

• Reduction in travel time. Covering a little over 400 miles at speeds approaching 200 miles per

hour, the total length of a journey between Los Angeles and San Francisco should be little more

than two hours. Currently, flying between each city takes at least two and a half hours,

accounting for time spent getting to or from each airport in California’s bad traffic.

• Reduction in carbon emissions. The rail line could eliminate up to 300,000 metric tons of

carbon dioxide (CO2) emissions in the first year of operation, equivalent to 53,000 personal

vehicles taken off the road. By 2040, the system is estimated to reduce vehicles miles of travel in

the state by almost 10 million miles of travel every day.

• Reduction in auto accidents. By providing a safe, efficient alternative, we hope to reduce auto

accidents in line with a general reduction in auto traffic between both termini.

• Economic growth. The rail line will provide faster and more convenient access to major city

centers, extending the geographic range in which they can spend money and work. We expect

the project to add at least 100,000 jobs to the California economy, accounting for temporary

work attached to the project itself and permanent job growth resulting from the train’s presence

in the region.

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Assumptions

The project makes a set of assumptions about the logistics and nature of the proposed high-speed line:

• What RapidTrak provides to California aligns with its expressed goals and values, so therefore

we assume that state and local governments will be cooperative, at least enough as to not impede

the project.

• We will make a conservative assumption that we will not be able to acquire all the land

necessary for tracks and stations along our idealized route. We assume that it will sometimes be

necessary to deviate from the planned route in order to avoid insurmountable costs or

inconvenience, even though doing so will require changes to scheduling and budget.

• The extent of the economic benefit to California can only be drawn in assumptions at this point.

Past rail projects in other countries do point to promising results, however.

• The most basic assumption made by this project is that Californians would be interested enough

in high-speed rail to use our line in such high numbers as to achieve the desired economic benefit

for the region.

Constraints

We also have to acknowledge the challenges and constraints that will likely affect our work.

• As mentioned in the proposal, one of the biggest sets of constraints will be where exactly

RapidTrak can secure land for building the tracks.

• Because of RapidTrak’s ownership by the federal government, we expect conflict over budget

constraints to arise every year, especially during times of turnover in political leadership as the

government re-calibrates its priorities for infrastructure spending.

• Constructing the rail line will require a massive amount of labor, over a long period of time and

spread across a wide geographical area. It could be challenge to have as many appropriately

skilled workers as are needed at all active job sites at all times.

Critical Success Factors

In order for this project to be successful, we see five factors that deserve our close attention moving

forward.

• A highly detailed but flexible WBS. This will be a massive, long-term infrastructure project, vulnerable to complication and delay at a micro level. Our work breakdown structure must be

able to account for the possibility of contingency spending, crashing, re-scheduling and more

whenever necessary.

• Effective control of the project budget. The demands of the WBS also mean that at a high- level, the management of our project budget must be of utmost quality.

• Diligent earned value management. Because this will be such a large, expensive project with so many moving parts, we must play close attention to how we are spending our funds, which

aspects of the project are making the most efficient use of time and money, and be ready to re-

plan or re-allocate those resources within the project portfolio as becomes necessary.

• Satisfaction of state and local government stakeholders. It will be crucial to keep these stakeholders informed, engaged and satisfied with and about our work. If RapidTrak should wear

out its welcome in the state, our project will be doomed.

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• Excellence in procurement and labor management. The rail line will run for hundreds of miles, in a years-long construction effort. It will be of utmost importance to ensure that the

project has enough labor hired and in action in the right place at the right time, all the time.

Building materials and other vital components, such as the rolling stock itself, will need to

sourced and delivered to budget, on time, and without complication.

To measure the ultimate success of the project, reference the economic benefits cited in our

Recommendation, Goals & Objectives and Costs & Benefits.

Costs & Benefits

This project will be a major undertaking, costing billions of dollars over more than a decade. We

estimate that RapidTrak will need to acquire approximately 9,000 acres of land in order to construct the

track, calculated at 500 miles (building a buffer into the net lengths, as per our assumptions) by 150 feet

(needed for the width of the track and relevant infrastructure. At an average cost of $12,000 per acre of

irrigated cropland in California (comprising most of the land between our target cities), this comes to a

net estimated cost of $108 million for land acquisition.

Add this figure to the expected combined costs of construction labor, rolling stock (Japan’s Shinkansen

trains are very expensive), information technology, facilities and stations, and contingency funds, and

we anticipate the total cost of the project to be $35 billion. With a 30% buffer, the total budget rises to

$50 billion.

As 10,000 passengers per day, it would take 137 years of passengers paying $100 for a ticket to break

even with the current $50 billion cost estimate. However, it provides an immediate tangible benefit to

the state by reducing travel time between Los Angeles and San Francisco to just two hours. Compare

this with a five hour drive or a two-to-three hour flight experience.

Project Delivery Schedule Summary

In keeping with this project’s sheer size, we plan for the entire setup, construction and testing process to

take approximately 11 years, running from the beginning of 2019 to the very end of 2029. The delivery

milestones are outlined below.

Milestones Completion

Project Start Jan. 1, 2019

Route Planning Dec. 31, 2020

Zoning Approval Dec. 31, 2023

Fundraising Jul. 31, 2025

Land Acquisition Dec. 31, 2025

Infrastructure & Construction Jul. 31, 2029

Operational Testing and Service Training Dec. 31, 2029

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Conclusion & Next Steps

RapidTrak’s proposed railway will provide efficient and safe mass transit between two major cities,

promote energy efficiency and environmental quality in California, and benefit regional and statewide

economic growth. We expect to complete the project by the end of 2029, for a total cost of $50 billion.

The approval of the proposed project outlined in this business case will enable the organization to

charter the project for next steps:

• Authorize developing a formal project plan

• Initial geographical mapping for optimize route

• Secure funding from stakeholder

• Engage relevant government officials and seek regulatory approval

It would be wise to get the Governor of California involved in the process relatively soon, since the

project is of material concern to the state. Also, given that we plan on replicating Japanese rail

technologies and techniques, we would like to connect with Japan’s Central Railway Company for

consulting advice.

Approvals

• Prepared by Nick Foster, Co-Project Manager

• Approved by Zhengda Wang, Co-Project Manager

• Certified by Tian Tian, Co-Project Manager

• Verified by Yulin Lu, Co-Project Manager