1.011 Project Example, Sydney Opera House

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  • P RO J E C T E VA LUA T I ON

    Preparedfor: 1.011FINALTERMPROJECT

    Preparedby: MITStudents

    Date: SPRING2011

    Acknowledgements: SYDNEYOPERAHOUSE,OFFICEOFTHECHIEFFINANCIALOFFICER

    PROFESSORJOSEPHSUSSMAN(MITDEPT.OFCIVILENGINEERING)

    NIHITJAIN(MITDEPT.OFCIVILENGINEERING)

    Image courtesy of Kevin Gibbons on Flickr.

    http://www.flickr.com/photos/kevgibbo/705358155/

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    TableofContents

    BACKGROUND 3

    THESTAKEHOLDERS 4

    STAKEHOLDERSDURINGTHEINITIALCONSTRUCTIONPERIOD 5PRESENTDAYSTAKEHOLDERS 7

    MAJORISSUESTHATAFFECTEDTHEPROJECT 8

    COSTSANDBENEFITS 9

    INITIALANALYSIS 9LOTTERIESUSEDFORFINANCING 9

    SIGNIFICANTDECISIONSTHATAFFECTEDDESIGNANDIMPLEMENTATION 11

    THEFOURSIGNIFICANTCHANGESTOTHEDESIGNAFTERUTZONLEFT: 13

    STATUSOFTHEPROJECT 14

    OURANALYSISOFTHERELEVANTCOSTSANDBENEFITS 15

    A 15NALYSISNALYSIS OFINITIALCONSTRUCTIONCOSTS:A O 19

    OF PERATIONALPERIOD(19732010):

    REVENUE 20EXPENDITURE 21NETCASHFLOWS 22

    CRITIQUEOFTHEPROJECTANDPROJECTEVALUATIONPROCESS 23

    WASITAPROFITABLEVENTURE? 23

    ISITFINANCIALLYSUSTAINABLEFORTHEFUTURE? 24HOWWEAREATTEMPTINGTOQUANTIFYITSVALUETOTHEPEOPLEOFNEWSOUTHWALES? 23

    ADDITIONALINFORMATION:WHATDOESTHEAUS$800MILLIONTOTALREFURBISHMENTRECOMMENDEDIN010REALLYMEAN? 242 ITIQUEOFTHEPROJECTANDCONCLUSIONSFROMOURPROJECT CR PR

    FROMTHISPROJECT,ANDTHEMISTAKESMADETHEREIN,WELEARN: 25WELEARNTHEIMPORTANCEOFPLANNINGWELLBEFOREIMPLEMENTINGAPROJECT.COMPLETEDESIGNSWOULDHAVESAVEDTHISPROJECTAGREATAMOUNTOFMONEYANDTIME. 25

    EVALUATION OCESS 25

    COMMENTSONTHEPROJECTEVALUATIONPROCESS 26

    APPENDIX 27

    GENERALFORMULAS 27

    EXPENDITUREFROMOPERATIONALPERIOD 29REVENUEFROMOPERATIONALPERIOD 28

    NETCASHFLOWSFROMOPERATIONALPERIOD 30

    BIBLIOGRAPHY 31

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    NOTE:Allamountsgivenareinactualdollars

    B

    ACKGROUNDi, ,ii iii

    OnNovember11,1954thehonorableJohnJosephCahill,thePremierofNewSouth

    Walesatthetime,convenedaconferencetodiscusstheestablishmentofanoperahousein

    NewSouthWales,Sydney,Australia.Attheconference,Cahillexpressedhisdesirefor

    properfacilitiesfortheexpressionoftalentandthestagingofthehighestformsof

    entertainmentthatwillbeacredittotheStatenotonlytodaybutforhundredsofyears.

    Outofthe21possiblesitesoftheproposedoperahouse,BennelongPoint,apeninsulaof

    2.23hectares(240000ft2)waschosenonMay17,1955.Thetramshed,whichwaslocated

    there,wasremoved:achangewelcomedbytheOperaHouseCommitteeandtheresidents

    ofSydney.

    OnFebruary1,1956,theinternationalcompetitionforthenationaloperahousewas

    commenced.Thecompetition,arrangedbyPremierCahillandthegovernmentofNew

    SouthWales,providedcompetitorswitha25pagebookletwithblackandwhitephotosof

    BennelongPoint.Detailedinthebookletweretherequirementsfortheoperahouse

    includingalargehallforsymphonyconcerts,largescaleopera,balletanddance,choral,

    pageants,andmassmeetingsthatcouldseat30003500peopleandasmallhallfor

    dramaticpresentations,intimateopera,chambermusic,concerts,recitals,andlecturesthat

    couldseat1200.Thestructurealsorequiredarestaurantwithacapacityof250andtwo

    meetingrooms,onefor100peopleandonefor200people.Thecompetitionclosedinlate

    1956with233entriesrepresenting28countries,includingAustralia,England,Germany,

    FrenchMorocco,Iran,andKenya.

    InearlyJanuaryof1957,38yearoldDanisharchitect,JrnUtzon,wasannouncedas

    thewinnerofthecompetitionbyCahillattheArtGalleryofNewSouthWales.Utzonhad

    designedtheoperahousewithoutfirsthavingseenthesiteinpersonandhereliedon

    photographs,shippingmaps,andfirsthandaccounts.ThejudgeschoseUtzonsdesign

    basedonitspureoriginalityandcreativity,realizingthatitwouldclearlybea

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    controversialdesign.However,theywerestillconvincedofitsmeritstoNewSouthWales

    andSydney.TheoriginaldrawingfeaturedUtzonsstructurallyunrealizable,but

    aestheticallypleasingroofdesign.

    OnJuly19,1957,theSydneyOperaHouseLotteryFundwasestablished.Asit

    wouldturnout,thelotteriesivwouldpayforthemajorityoftheinitialconstructioncost,as

    thegovernmentofNewSouthWalesdidnotwanttopayfortheproject.

    WithUtzonsapproval,OveArupandPartnerswasappointedasthestructural

    engineersfortheprojectin1958andconstructionoftheSydneyOperaHousebeganin

    1959.ItwasexpectedtotakefouryearstocompletewithanestimatedcostofAUS$7M.

    However,evenworkingtogetherwithArup,Utzondidnotcomeupwiththefinalspherical

    designoftheroofuntilsometimebetween1961and1962;threetofouryearsafter

    constructionbegan.

    TheSydneyOperaHousewouldbeoneofthefirstmajorprojectsdesignedusing

    computeraideddesign(CAD)vandpresentedmajorrevolutionaryarchitecturalconcepts

    andengineeringchallenges.Itwasalsooneofthefirstmajorprojects,whichemployedthe

    useofcomputerstoanalyzeinternalloadeffectsonthemembersthatwouldsupportthe

    roofstructurevi.

    Altogether,theSydneyOperaHousetookfourteenyearstocompleteand

    constructioncostsamountedtonearlyAUS$102M(actualdollars).Sinceitsinitial

    openingin1973,theSydneyOperaHousehasundergonenumerousrenovationsand

    expansionsandhostedmanyperformances.

    THESTAKEHOLDERSvii

    AprojectthemagnitudeoftheSydneyOperaHouse,apublicsectorendeavor,had

    manystakeholders.Thefollowinganalysisofthestakeholdersclassifiesthemusingthe

    Mitchellcriteria,whichdeterminesandplacesstakeholdersonthebasisofwhetherornot

    theypossessanycombinationofthethreefollowingqualities:power,legitimacy,and

    urgency.Inadditiontothis,thestakeholderswillbeevaluatedwithintwodifferent

    timeframes:duringtheconstructionoftheSydneyOperaHouse(19591973)andthe

    moderndayera.

  • Stakeholdersduringtheinitialconstructionperiod

    WhentheSydneyOperaHouseProjectfirststartedtotakeforminthemid20th

    century,thegovernmentofNewSouthWales(NSW)wasgivenatasktocreateatheater,

    whichwasintendedtoservethearts.ThismakestheNSWgovernmenttheveryfirst

    stakeholderoftheproject.FromtheMitchellperspective,thegovernmentwasprobablya

    definitivestakeholder,exhibitingpower,legitimacy,andurgency,sincetheyweregiventhe

    responsibilitytofacilitatethecreationofsuchaproject.

    Chronologically,thenextstakeholdersarethejudgingpaneloftheinternational

    competitiontodesignthefutureoperahouse.Thesestakeholderscanbeclassifiedas

    dependent,becausetheywereappointedbythegovernmentofNewSouthWalestochoose

    adesignfortheoperahouse;however,theylackedthepowertodoanythingfurtheronce

    thedesignwaschosen.

    Themainstakeholderthroughouttheinitialconstructionprocess(19591973)was

    JrnUtzon,whosedesignwaschosenoutofatotalof233entries.Sincetheprojectlacked

    apropermanager,Utzon,alongwithOveArup,thechiefstructuralengineerworkingonthe

    project,facilitatedandoversawtheconstructionoftheproject.Together,theyworkedfor

    fouryearsbeforearrivingatthefinaldesignfortheroof.Thiskeensenseofarchitectural

    visioncausedsomeproblems,asUtzonwouldpaymoreattentiontothedesignaspectof

    thestructureratherthanthetimeandcostobjectives.However,becausehewas

    essentiallytheprojectmanager,nearlyeverythinghesaidwentthrough,whichclassifies

    himasadefinitivestakeholderundertheMitchellframework.Arup,whowasforthemost

    partUtzonssecondincommand,isalsoconsideredadefinitivestakeholder.

    This image has been removed due to copyright restrictions.

    Figure1:UtzonworkingonamodeloftheOperaHouseviii

    5

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    In1966,duetofinancialissues,JrnUtzonresignedfromtheprojectbeforeits

    completion,andthegovernmenteventuallyhiredHall,Todd,andLittlemore.Utzonleft

    withsomeoftheoriginalblueprintsofthebuilding,soHall,Todd,andLittlemorehadto

    spendtimeandmoneyonadditionaldesignsix.ThismakestheHall,ToddandLittlemore

    definitivestakeholders,becauseafterUtzonleft,theyessentiallyassumedtherolesof

    projectmanager.

    In1967,attherequestoftheAustralianBroadcastingCommission(ABC),theNew

    SouthWalesgovernmentchangedtheproposedlargeroperahallintotheconcerthall

    becausesymphonyconcerts,whichweremanagedbyABC,werepredictedtobemore

    popularandableofdrawinglargeraudiencesthanopera.Thus,therevenuestotheopera

    housewouldincrease.TheAustralianBroadcastingCommission,atthispointintime,was

    adependentstakeholder,becausetheyhadlegitimateandurgentconcernsforaconcert

    hall,buttheyhadtorelyontheNSWgovernmenttodotheirbidding.

    ThefundingfortheSydneyOperaHousewasdoneprimarilythroughlotteries,

    whichhadparticipantswhoweremostlikelypoor,aswewilldiscussinalaterpartofthe

    project.Withoutthelotterycontestants,therewouldhavebeeninsufficientfundingforthe

    operahouse.However,besidesfundingthisendeavor,thesecontestantsreallyhadno

    power.Thesestakeholdersalsodidnotexhibitlegitimacyorurgency;thecontestants

    participatedinthelotterieswiththeirownbenefitsinmind.Itcanthereforebeargued

    thattheydidnotquitehaveanyinterestintheOperaHouseandonlysoughttowinthe

    jackpot,thus,theyhavenoneofthethreequalitiesdetailedbyMitchellsotheyare

    classifiedasnonstakeholders.However,thistermcouldbealittlemisleading,because

    withouttheirfundingfromthelotteries,itisdoubtfulwhetherornottheSydneyOpera

    Housewouldbearoundtoday.

    TherewasalsoanOperaHouseCommitteeformedin1954,andtheSydneyOpera

    HouseExecutiveCommittee(SOHEC)replacedthisentityin1957.TheCommitteewas

    Utzonsmainclient,thatis,insteadofinteractingwiththeGovernmentofNewSouthWales,

    UtzononlyinteractedwiththeCommittee.TheCommitteehad3advisorypanels,onefor

    architecturalandconstructionalaspects,onefortrafficandoneformusicanddramax.It

    continuedtomakerequestsofchangestothedesignandcapacitybasedonrequestsfrom

    theAustralianBroadcastingCommissionandotherindividualseveninto1959,when

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    construc