Megaprojects and Place

Megaprojects are significant material and symbolic investments serving civic and profit-making ends. Technically sophisticated, financially large, and administratively complex, large, publicly controlled, single-purpose infrastructure schemes such as Prince’s Dock transform the urban and national landscape. Gigantic projects around the world have delivered a wide range of positive benefits, such as major urban renewal and job creation; established global networks of economic, political, and technological exchange; and promoted the circulation of goods, information, people, and money across space. Despite the obvious value in developing urban infrastructure megaprojects, project promoters have often exaggerated their expected benefits in order to gain approval for initiatives that otherwise would not justify their costs. Large schemes also convey a symbolic imagery of proactive leadership, technical efficiency, and global status. Given the large but unequal and uncertain benefits they create and the potential they pose for significant negative benefits, megaprojects are also political projects. Theodore Roosevelt, for instance, recognized this point when he implored Americans in 1902 to take on the task of completing the Panama Canal following the failure of the French contractor.^{Footnote 13} So did the British colonial rulers of India, who understood that the construction of a national railway and dock networks had the potential to breakdown traditional social and labor relations and to draw the country into networks of modern global capitalism.^{Footnote 14}

Despite the enduring popularity and growing scale of large, publicly controlled infrastructure megaprojects, these massive capital expenditures are beset with an underlying problem: the prevalence of cost overruns. Stanley Engerman and Kenneth Sokoloff document how some of the most important large American infrastructural schemes of the nineteenth century, such as the Erie Canal, the Croton Aqueduct in New York City, and the Mississippi River Levee Line, were characterized by substantial costs escalations. Plagued by financial misfeasance, political conflict, and organizational incompetency, project after project experienced cost and time overruns.^{Footnote 15} The construction of the railroads in India was afflicted by a similar set of obstacles that led to similar outcomes.^{Footnote 16} Outside of colonial India, docks were built over budget and time. In the Ottoman city of Izmir, a dock, which was first started in 1869 by the British, was finally completed by Dussaud Bros., a French engineering company, in 1880. It went over budget and time because of acrimony from local merchants and British interests and the difficulty of finding sufficient private capital.^{Footnote 17} In British-controlled Zanzibar, the Colonial Office approved a plan to enlarge the harbor in 1919. However, the Malindi project quickly fell into trouble as the projected costs were far less than were actually required. Without an on-the-ground promoter and facing conflicting local and colonial pressures, it was only finished in the late 1920s, ten years after the initial approval and close to 60 percent over budget.^{Footnote 18}

This is also the case with more recent large infrastructural projects. Working from a global dataset of 258 megaprojects from 1925, Bent Flyvbjerg and his colleagues show that nine out of ten large transportation schemes are completed late and over budget. Persistent patterns of cost and time overruns are unchanged from 1925 through the present, highlighting a historical durability that pervades updates in project delivery techniques over time.^{Footnote 19} From the above discussion, it is clear that the policy of megaproject development cannot be detached from the project’s implementation. When projects are so big, the costs so high, and success is measured in terms of both tangible and symbolic outcomes, policy formulation and execution are intimately linked as part of the same cycle of decision making.

To be certain, not all large infrastructure projects are completed over budget. Why this is the case demands an explanation about the factors that contribute to the small minority of schemes that are successfully delivered. Several writers make a similar point, although they tend to focus on either large-scale datasets that tell us little about actual cases or single explanations such as political corruption or technical inefficiencies.^{Footnote 20} Building on this work, we use a case-study approach to argue that the dynamics of the social relations in the place in which a project is built is a rich area of inquiry in understanding whether preconstruction estimates for time and cost are in fact met. Central to this is the idea that different social actors are placed in quite different ways in relation to the political economy of a locality and that this has important effects on what happens in that place.^{Footnote 21} Local businesses, politicians, developers, and workers fight over local resources and power. This locally contested world is connected with worlds elsewhere through a complicated web of material and symbolic interactions.^{Footnote 22}

Put differently, the local context is more than a backdrop for decisions about specific megaprojects. It also creates conditions that can either support or exacerbate the incidence of cost and time overruns, aligning the interests between the various stakeholders. The importance of place on the outcome of megaproject development, however, varies by the type and scale of the project and the sociopolitical regime in which it occurs. Urban fixed projects such as docks and stadiums have a different politics of place than circulating commodities, such as military goods and information technologies, and extensive infrastructures that stretch across space such as canals and railroads. Nevertheless, we contend that the place-specific character of large infrastructure construction is a direct product of localized multi-scalar economic, social, and institutional arrangements. In particular places at particular times, public schemes are subjected to vigorous outside scrutiny embedded in the political, economic, and institutional environments in which they are planned. Project-financing regimes create accountability mechanisms for those producing forecasts and overseeing construction. Based on their social status within the local community, those championing megaprojects can either have greater or less incentive to make accurate forecasts and take measures to ensure that the scheme keeps on budget.

Our detailed analysis of the building of the Prince’s Dock in 1870s Bombay illustrates how the completion of the project on time and on budget was embedded in a specific alignment of multi-scalar political, economic, and social interests. Four dynamics are crucial to this story. First, the composition of those supporting and opposing a scheme create a climate of scrutiny that is accepted, often begrudgingly, by project planners. Schemes that face opposition from powerful political, economic, or social elites create a disciplinary regime over the cost and time estimates being produced, while widespread popular support limits the potential for unexpected and costly change orders. The building of a modern port in late nineteenth-century Chittagong, for example, developed around a consensus among the city’s shipping, railroad, and political interests for strict financial accounting.^{Footnote 23}

Second, the role of a project champion as a politician, an entrepreneur, or technocrat is critical as they take responsibility for completing the scheme. Highly motivated, politically able, and powerful characters such as John Stevens and Major George Goethals were able to incorporate and neutralize dissident voices over the building of large-scale ventures such as the Panama Canal. The foundation of the scheme champion’s local reputation and future legacy can thus be central in influencing the prospects of major time and cost overruns. A project champion who is deeply embedded in a local civil service or technocratic community, and whose reputation is based on successful project delivery, has a strong incentive to take aggressive steps to meet the scheme’s proposed budget and timeline.

Third, local culture can strongly influence the strategies to limit cost and time overruns. In certain places at specific moments, such as colonial India and Africa, French-controlled Egypt, the Ottoman Empire, the late nineteenth-century Americas, and now contemporary India, cultures of limited professionalism in government procurement, pervasive nepotism or corruption, labor militancy, and public indifference can coalesce to create conditions where overruns become the norm. In many cases, the ability to complete large schemes on time and on cost centers on local unequal and exploitative labor relations.

Finally, the character of the project’s financing arrangement shapes the extent to which local and nonlocal actors make realistic construction cost estimates and then meet their obligations. Competition to attract senior government grants has in many cases led local governments to underestimate the costs and overestimate the benefits of their ventures. Financing ventures through government debt or bonds has created little private-sector scrutiny on major infrastructure schemes when it is believed that the government will repay their debts. By comparison, private loans that are repaid based on successful completion of a project or through revenues from operations create an incentive for the financiers to scrutinize project budgets and construction progress. Our study of the building of Bombay’s Prince’s Dock frames megaprojects within a broader set of place-based articulations and interactions.

Prince’s Dock: Built on Time and on Budget

By the 1860s it was evident to many people in India and Britain that changes had to be made to the Bombay harbor if the city was to strengthen its place as a significant imperial center. Seeking to strengthen India’s place within the imperial system, cotton merchants, textile manufacturers, and shipping companies pushed for the construction of a large and modern port complex on the colony’s western coast. With its significant trading, manufacturing, and transportation facilities, Bombay was the most obvious choice. The opening of the Suez Canal in 1869, which reduced travel time between Europe and western India by more than a half, was a further impetus to the building of a dock system. The first concrete step toward this was the creation in 1873 of the Bombay Port Trust, a financially independent state-owned enterprise, which was given the task of building a dock capable of servicing large, ocean-bound steamers.^{Footnote 24} In 1875 the Trust received approval to build a new dock. Opened in early 1880, the dock, named Prince’s Dock after the Prince of Wales, was built on budget and on time. Similar in scale to docks built in London and Liverpool at the time, it was India’s first modern, large-scale dock.^{Footnote 25}

The planning and building of one of India’s largest colonial projects of the time was not straightforward.^{Footnote 26} It took several years of acrimonious debate between the secretary of state and the British Parliament, two levels of colonial government, the Bombay municipal government, the Bombay Port Trust, European shipping companies, and Indian merchants to reach a final decision about the dock’s cost and end date of construction. A final and binding decision was reached in April 1875, with the government approving a scheme to cost 7.6 million rupees. Funding came from a government of India loan to be repaid with interest at 4.5 percent once construction was finished. The principal and interest were to come out of dock dues. Several scope changes introduced after 1875, which resulted in the rewriting of the contract between the government and the main contractor during construction, did not produce overruns. While some of the scope-changing proposals were accepted, most were rejected as not bringing a “fair return” on expenditures.^{Footnote 27} Unlike many current projects, the changes that were accepted did not have an adverse effect on the scheme. Indeed, their successful incorporation into the original project speaks to the ability of local accountability mechanisms to keep time and costs within the mandate sanctioned in 1875.

The dock was completed on time and on budget. The first and last stones were laid on November 11, 1875, and April 10, 1879, respectively, and the dock was formally opened to shipping on January 1, 1880. Prince’s Dock was Bombay’s and India’s first modern large-scale dock, complete with 1.5 miles of dock wall, a deep water channel, forty-four hydraulic loading cranes, and a large set of sheds.^{Footnote 28} A month after the opening, John Macdonald, the secretary to the governor of Bombay, told J. Ponsonby Cox, the Trust’s chairman, that the time to completion was “a very short time for such a work.”^{Footnote 29}

It is also clear that the project finished on budget. Certainly, the Trust did not receive more from the government than the 7.6 million rupee loan agreed upon in April 1875. Nor is there any evidence in the Trust’s financial accounts that funds were taken from elsewhere to pay for construction. According to Thomas Ormiston, the Trust’s chief engineer, the building of the dock itself, including masonry wall construction, dock excavation, channel dredging, and infrastructure installation, was completed within the allotted budget.^{Footnote 30} Macdonald agreed, writing that “not only has the work been executed with great rapidity; it has also been completed within the sanctioned estimate, although the area of the Dock is greater and the water is deeper than was originally estimated for.”^{Footnote 31} By 1880 the dock was open, seawater had been admitted, all of the berths had been leased to European steamship companies, and the Trust was collecting unloading, loading, and wharfage dues.^{Footnote 32} Indian’s first modern dock was open for business.

How can we explain the Trust’s ability to construct on time and on budget a massive infrastructural work? How can this be accounted for in colonial India, where the British administrator’s “profligate disregard” for building on time and budget was “a malady extending all over India” and where “there can be little doubt that systematic peculation of one sort or the other is largely prevalent”?^{Footnote 33} Without exploring the character of the place-based relations affecting both the day-to-day and the broader policy issues of dock construction, it is very difficult to ascertain the dynamics crucial to completion of the work. We argue that the Prince’s Dock’s success lay in a dynamic created by several interlocking place-based factors. The combination of judicious political oversight, contested political relationships at various spatial levels, dynamics specific to Bombay’s foreshore properties, and the character of the local labor regime ensured that construction costs would not escalate out of control and that the work would be completed on time.

The Docks, Contestation, and the Politics of Multiscale Governance

Building the dock was a hotly contested local issue. In the 1840s and 1850s, large steamship companies such as P&O and British India Steam Navigation demanded better dock facilities. Requiring rapid turnaround for their high-value services and commodities, they pressured local and imperial governments to modernize the city’s port facilities. Little was achieved, however, as governments were administratively incompetent and ideologically opposed to public investment in such facilities, while private companies were unable to assemble the necessary political drive and financial capital.^{Footnote 34} Beginning in the 1860s, a divisive debate involving the city’s elites took place over the foreshore properties where the dock would eventually be constructed. The central question revolved around what to do with the property of the Elphinstone Land and Press Company. Formed in 1858, the company’s mandate was to reclaim land from the city’s foreshore and to build tidal basins, roads, and warehouses, Experiencing little initial development and constant financial problems after the economic crash of 1865, the government of India forced the Government of Bombay to buy the property in 1870 even though powerful local interests questioned the wisdom of the purchase and the cost.^{Footnote 35}

Conflict intensified once the property was suggested as the site for the new dock. For many, the government-owned property at Mody Bay, which was closer to the city’s business district, was a much better location for a harbor. As a result, the decision-making process for determining the location and cost of the new docks was highly divisive. The business of sanctioning construction was long, arduous, and contentious. Importantly, the divisions over the use of the Elphinstone property for the new docks forced the colonial state and its agents in Bombay to proceed very carefully and created a skeptical group of voluble and powerful people who closely scrutinized the construction process.

To deal with these divisive local issues, the Bombay and India governments placed strict financial oversight over the project. The 7.6 million rupees were spent by the Trust on the masonry and excavation contracts awarded to William Glover and Company, construction work undertaken by the Trust itself, and one-time expenditures of fixed capital items such as bollards, cranes, and dredgers. All of this was closely monitored. The specifics of the loan were a critical part of the successful completion of the project on time and on cost. The loan was provided on an annual basis for five years (1875–76 to 1879–80), with each new allocation doled out on the successful completion of the already-paid-for work (Table 1). In the first year, the Trust spent 587,681 rupees out of a loan of 590,000 rupees, most of which went to channel clearing and masonry work. The Trust only received the second-year portion of the loan once the previous year’s work had been verified and cleared. Over the next three years, almost 4 million of the 5.8 million rupee loan was spent on outsourced masonry and excavation work. Close oversight was given on most aspects of the construction. Glover was the focus of tight supervision, with each new annual payout only given after careful perusal of his work in the preceding year. A tight rein was placed on the loan, making it very difficult to obtain authorization for more money for a sanctioned task or to change the scope of the construction.

Table 1.

Expenditures on Prince’s Dock, 1875–1880 (rupees)

Source: Bombay Port Trust, Administration Report (Bombay, various years).

This oversight operated at various spatial levels of governance. The Trust reported to the Government of Bombay, which in turn reported to the government of India. The secretary of state in London had ultimate responsibility. Within this chain of command, the Trust was the on-the-ground power with Ormiston undertaking supervision of all aspects of the construction. He was the project’s champion. Not only had he convinced the government of India to use Elphinstone, but it was his plan that was used to build the dock.^{Footnote 36} His reputation as an engineer and as a respected Bombay citizen was embedded in the scheme’s success. As such, he, and his brother George, who took over when Thomas retired in 1877, exercised a constant presence on the site, overseeing, monitoring, and, in some cases, fighting with Glover. Even though they were not responsible for the actual construction, the Ormiston brothers worked hard to ensure that the project proceeded as quickly and as effectively as could be managed under the circumstances. As the project’s champions, their reputations were on the line.

Similarly, the Bombay government expected a strict accounting of the construction’s progress from the Trust. The Public Works Department received monthly reports from the chief engineer. The Ormistons’ end-of-year reports lay out all aspects of the year’s progress, including the work completed, problems confronted, and an itemized costing of the year’s construction. The Bombay government signed off on these reports. But this was not the final level of control. Through a series of reports, memos, and letters, Bombay reported on the works to the government of India. In some cases, reporting was nondescript and simply documented routine affairs. In other cases, it was nonroutine as the government was kept informed about specific problems or ongoing matters of concern. In the latter case, the state had to be a calculating agent that would strongly influence the building of the dock. In all cases, an intricate web of oversight of the financial and everyday building operations characterized the dock’s construction.

The Politics of Multiscale Governance

The building of the dock was shaped by the financial oversight emerging out of long-running political and economic conflict over local resources, the place of senior governments in local affairs, and imperial and local economies. The city’s political regime in the 1860s and early 1870s had three key features. First, the imperial government was intent on asserting its authority over the Indian urban landscape. Bombay, through its refashioning of the central business district and the modernization of the docks, was a material manifestation of imperial power in India.^{Footnote 37} Second, two distinct business blocs fought over Bombay’s economic trajectory and the distribution of the economic surplus generated in the colonial economy. While European business houses and their Indian allies sought to build new imperial economic relations, small-scale Indian traders and manufacturers looked to consolidate their hold over the Indian market.^{Footnote 38} Finally, political and economic elites, both British and Indian, controlled the municipal corporation. While ignoring pressing questions of sanitation, water, and housing, the city council allocated city resources to constructing an imperial business district that reflected colonial dominance, to building new transportation nodes that linked the city to the world outside, and to reordering the spatial form of the city to facilitate profit making. As the city’s major landowners, Indian government and civic elites sought to protect their property from the incursions of the state and other interested parties.^{Footnote 39} Prince’s Dock was one manifestation of this local politics.

The character of the city’s political regime ensured that conflict over political authority, the distribution of the colonial surplus, private property, and the allocation of municipal finances would promote ongoing and often bitter conflict between elite blocs. This conflict over what to do in Bombay was played out at different spatial scales. One site of conflict lay within the colonial state. The governments of India and Bombay had been at loggerheads over how to develop the city’s foreshore properties since the early 1860s. Bombay was a reluctant participant in India’s position, arguing against the Elphinstone location. As we have seen, their choice was Mody Bay. By September 1874, there was still a “difference of opinion between the two Governments,” with neither “inclined to surrender their views” on the matter.^{Footnote 40} Despite the support of the city’s mercantile and landed property interests, Bombay failed to convince India to build the dock at Mody Bay. Against its will, Bombay was forced to promote Elphinstone as the site of the new facilities and to take financial responsibility for dock construction.

Overseeing these conflicting layers of colonial government was the secretary of state for India. Beholden to the British government and parliament, the secretary was responsible for colonial matters, financial and otherwise. The Duke of Argyll signed off on the purchase of the Elphinstone estate in 1870. Five years later, the Marquees of Salisbury allowed the government of India to force the Bombay government to financially underwrite dock construction and to dictate the terms of construction. By becoming involved in matters they usually left to the lower levels of government, the succession of secretaries of state became implicated in the project’s successful outcome and city politics. The reason for this, in London’s view, was that to go over costs and time would be embarrassing. Moreover, it was believed that the local interests actively working against the scheme would demand a humiliating financial and political accounting from the government. This was not acceptable. The project would have to be pushed forward regardless of the limitations associated with the Elphinstone property’s location.

The local character of the dock and property issue was intensified by the British Government’s sensitivity at the time to massive colonial overruns. This sensitivity was apparent in the voluminous testimony compiled between 1872 and 1874 by the Select Committee on East India Finances.^{Footnote 41} Seeking to devise methods for making what the government considered appropriate funding decisions about Indian projects, the committee paid special attention to decisions made at the provincial level about local and imperial revenues. Concerned with the bad press that came with the committee’s ruminations, London went to great lengths to ensure that revenues were kept in check and that the various levels of government were responsible for their expenditures. One key approach was to phase the release of project financing based on the suitable completion of each dock component, creating an additional level of oversight on the local project managers and an incentive for the contractor to meet their construction expectations. The committee’s recommendations of course favored imperial accounts rather than Indian ones, and could be evaded by unscrupulous administrators, as they often were. But given its focus and the timing of its evidence gathering, the committee threw the spotlight onto large-scale undertakings such as dock construction. Accordingly, the administrative gaze of the 1870s allowed for more intensive forms of the monitoring of the cost and timing of colonial projects. This political reality forced Ormiston, port trustees, and the Bombay government to pay close attention to the scheme’s costs. The opportunities for corruption and learned incompetence were severely limited.