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Please read the case study carefully and then use the knowledge you have acquired during your study of this module to 请仔细阅读案例研究，然后使用您在学习本单元期间获得的知识
a) Evaluate the evidence for making a decision either to proceed or not proceed with the HS2 decision. 评估决定是继续进行还是不进行HS2决策的证据。
b) What does the case tell us about the processes of strategic decision making in light of the discussion in chapter 9() of the set text (ie Clegg, Theory and Practice second edition) b）根据文本第9章（）中的讨论（即克莱格，理论与实践第二版），案例告诉我们战略决策的过程是什么？
案例分析
HS2
REBECCA O’NEILL2
The recent publication of the government’s strategic case for HS2 has added to mounting concerns about the strength and validity of evidence put forward to support the project.最近公布的政府HS2战略案例使人们越来越关注为支持该项目而提出的证据的有效性和有效性。
Previously, the business case report written by KPMG stated that the high-speed rail link could benefit the UK by £15 billion a year – a claim made just days before a critical vote in parliament that secured further funding.此前，毕马威会计师事务所撰写的商业案例报告指出，高速铁路连接每年可使英国受益150亿英镑 - 这是在议会进行关键性投票前几天获得进一步资金的主张。
The KPMG report’s authors have been accused of ‘cherry-picking’ the evidence to exclude any that did not support the project. It listed, for example, the areas that would benefit – such as Greater London by £2.8 billion and the West Midlands by £1.5 billion – but omitted details of those that would end up worse off. This was discovered in response to a Freedom of Information request.
A panel of academic experts subsequently told the Treasury select committee that the KMPG report overstated the HS2’s regional economic benefits by six to eight times. Dan Graham, Professor of statistical modelling at Imperial College London, told the committee of MPs: ‘I don’t think the statistical work is reliable’. The findings were widely cited by the government, including in its new strategic case document, yet used a procedure that was ‘essentially made-up”, according Henry Overman, Professor of economic geography at LSE. It seems critics have every reason to be sceptical about the evidence being presented.
THE WIDER PICTURE
There are few relevant studies that can provide statistically significant evidence of cost performance in transport infrastructure projects. But one that does is by Flyvbjerg et al. (2003). The sample used is the largest of its kind, covering 258 projects in 20 nations worth approximately US$90 billion (at 1995 prices). The findings from the study were as shown in Figure 9.3 below.
Turn over…
It shows rail projects incur the highest difference between estimated and actual costs, no less than 44.7% on average. Based on the available evidence it seems rail projects are particularly prone to cost escalation, followed by fixed links such as bridges and tunnels. Road projects seem to suffer this relatively less, although actual costs are still higher than forecast costs much more often than not.
Flyvbjerg and his colleagues then subdivided rail projects into high-speed rail (the study included HS1, the Channel Tunnel Rail Link), urban rail and conventional rail, finding that high-speed rail tops the list of cost escalation at on average 52%, followed by urban rail at 45% and conventional rail at 30%. According to Ricard Anguera’s 2006 study, ‘the British economy would have been better off had the tunnel never been constructed’. For all three project types, the evidence shows that it is sound advice for policy and decision-makers as well as investors, stakeholders, media and the public to take any estimate of construction costs with a pinch of salt, and especially for rail projects and fixed links. Be wary of long term estimates like these.
Cost escalation and benefit shortfalls
Cost performance has not improved over time. The tendency for costs to escalate today is the same as it was 10, 30 or 70 years ago. If our ability to estimate and forecast the costs of infrastructure projects has improved over time, this does not show in the data. In other words, no one seems to have learnt from past experience.
Is this due to the influence of pressure groups, which seem to have some influence over the decision-making process? For example, environmentalists’ desire to safeguard the natural environment demands that roads or railways are buried in expensive tunnels, rather than above ground. The historical period that Flyvbjerg draws his data from goes back long enough to include projects from before pressure groups could wield influence over decision-making and costs. Then, as now, cost estimates were as inaccurate and cost escalation as large.
Costs shrunk or inflated to order
Another explanation is that cost underestimations and escalations are intentional. They are part of power games played by project promoters and consultants aimed at getting projects started. Cost underestimation is used strategically to make projects appear less expensive than they really are in order to gain approval from decision-makers. Such behaviour best explains why cost escalations are so consistent over time, space and project type, as Flyvbjerg and Martin Wachs have described extensively.
One of the reasons that the evidence is so easily contested is due to its nature. The data presented in the Strategic Case for HS2 is predominantly predictive. How are we to know in 20 years’ time what the expected rail demand will be? Or how commuters will behave? The evidence is a forecast which leaves it open to much criticism and debate.
Those campaigning for the project need to accept that their data will be questioned and look at other ways to justify HS2. It is unlikely that someone whose home must be destroyed to make way for the new high-speed network is going to be sympathetic to evidence that suggests large cities will benefit by billions of pounds. Perhaps a new approach to justifying these large transport infrastructure projects is needed.
Please read the case study carefully and then use the knowledge you have acquired during your study of this module to
a) Evaluate the evidence for making a decision either to proceed or not proceed with the HS2 decision.
There are two aspects of the evidence for making a decision either to proceed or not proceed with the HS2 decision. First, some evidence shows that HS2 can bring economic benefits which are less than which is expected, but is magnified 6-8 times. Second, some evidence of possible adverse effects on HS2 has been ignored either intentionally or unintentionally.
In addition to the intention of the author of the report, the reasons for the existence of problems in these evidences mainly lie in the emergence of many new situations, problems during the operation of the project. As a result, the actual gains have not been achieved and the actual costs are higher than expected. In other words, it is difficult for these evidences to predict these new situations perfectly. Based on these evidences, it is not very scientific and reasonable to decide whether HS2 should be carried out.
b) What does the case tell us about the processes of strategic decision making in light of the discussion in chapter 9() of the set text (ie Clegg, Theory and Practice second edition)
In this case, whether HS2 is based on some evidence to decide whether to proceed or not, and these evidences can not perfectly predict the problems in running the project, therefore, there may be many problems based on these evidences to make strategic decisions, and problems of HS2 in the strategic decision-making exist widely in the traffic development strategy formulation process.
Mintzberg (1978) proposed his theory of emergency strategy for such problems arising in the process of strategic decision-making. He acknowledged that a strategic decision of an enterprise is a conscious, predictable and organized course of action. However, he also pointed out that the strategy of the enterprise also includes an emergency strategy. That is, the strategy is formed from the history of the company to make a reasonable explanation of the past actions so that the members of the corporation can act according to the successful model in the future. Many successful strategies come from practical experience of specific departments. New method is summarized by continuous groping and constant failure. Such tests, as well as mistakes and even luck, will bring about entirely new means of competition. If these innovations are copied, consolidated and formalized, management will gradually learn how to improve their strategies through this "bottom-up" approach. Of course, when an emergency strategy is proven to be effective, it may solidify as a formal strategy or as an alternative to a previously identified strategy. Therefore, effective strategy is gradually formed and time-efficient.#p#分页标题#e#
Mintzberg and Waters (1982) believed that strategy of any company has random ingredients, but the proportion is not the same. From the strategic decision-making point of view of enterprises, there are plans developed in advance, there should also be emergency strategy, a good strategy should be a combination of the two, which will have both ability to foresee, and the ability to react to accidents.
In the HS2 strategic decision-making process, the root cause of the problem is that there is only a predetermined plan, but there is no emergency strategy. The correct process of strategic decision-making should be based on the prior formulation of a scientific and rigorous strategic plan, while discovering new problems and new situations in the operation of the project in time and amending, adjusting the original strategy after finding a suitable solution.
References
Mintzberg, H. (1978) 'Patterns in strategy formation', Management Science, 934-948.
Mintzberg, H and J. A. Waters. (1982) 'Tracking strategy in an entrepreneurial firm', Academy of Management Journal, 465-499.
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