1. South Florida PMI Chapter Dinner MeetingThe 3 Projects of the Panama CanalLessons Learned from one of the engineeringwonders of the world or how a Mosquitocan kill your project! Roberto Toledo, MBA, PMP AlphaConsultoría México and LatinAmerica

2. 2 Agenda Some history and the importance of the Canal The French project and its lessons learned The American project and its lessons learned The Panamanian project and its lessons learned

3. 3 Theimportance of LessonsLearned

4. The importance of the Canal Technically it is one of the greatest engineering achievements of humankind. It longs 80 km from the Atlantic to the Pacific Ocean. Its width ranges from 91m to 300m. It possesses two terminal piers, three sets of twin locks and one of the largest artificial lakes in the world: Gatún Lake, which covers 425 square kilometers 4

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6. Beyond engineering is about economics It’s the second primary route for imported goods to the USA (first customer) It’s a main route for exported goods for China (second customer) It grossed 1.3 Billion USD in 2008 Gathered 2.3 Billion USD for the Expansion Program Out of 5.2 budgeted Holds A2 investment rating 6

7. Panama, the Nation of the Canal 25% of the Government ‘s income comes from the Canal’s Economy Direct and Indirect Contribution of the Canal as a percentage of the Government’s current income 7

8. What does it mean to the World? 8

11. The Darien Expedition by the Scots in 1699

12. The somewhat successful American Railway experience, considering a dead toll of 12,000 workers by malaria and yellow fever10

13. The French Project Work continued trough 1889, when the French abandoned the project Heavy machinery was insufficient and not working properly More than 22,000 people died due to diseases like malaria and poor living conditions The digging made by the French were vast and used though 11

14. Lessons Learned Prior failing -extreme disaster- experiences were dismissed due to a seemingly recent successful experience -the Suez Canal- Prior technical knowledge was not reviewed nor verified Environmental conditions were not considered as part of the Construction Management Plan Sanitary conditions were not considered as part of the Construction Management Plan 12

15. The American Project Foreign landowners in Panama lobbied the US Congress to chose Panama over Nicaragua for a canal The Cromwell scam The access-granting treaty to the Canal Zone was not ratified by Colombia prompting Panama’s independence 13

16. Experiences considered The American Railway construction through the Isthmus (1885) The Spanish-American war in the Caribbean (1898) “Tropicalized” heavy machinery The mosquito vector and disease control How they did it??????? 14

17. Lessons Learned Political issues got involved into a technical decision Panama vs. Nicaragua Panama’s secession from Colombia Some technical studies were postponed due to political pressures Proper housing and sanitary conditions for workers are a must.- People are your most valuable resource! The adaptation of the tools (heavy machinery) avoided delays Thorough planning and tight control allowed finishing the project two years ahead of time PM did not formally existed as a discipline 15

18. The handover to Panamanians The treaty of the canal was signed in 1903 The new canal was finished in 1914, two years ahead of schedule A new agreement was signed in 1977 named the Torrijos-Carter Treaty In 1999 the US government gave Canal’s control to Panama 16

19. The Panamanian Project Only 25 ships can go through the Canal every day (reservation slot needed) Ships’ size has steadily increased since WWII Heavier traffic is expected in the following years Two competing projects challenged the Canal’s supremacy (Mexico and Nicaragua) Panama’s economy dependence on the Canal increases every year 17

20. Bigger is better More larger-than-Panamax-size ships are being built in the world 18

21. Contribution to Panama’s Economy Direct and Indirect Contribution of the Canal as a percentage of the Government’s current income The impact of the Canal’s contributions to Panama’s economy grows every year. 19

22. The Strategic Plan Strategic Stages at the Panama Canal Maximize Benefit of Transit Business Expand Transit Business Create Options for Growth 20

23. From past lessons… Political gambling has been reduced to a minimum A wide, extent communication plan has been established Economical benefit -our business, our country, our customers, our people- is the guideline Technical feasibility included: Heavy Industry studies, TI, Marketing, Engineering, Hydrogeology, Economic and Project Management and 6-Sigma 21

24. From past lessons… Human feasibility includes: Healthcare, Personal and Professional Development, History and Sociology Stakeholders considered are quite more in number and interests than in the past 22

25. Where is PM contributing? Some unrefined PM practices were used during the American Project (still for many years remained isolated practices) The building of a new Canal implies using state of the art PM tools 23

26. Portfolio Management Managing new construction technologies developed ad hoc for this endeavor Managing Canal operations in parallel to construction activities Managing interfaces.- where construction and daily operation activities meet Managing millionaire budget coming from external sources Managing several complex stages at different levels, zones and stages 24

27. Time Management (Top Level) 25

28. Cost Management Multimillionaire Budget handling coming from diverse sources implies a strict expense control and detailed accounts reporting Financing: 2.3 billions Own cash flow: 2.9 billions 26

31. Quality Management Technological developments must live-up beyond their expectations, and good quality management is the key Quality standards are required for all components. Project Quality Management aligns planning, control and assurance. 29

32. Resource Management Adequate procurement, supply, and human capital, coming from everywhere in the world must be properly managed, with the necessary planning, controlling and executing. 30

33. Project running as expected… Canal Expansion Project seems to be online according to the macro-schedule Everyday operations at the Canal are running as usual Fine control over smaller projects and subprojects is vital to remain on line The ACP and its governance bodies seem to be covering properly their roles as sponsors and stakeholders 31

34. Success must be repeatable!! By using a consistent methodology efficiency and consistency are guaranteed Don not brag about your successes Avoid the French Syndrome: One great success does no guaranty another greater success! We know some new surprises will emerge in the future for the Panama Canal… be wise and be prepared… Lastwords… 32

35. ¡Thankyou!¿Questions? Roberto Toledo, MBA, PMP ManagingPartner of Alpha Consultoría rtoledo@alpha-consultoria.com (+52.55) 5211.6828