VICTORIAN DESALINATION PROJECT THE WHITE ELEPHANT? Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

VICTORIAN DESALINATION PROJECT THE WHITE ELEPHANT? Case Study Solution

Further, the market risks were not considered such as the impact on the total government standing after the investment, and the risks on the People as this project was a very heavy project. A risk adjusting factor would have to considered before the implementation of this project.

The analysis had to ensure a project which was to be set up by more research and base projects to ascertain the exact nature of the similar projects, which had been provided earlier as to provide a complete analysis and to provide an exact discounting needs of the project to be appropriated.

One other problem was the take up of a debt capacity and the debt impact to be neutral in value with the no implication in the weighted average cost. Apart from this, when the final finance arrangement had taken place an A$ 1.746 Billion of the amount being syndicated with a separate A$ 246 Million on the HVAC facility. This amount had been a staggering 34.8% of the total finance being taken by the Sponsors of the project. This was not appropriated in the cost adjustments taken by the PSC. (Ker, 2009)

Under these considerance and other factors derived after the startup of the Desalination plant, the project’s Risk free rate being taken was not unbiased, as all the risks were not appropriated.

The Use of Public Sector Comparators in the PPP’s

Public Private Projects are basically collaboration projects, which would provide on the private companies holding the first initial investments of a long term project, and the government and the state units providing an annual return payment on the project for the entire life of the project.

To assess and to appraise the projects, the governments have different agencies. In this instance, the Public Sector Comparators (PSC) was considered which provided on the actual estimated cost of the project. They will provide a figure of the whole projects consisting, the actual costs if the governments would have completed on their own personal structure.

The use of the PSC in the PPP’s agenda is problematic in many instances.

The first reason is the PSC measuring all the required risks and providing a single figure on the breakup part of the project for the areas to be completed by the private entity. This does not include, the governmental and other pressures which will be focused on the project. This was the case provided on the VICTORIA DESALINATION PROJECT for which the government and other factors were not considered.

Another problem was the PSC’s directly initiating their own figures on the past trends and the data of older projects. They would provide their own examination with the figures. This again had been of serious issue, as the Desalination project was one of its kind. Had very high figures, a typical life of 30 years which was very long term and had to take in more figures from different agencies and governmental institutions being all on board.

The use of PSC was considered as not entirely redundant as the figures can be used, but this has to be used in considerance with other figures from different un-biased entities and the average figures is needed to be compared for most effectual results. (Melbourne, 2007)

Conclusion

The VICTORIA DESALINATION PROJECT; which until the current moment of the cast at December 2011 is considered a failure with different penalties and costs being overrun in the current surroundings. (Ross, 2008)

This was a PPP made into use after a long term, and the PSC was used in the comparative cost analysis which had its own limitations and problems. The PPP will have high detrimental effects on the government and other financial markets, due to over subscription of a pre – fail project.

In conclusion, the PPP is considered a complete redundant mode, and new methods are needed as the PSC’s measure was one of the main reasons the project had failure.

This can also be considered under other surroundings as “WHITE ELEPHANT” which positions the appraisal of a biased nature. Other specialist agencies are available, and in order to make this effective; all bodies have to come up with a complete appraisal taking into account of all perspectives, rather than a biased and a systematic approach.............

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