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Project Evaluation

The Class

During my junior year spring semester, I took a class called 1.011 - Project Evaluation and Management, taught by then-MIT graduate student Scott Middleton. For the first half of the semester, we learned project management and evaluation techniques, ranging from the critical path method to benefit-cost analyses. Our focus for the second half of the semester was employing the skills we learned to evaluate a project of our choosing. I worked in a group with two other students to perform a comprehensive evaluation of the Three Gorges Project. We produced a 30 page report, gave a short PowerPoint presentation, and presented a poster to guests. The class provided a great introduction to project management and allowed me to practice essential communication skills. For the full report, please see: Three Gorges Project.

Project Context

 

Background

The Three Gorges Project (TGP) on the Yangtze River in Hubei province, China is the world’s largest hydropower project. The idea for the TGP was first discussed in the 1920s by the Chinese Nationalist Party, but its construction did not start until 1994 due to the enormous scale of the project and surrounding controversy.

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Controversy

The World Bank and other international organizations refused to fund the dam because of environmental, safety, and equity concerns. The dam has caused frequent landslides and severe downstream droughts. An estimated 1.4 million people were displaced due to the flooding to fill the reservoir. Due to corruption, there was an inequitable distribution of relocation spending.

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Problem Statement

Did costs of the TGP outweigh benefits when considering environmental, social and economic factors? Is there a preferred alternative to the TGP?

The Three Gorges Dam in Hubei Province, China (ultimatescience.org). 

Stakeholder Analysis

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  1. Construction workers

  2. Fishermen

  3. Downstream residents

  4. General Chinese population

  5. Displaced persons

  6. Shipping industry

  7. Three Gorges Corporation

  8. Environmental, archaeological, and human rights groups

  9. World Bank

  10. Research institutions

  11. Yangtze Valley Planning Office

Financial Analysis

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Construction Funding Sources

  • Domestic sources comprised the majority of funding

  • TGP Construction Fund was established by the Chinese government

  • A levy on electricity use during project construction generated nearly 25% of the funding

Cash Flow Diagram

  • Construction costs ended when installation of turbines finished in 2013

  • Construction accounts for $50 billion in costs

  • $82 billion in economic growth (e.g. job creation) was generated

Solar Farm: A More Sustainable Alternative

  • A solar farm would have a higher initial capital costs, but benefits would be felt sooner

  • Solar farms would also incur much lower resettlement and archaeological costs

Conclusion

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Accounting for social and environmental factors indicates that the benefits of the TGP still outweigh the costs. However, an equivalent solar farm would have lower social and environmental costs, and is a more economically favorable alternative.

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