Monday, October 18, 2010

If I Were Entrusted to Mastermind a Mega Project

(Note: All the characters, events and places described in this article are fictional and theoretical, of course.)

Sometimes, I wonder how policy makers gleefully announce the building of not few mega projects in so short a time: in less than 5 financial cycles! Then this comes into my mind: what are in their minds that make them decide they are going to build such humongous projects? Lots of money, I mean… lots of return can be gained from such endeavors. That may be, but as the financial credo states, high risk yields high return. Yet, we are often fed with the high return part, which is the second clause of the sentence while forgetting the first clause: high risk.

What are the risks of embarking in such gigantic project(s)? Well, that depends on what projects we want to endeavor in the first place. Building a mega-dam is almost different game altogether than building a multimedia super-corridor with one definite similarity: they require a lot of money, I mean, resources to build. But let’s just assume I’ve been entrusted to build a 100 storey commercial tower here with RM1 billion budgets.

The first thing that comes into my mind is… dang, this is a lot of money! I wonder if I can put some of them in my own pocket first. Not much, just 1%, even 0.1% will do… I won’t mind sharing 10% out of that proportion with you if you keep quiet, yes? Now, this is the first problem: a large scale project by itself is prone to embezzlement – the players, even before the board is set, are already thinking their about their shares usually extracted in the most convenient way, in order to maximize their profit.

But wait, I do not have the RM1 billion yet, I only have the order to plan this entire Sky Tower project from the scratch. So, I need to do some, umm… a lot of fundraising! Remember when you were 9 years old Scout member, forced by your Captain to fundraise RM100 for that annual jumble sale? Before, that little you scurried here and there, shyly knocking at the not-so-familiar next (and the next etc.) door neighbors’ door and ask them to ‘invest’ or ‘donate’ just that little 5 Ringgit (10 Ringgit would be better, hehe) in your worthy cause. Then in your mind you would fervently pray, “Please give me the bucks, pretty please!”

It is the same game for this pointy Sky Tower, with a little larger amount. Like a little niner, I need to find the sources of capital for this project. If a little niner feels lucky if mom could give him RM50, I definitely feel lucky if the IMF would give me RM500 million to fund the project. I must also convince private shareholders comprising individuals and financial institutions to cough up the RM500 million and by assuming the IMF will give me the full amount. Of course, interest rates will jack the price higher up. This is the second problem.

Now I am starting to scratch my head: how on Earth am I going to build skyscraper alone? I need friends, umm… other professionals to help me out with this thing. I maybe good at administering the project and supervising the site once it is up because I have that flashy Civil Engineering degree from Stanford and an MBA from U Penn. But I can’t draw like Ah Leong, my old batch mate majoring in Architecture when we were in Stanford. (By the way, he works in overseas now because he said the pay is better) And I need to recruit more professionals like Ah Leong in other fields as well.

Then I launch a mega interview session similar to AF-style uji bakat, tailored specially for seeking ‘professionals.’ But hey, unlike would be singers, these home bred professionals are hard to find to occupy my long list of job vacancies. I know some fellow Malaysian guys and girls who were honor students in their fields a long time ago, but similar to Ah Leong, they preferred to stay overseas. *sigh* Knowing that I am not going to be able to do this alone, I am now delegating some (or half) of the task in the open market. In other words, I’m offering tenders and contracts to the business world.

Then all of a sudden office phone rings every fifty seconds, my emails and mailboxes filled with tender applications, hi and hellos, flirt calls, special requests… you name them! And after scrutinizing the applications, I notice a pattern: wait, why are the boss (or bosses, or umm… shareholders) in Company Rising Son the same as in Company Pisces? And these companies are huge! Oh well, they offered the lowest price and they claim to have the manpower… sorry Little Shiny Co., I wish you better luck next time!

Now I’ve got the capital – promissory notes promised to be paid in full in 5 years (hope those lenders won’t just be selling their silver tongues and the interest rate won’t go up), the big machines (Kobelco cranes and stuff), and the people, skilled and unskilled (lots of Mr. Engineers, hard laborers etc.). Now, at least on paper, those are all set.

Wait, I forgot about the land. Where on Earth must I exactly place this pointy Sky Towers so that it can be an envy to outside visitors, a pride to my people, and of course, a money generating machine?

“Ah, that one on the green hill near K City seems to be a good place,” I thought to myself.

So, I went there to the Department of Land and Survey to ask about who’s the owner of the land and then crossed my finger while contacting the land owners...

“RM 400 million,” that was their price and I already had ants in my pants. That is already 40% of the budget gone and only RM600 million left to build a tower like Burj al-Dubai.

After much negotiation, I managed to buy the land at RM300 million and I ordered all the workers and the machines to the site and uh-oh, I see a little village over there and its inhabitants picketing along the highway, refusing entrance of the machines and workers. They claim they already live there for three generations and those in power had been promising that place to them for many years.

Noticing the heat of the news, foreign and national media are amassing themselves around the site and so are YBs from the government and the opposition, taking turns to turn the tide of the story. One side calls for justice, the other calls for the greater good for many. But I just sit there and see the drama as it plays…

From the East, people wail, “why are beautiful buildings and tall towers are always built in your already big and beautiful city while we are lacking even water and electricity?” From the North, people shout, “you guys are building yet this another white elephant using our oil money!” Oh boy, how am I going to answer them?

This is a scaled down version of just one hypothetical scenario of mega-sized project. I have not even begin to touch about how I am dealing with investors, government officers, non-governmental organizations and international bodies. Now imagine five or six of them being built almost in unison…

Hey wait, why do we need this pointy tower again? Oh, so foreigners will come and shop there and envy at its beauty. And we are proud to have the pointiest tower in the world even Uncle Sammy cannot match.

Now this reminds me one day when a little guy asked, “where is your country, again?”

I frowned, “you don’t know?”

“A-a,” he shrugged.

“Do you know where the little Tiger-Isle is?” I said.

“Yea…,” he smiled.

“It’s just north (and east) from that little isle,” I retorted with a smile, almost stuttering.

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