The Project Notebook

Projects to Watch: A Man, A Plan, A Canal


On a recent trip to the San Diego airport, the shuttle made a brief diversion to a downtown hotel to pick up guests from a cruise ship that had just been through the Panama Canal. Now each of my online students needs to do a brief essay on an historical project, and this is a popular one, given that one project team succeeded where another had failed. So it peaked my interest to hear something about the current state of the canal.

What many do not realize is that the current state of shipbuilding is constrained by the canal. Most ships do not exceed the size of a vessel that can pass through the locks. This size has actually been assigned a name, Panamax. The super tanker, along with our Nimitz class aircraft carriers, exceed this size and must therefore pass Cape Horn at the Southern tip of South America if they want to pass from Atlantic to Pacific. This is a far longer (around 8,000 nautical miles longer) trip than the roughly 15-16 hours it takes to pass through the canal end-to-end.

Talk of expanding the canals had been around for year, however these recent cruise ship guests indicated the construction was now actually visible to those on deck. The project was originally proposed by former Panama President Martin Torrijos in 2006. The official project start date is recorded as September 3, 2007.

I also had not given much thought as to how the canals generated income — the early history doesn’t speak to that. Small ocean-able private ships (e.g. around 50 foot) may pay a little more than $1,000 US, while cruise ships may pay $100,000+. These tolls and increased by approximately 3.5% per year and must be pre-paid. The cruise ship guests speculated that the large number of ships moored off the canal entrance may have been due to the wait for the fee payment to clear. Another limiting factor is how many ships can pass per day due to the operation of the locks. Most statistics on the canal are given in tons of cargo, but estimates are that 40-50 can pass through in a day.

The final days of the project are expected to be in 2015. The result will be new wealth for Panamanians. The construction jobs, post construction jobs, and tolls are expected to reduce poverty in this small country by 30%. Critics pointed out that the canal plans did not include the social planning necessary, however this planning is now underway as well. Only time will tell if this project succeeds or fails, but the early indicators are positive — this is a project to watch.

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Category: Projects to Watch

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© 2010-2012 Ray W. Frohnhoefer, MBA, PMP, CCP