Jumeirah Palm Island, Dubai
Project Risk and Value Management
Karolina Sochacka,
Darek Batko
Warsaw, 2014
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Table of contents:
1. Introduction
2. Definition of Megaproject
3. Project description
4. Planning, development and implementation of the project
5. Risk considerations
6. Risk description
7. The future of JPI- How does it look today and what are future
expectations
8. Conclusion
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Introduction
The aim of this report is to introduce the conception of mega project called Jumeirah
Palm Island (JPI) realized in Dubai. Following number of years of feasibility studies,
the Palm Jumeirah was launched in 2001, with reclamation starting in the same
year. From the end of 2006, the island's first residences – comprising 4 000 luxury
villas and apartments were handed over during a phased period. Since then, the
tourism, leisure and retail elements of the island have been developed, creating a
spectacular, world-renowned residential and tourism destination.
In this report we will put emphasis on the problem of risk during the project
execution. We will also provide analysis of the case of Jumeirah Palm Island mega
project, discussing the ways in which the project was planned and implemented,
how Jumeirah Palm was created, what problems it had to face with and the future
consequences of it.
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Definition of term mega project
The mega project phenomenon does not have fixed definition. Moreover there is no
exact way to determine whether some projects are mega or not.
Basically we can define this term as:
• High investment expenditure of USD 250 million and more
• Involving large amounts of global/regional/national capital,
• Typically linked to global networks,
• With a life span of 50 years and more
• A global workforce may be involved in construction and operation
• New institutional forms may be involved in planning, construction and operation
• There is considerable uncertainty as regards demand forecasts and cost estimates
• Indirect benefits are shared, not solely for the benefit of the operator
So we can observe that mega projects are large-scale (typically complex) landbased infrastructure projects. They often link local with global networks, and are
frequently perceived as national icons of development, critical to the delivery of
national and regional development strategies. The term mega project denotes
initiatives that are physical, very expensive, and public. More specifically, megaprojects involve the creation of structures, equipment, prepared development sites
etc.
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Project description
The Jumeirah Palm Island is an artificial island located in Dubai, United Arab
Emirates, created through the process of land reclamation. It was developed during
an economic boom in Dubai, catering to the increased tourism and luxury living
requirements of the city. Design of the JPI started in 2001 and construction has since
been completed.
The JPI was designed largely to combat the problem of limited development space,
especially beachfront properties. The palm shape of the island was decided on as it
provided significant beachfront area, while remaining culturally relevant and
symbolic.
Throughout the reclamation process, geographical surveys were completed to
ensure that the island was being shaped correctly and built up to the designed
elevation. After reclamation was complete, vibrocompaction was used to compact
and strengthen the sand, making it a suitable base for construction.
With construction completed, the impacts of the JPI can be observed. Specific areas
of interest are the impacts on the island itself, the surrounding geography and the
ecosystem. Analysing these areas can give an indication of the success of the
project, and be used to develop improved methods of design and construction for
similar projects in the future.
The JPI is one of the largest artificial islands in the world, and is a significant coastal
engineering feat. Such a large-scale project is accompanied with enormous
challenges and
requirements.
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Table 1.1 Some Key Features of the JPI Mega Project
Area
The breakwater
Construction
Completion
Client
Total coast until 2007
Consultant
Coastline added
Employees working on the project
each day
5.6km2
11.5km
Started 2001
First phase 2006
Nakheel
USD 6.5bln
Hill International (USA)
78.6km to the country's 72km
Visitors per day
40,000
94 million cubic metres of sand and seven million tonnes
of rock.
40 five-star
Expected to become 30,000
Predicted to become 20,000, with 15 million visitors by
2010.
Residents
60,000 from more than 70 nations round the globe
Reclamation
Hotels
Guests
The strategy for mega project development in Dubai has been adopted to expand
the urban economy, promote larger scale development, and to strive for global city
status. The establishment of mega global projects has given Dubai global attention
and status as a place which attracts visitors from different parts of the world. In
doing this, the city started to construct large national real estate companies,
adopting a mega projects dominated policy, focusing on financial flows from
government, the GCC and global investors. This has led to the creation of a huge
transformation in the economy and population of Dubai.
The coastline of Dubai is one of the few man-made features on Earth to be visible
from space, because of which it has been dubbed ‘the Eighth wonder of the world’.
The development of the JPI remains probably the largest urban operation to be
carried out in the last few years, in the world.
It involves re-imaging, to make it attractive globally, restructuring the entire urban
area through the development of sites which have become obsolete after technical
and economic change, and the involvement of private investment through new types
of partnerships.
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Figure 1.1. The Coastline of Dubai 2000
Source: Nakheel.
Figure 1.2. Recreational Mega Waterfront Projects, Planned and Under
Construction in Dubai Until 2025
Source: Nakheel
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Figure 1.3. Location of JPI on the Southern Coast of Dubai
Source: Nakheel.
The three palm islands developments will increase Dubai’s shoreline by a total of
520 km. The Palm Jumeirah development is a mixed of offshore residential, retail
and resort development on an artificial island reclaimed from the sea, in the shape
of a palm tree. It consists of a trunk, fronds connected to a central spine, and a
surrounding crescent island forming a breakwater. The total area of land that has
been created is approximately 5.6 km2, connected to the mainland by a 300
metre bridge, which extends approximately 5.1 kilometres into the sea, and is
approximately 5.3 kilometres wide.
It is surrounded by a resort style development along the beach edge, with more
commercial development, such as Internet City, Media City, and Knowledge City,
which are located inland from The Palm.
The emphasis on the creation of new beaches as part of the strategic plan gives it a
citywide significance. The development of the waterfront projects aims to add new
recreational waterfront spaces to the city.
The proposed new area was therefore partly about establishing a new spatial
balance in the city. This issue is important for the City of Dubai because it has used
all its coastal area.
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Planning, designing, implementation
All the detailed information below is written on the basis on the Research made by
University of Southampton.
Planning involved studying aspects related to the project, and environmental
considerations as well as financial and economic issues within the community. The
project went through a series of stages. All schemes incorporated elements such as
project identification, design, evaluation and implementation.
JPI developed in three stages:
1) Identifification of the strategic goals of the project;
2) Project Formulation and Design;
3) Project Implementation.
The need for more coastal recreational areas, in other words, more beaches, was
very clear strategy for the city. Tourist development was experiencing an
extraordinary boom, creating demand for hotels and furnished flats. It seems that the
following rush affected the planners' thinking, to such an extent that no attention was
paid to the possibility that such massive projects could cause damage in the future.
The development of the Palm Island was part of a massive project directed to
achieve the following goals:
1. Achieving pioneer status.
2. Setting up an economy based on the tourist sector.
3. Setting up new coastal areas in the few remaining areas.
Property-led development strategy was the major motivation; it depended upon
reaching goals. The local authority showed greater effectiveness in carrying out the
massive projects than traditionally. The government agreed upon a strategy of
attracting hundreds of companies, financed by leading banks, and international
hotel companies, to carry out their investment projects.
The form of the tree was seen to offer the most potential, maximizing beachfront
areas. The local community was very supportive of the idea. The palm tree is a
powerful cultural symbol amongst all Arabs.
The next stage was the selection of the exact site and the preparation of specific
plans for each aspect of the palm island. These included the following elements: site
analysis/evaluation; palm design program; street scope network; landscape
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elements; the palm trunk; the palm crown; environmental procedures and analysis;
implementation and development; cost estimation; cost benefit analysis. These
elements were in a sequential process. Each received detailed attention and
involved numerous consultants, architects, designers, engineers, and other technical
experts.
The plan was well studied and discussed before going ahead, and was dependent
upon the initiatives and projects of the private sector. The project’s cost expectation
was much higher than expected, because of a price overrun in the materials needed
for construction.
Another factor to be considered was the island’ ground structure, as it was unlikely
be able to support skyscrapers because of fear of slippage. Therefore, several high
towers projects were cancelled in the Trunk area of the Palm Island. Indeed,
uncertainty surrounding the solidity of the island led some of the early and ambitious
architectural designs to be withdrawn.
The government had a leading role in the development of the artificial island, mainly
in financing the infrastructure. The government looked after other elements of the
island, for example, the basic foundations. In fact, rather than putting a lot of money
into carrying out the projects on the island, the local government instead managed
to offer competitive and easy investments for the private sector, relaxing taxation
and cancelling out-dated regulations. Foreign companies were the central and
major players in carrying out those projects.
The implementation of the Palm Jumeirah involved three broad phases:
Phase 1: Reclamation and Ground Improvement
Phase 2: Infrastructure and Utilities
Phase 3: Building Development
Phase 1: Reclamation and Ground Improvement
The reclamation phase took 27 months, and involved sand transfer and rock
placement to create the land foundations. During this period approximately 100
million cubic metres of sand and rock were put in place.
Van Oord started construction in August, 2001, and completed its work four months
ahead of schedule, in October, 2003.
Above sea level, the top four metres (approximately) of reclamation was achieved
using a dredging technique known as ‘rainbowing’, where the sand fill was
sprayed over the surface of the emerging island. The loose fill was then compacted
by means of vibrocompaction to form the ground surface. Vibrocompaction is a
ground improvement process used to increase
the density of loose sands, and to create stable foundations soils. Vibrocompaction
involves a combination of vibration and water saturation by jetting, whereby loose
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sand grains are re-arranged into a more compact state. This process minimises the
potential for differential land settlement across the reclaimed area.
Figure 1.4 Rainbowing
Source: Google graphics
Phase 2: Infrastructure and Utilities
The second phase of development involved the construction of the network of
infrastructure and utilities required to support development on the Palm. This
included: roads, public transport, water supply, sewerage, electricity, district
cooling and communications. The construction of the infrastructure, including
services plots, the gateway bridge and several roads, commenced in early 2004.
Phase 3: Building Development
The third phase, the construction of the proposed buildings, occurred progressively,
as the infrastructure was provided to various sections of The Palm. Fully developed,
Palm Jumeirah supports around 40 hotels, 1,800 residential beachfront villas and
2,400 apartments. The construction of villas on the first frond commenced in March,
2004. It includes marinas, a water theme park, restaurants, shopping malls, sports
facilities and commercial land use. Palm Jumeirah will support an ultimate population
of approximately 60,000 residents, 30,000 guests/transitory visitors and 20,000
employees.
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Risk Considerations
Mega projects cannot be considered as conventional projects expanded to bigger
proportions. Increasing the size to that extent creates exponential risk. The designs
and sizes are beyond previous experience of operation, capital investment, market
strategy, environmental impact and government policy. Public interest requires mega
projects to be as successful as possible.
Urban mega projects are assumed to have a short and long-term economic impact
on the host city and on the flow of tourists to it.
The main problem of mega projects is that it can cause controversy. Political
leaders join with commercial and industrial parties to promote new mega projects,
while economists, environmentalists, and social advocates stand in opposition.
They are warning about the large risks associated with mega projects. First of all
exists huge difficulty in forecasting what the final costs of projects will be and
whether they will perform as promised.
We can distinguish different types of risks in mega projects:
• Cost risk (construction, maintenance, operation)
• Demand risk (traffic forecasts, revenues);
• Financial market risk (future interest rates);
• Political risk (regulation, parallel public investment, pricing on adjacent parts of
the network);
• Many mega projects benefit global (corporate) interests more than local, even
though their patrons often (by default or design) have local and national
governments meeting the lion’s share of financial, social and environmental costs
(and risks).
• Mega projects may cause an increment in physical and social fragmentation in
urban areas
Because of great probability of risk occurrence, risk and value considerations have
big importance during project preparation and may influence the final outcome of
the project. Lack of risk and value considerations may lead to the failure of any
project. In case of such a huge project like JPI the clear understanding of numerous
risks and the factors that they are connected with is crucial to the final success of the
project. The appropriate risk analysis will prepare project managers to face the
uncertainty more effectively and will definitely help in delivering the value to the
project.
If we fail to analyze certain risks like for example with safety matters it might lead to
minor problems or even a cataclysm which can result in huge loss in capital or even
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in human lives. Lack of this kind of analysis would decrease project effectiveness
and efficiency.
In conclusion, risk and value management is one of the most important things which
project managers should really consider and be aware of during project
preparation.
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Conclusion
Building an artificial island in the Arabian Sea would seem like an overly ambitious
dream to most, but for one of the wealthiest countries in the world, it was one of
several ambitious projects that have come to make the country one of the top luxury
and tourist destinations in the world. The construction of the Palm Jumeirah was a
feat of engineering, but did not come without its challenges.
An immense amount of sand and stone was used, and it all had to be placed in
precisely the right location. The island was designed to withstand both the forces of
nature and the forces of the city being built on top of it, all within a strict deadline.
It has been speculated that the island is sinking—a claim debated by the developer
and explained as being a natural settling process that will not have any long term
negative effects. The island is, however, being eroded, and is causing increased
erosion of the surrounding geography. It has also disrupted or destroyed parts of a
naturally occurring ecosystem, and will likely continue to do so until all of the land
reclamation projects are complete.
The Palm Jumeirah is an impressive project, and should now act as a tool for other
similar projects in Dubai and the rest of the world. Knowing the challenges of
building an artificial island can be helpful in figuring out more efficient and effective
construction methods. Knowing the postconstruction impacts will give rise to future
designs and methods that help reduce these types of impacts. With these ideals in
mind, ambitious projects like the Palm Jumeirah can continue to grow and evolve,
producing even greater feats of engineering.
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