the window and thought about his options. He considered what he could say to the shareholder ministers of WSA Co, Minister Emma Bermingham and Senator Matt Washbourne, who were demanding an explanation for why there were cost issues at the Western Sydney International (Nancy Bird Walton) Airport (WSA). Jack knew that this morning both the minister and senator would be concerned about the political impacts and expect to hear solutions rather than excuses. Jack looked back at his letter of appointment, which set out the statement of expectations for WSA Co, and the objective was clear: ‘to deliver an operational airport to permit services to commence not later than the end of 2026’. He considered how it had come to this given that since 1946 there had been an ongoing debate about a potential second Sydney airport with various studies commissioned by both Australian and NSW governments into the need and the appropriate location. These studies had extensively considered factors such as demand forecast, capacity constraints of existing infrastructure, service growth options, environmental impacts, community opinions, and costs and benefits. The studies had variously identified decision points such as:
• whether to put resources into a second airport or further develop the first • if both building of the second and development of the first were to be pursued, which should be given preference • whether to develop a modest limited facility or construct a full airport of international standards • where would be an appropriate location for a second airport to enable growth, negatively affect the least people and minimise the impact on the environment.
Nineteen sites were considered and the reports of these studies were examined at great length and at considerable costs by successive governments. The reports varied in their assessment of the evidence, ranging from deeming a second airport unnecessary through to identifying particular sites and presenting cases for the urgency of building the airport immediately. However, over the years all the plans were stymied or deferred for a variety of reasons, including public lobbying campaigns, environment impact studies,government changes and funding shortages, and no decision was made. Though there was unending rhetoric about the urgent need for a second airport, governments proceeded slowly. Finally, in 2012 a study found that the current airport was almost at capacity and would be unable to meet future demand.73 A range of sites was considered with the conclusion that the 1780 hectares of Commonwealth-owned land at Badgerys Creek, which was first identified in 1969 and continuously considered, would be ideal. Construction began on 24 September 2018 with the prime minister breaking ground and declaring that the new airport was job-generating infrastructure which would eventually cater for up to 82 million passengers, the size of Heathrow Airport in London or JFK Airport in New York. Jack reflected on why the government had finally established WSA Co as a wholly owned Commonwealth company and committed up to \($5.3\) billion in equity to build the new airport. He remembered that Sydney Airport Corporation (SAC), owners of the current Kingsford-Smith Airport, had declined their first right of refusal to build the new WSA. Jack knew that SAC were in the business of making money and were not prepared to take on the considerable risks of developing the new site, especially given that building airports requires a long-term capitalintensive approach that can take many years to turn profitable. SAC was happy with being one of the most pricey airports in the world for both passengers and airlines as it returned over \($320\) million profit per year.
The Commonwealth Government wasn’t concerned with airport as national infrastructure with a multiplier effect creating jobs at the airport and in all the businesses that support the airport such as car hire, shops, hotels and so on, with each of these job holders also offering potential votes. Jack knew that this perspective meant that the \($5\) billion investment could easily turn into a \($50\) billion economy and that controlling this opportunity had led to the establishment of WSA Co. Hailed as a unique opportunity to build major infrastructure and be a significant catalyst for jobs and economic growth, the WSA had experienced problems since its inception. The requirement to level the ground, which had a fall between the highest and lowest points equivalent to a 12-storey building, meant shifting about 1.8 million cubic metres of earth. When this levelling was delayed it impacted on major earthworks including drainage and decontamination and some airside civil works packages. There had also been some problems in recruiting enough engineers and different contractors as well as a few occupational safety issues. Heavy rainfall in Sydney in early 2021 had halted construction for five weeks and COVID-19 lockdowns requiring suspension of construction work between July and August 2021 had affected the project’s budget and schedule. To top it all, there had been a series of protests by local residents and action groups about the damage to the environment. In addition, in 2022 the airport was at serious risk of opening without crucial public transport connections because of major delays to funding from the state and federal governments for the project. Though the government was saying the airport was still ‘on track’ to begin flights by late 2026, it was now being said that the cost of the airport was blowing out and would well exceed the budgeted \($5.3\) billion. Jack knew he had to find some answers before his meeting with these politicians. He contemplated whether he should provide them with the updated completion timelines, show them the stages completed so far, point to the underestimated budget or talk about community issues. He hoped there wouldn’t be a protest group this morning as that would just worsen the situation. Jack gloomily considered his choices, including whether he should offer to resign, and framed some mental responses to the questions he thought he would be asked.
Questions Mainstream
1. Were the ongoing government studies commissioned to determine the need and a location for a potential second Sydney airport examples of decision making or problem solving? Justify your choice.
2. Do you think the government was using a rational or behavioural approach to decision making in the situation of the potential second Sydney airport? Explain your reasoning.
Critical
1. What examples of evidence-based management can you see in this case? How would you see EBM impacting on the decision making?
2. What potential do you see for escalation of commitment and what might be some factors influencing the current decision-making path?