German Cases

Question 1

Name the key risks for Stuttgart 21

Answer 1

- Financial risks
•	Unpredictable costs (belated launch)
•	Default of fancier
•	Changes in prices (raw materials)
- Public opposition
- Other risks: Geological risks; Completion risk

Question 2

Key players Stuttgart 21

Answer 2

o	Province Baden-Württemberg
o	Capital city Stuttgart
o	Region Stuttgart
o	“Flughafen” Stuttgart GmbH
o	DB AG
o	German government

Question 3

Opponent’s arguments Stuttgart 21.

Answer 3

• Ecological issues
• Cost-value-ratio
• Reconstruction of the existing rail station would be more rational & efficient
• Stuttgart is bankrupt – no funds for other projects (e.g. schools)
• Influence on private property and monuments

Question 4

Issues regarding the costs (Stuttgart 21)

Answer 4

• Official planning costs don’t include several deals with the key players
• If costs continue to rise, most of the involved parties aren’t able/willing to invest further money. Stuttgart and BW (taxpayer) will pay the additional costs.

Question 5

Key Facts Elbphilharmonie

Answer 5

• Planned construction costs for Elbp. and additional facilities of 77m€: Real total costs of 866m€ (789m€ paid by the City of Hamburg)
• completion delay of 7 years

Question 6

Key players Elbphilharmonie

Answer 6

• Architects Herzog & de Meuron
• Project Company: Elbphilharmonie Hamburg Bau GmbH & CO. KG
• Hochtief as construction company
• Investors (Investment consortium Adamanta; Private donors; Local government)

Question 7

Key risks Elbphilharmonie

Answer 7

• Functional and operational risk
• Completion risk
• Transaction risks: Liquidity, Interest Rates

Question 8

Elbphilharmonie: Why did the project fail?

Answer 8

Poor Planning, Structure of contracts, missing experience, construction planning errors

Question 9

Elbphilharmonie: Opponent’s arguments

Answer 9

• Symbol of elites
• Massive construction costs
• Poor planning in acoustic
• Misleading of publicness
• Economic incompetence of the city of Hamburg

Question 10

Elbphilharmonie: Why City of Hamburg didn’t cancel the contract in case of increasing costs?

Answer 10

Lock in effect: Hamburgs expanses would be even higher when hiring a new construction company. For that reason Hochtief was able to push higher construction costs through.

Question 11

Elbphilharmonie as a PPP?

Answer 11

PPP: after renegotiation→ operative risk transfer to Hochtief

Question 12

Key Facts Berlin Brandenburg Airport (costs, opening)

Answer 12

• Originally planned costs 1,4bn €
• Planned opening date 2011
• Still not opened in 2017
• Initially planed to be built, owned and operated by private sector → but in the end it was built under public sponsorship

Question 13

Key players: Berlin Brandenburg Airport

Answer 13

• Land Brandenburg
• Bundesrepublik Deutschland
• Land Berlin

Question 14

Berlin Brandenburg Airport: Reasons for failure

Answer 14

• Poor Management

- Technical issues

Question 15

Lock in effect BB Airport?

Answer 15

prestigious project (only financed by public parties)

Question 16

What financial instrument was used for the BB Airport Project?

Answer 16

Financial Instrument: Consortium loan, insufficient amount

Question 17

Possible recommendations BB Airport:

Answer 17

Transfer to a PPP

• Risk transfer to private companies
• Pooling of know how
• Planning and cost security
• Founding a federal agency to control and plan mega projects