1. Executive Summary
The Suez Canal is an ancient connection between two distinct land masses. The canal which dates more than 100 years old continues to be beneficial since it has dramatically shortened the distance to be navigated between Europe and South Asian countries. The construction of the initial project was limited to a lower number of navigating vessels to access the canal on a daily basis. Fortunately, the Egyptian government has been on the forefront in expanding the canal to increase its handling capacity. The expansion of the canal has been justified by the anticipated economic benefits to Egypt and the entire world due to international trade. Importantly, the Egyptian government should strive to solve the handling capacity of the canal once to continue benefiting from it.
2. Introduction
The Suez Canal is one of the oldest artificial structures across a large water body. Just like any other modern projects, the implementation of the idea of coming up with the canal passed through a series of the process such as analysis, design, and sourcing of funds that lasted for several years. Some of the issues related to the Suez Canal can also be analyzed to dates such as the coverage of its scope and its cost and benefits analysis.
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3. Project Overview
Transportation has been one of the critical activity that people undertakes daily. Due to the urge of linking to lands separated by sea for various uses, the Suez Canal became the first ever structure to be constructed, connecting two continents (Suez Canal, 2018). The canal is an essential connection between two seas namely the Mediterranean and the Red Sea (Galil et al., 2015). Remarkably, River Nile has also been incorporated in this human-made canal (Suez Canal, 2018). The initial cost of the project was valued at 200 million francs, and more than 2613 million cubic feet of the earth’s surface was to be displaced (Suez Canal, 2018). The construction of the 160-kilometer canal lasted for ten years from 1859 to 1869 although it was faced with several challenges before it became stable regarding operations.
4. Analysis of the Project
The Suez Canal has continued to be a critical point in transportation. Initially, ships had to navigate around Africa on their way to from Europe to South Asia or the other way round. However, the trend was changed by the development of the Suez Canal (Malsin, 2015). The Egyptian government has continued to expand the project although it has been costly. Statistically, the Canal is expected to handle more than 90 vessels by the year 2023, an increase from the current figure of 49 ships per day (Malsin, 2015). Importantly, the project generates revenue of $3 billion to the Egyptian government revenue per annum, and it is expected to double (Malsin, 2015). The income is collected from tourism, transportation and other sources that are directly affected by the Suez Canal.
Benefits of the Suez Canal
The construction of the Suez Canal has offered a lot of opportunities to the Egyptians and other people from the surrounding regions. The possibilities are in the form of improved infrastructural facilities, improved trade and transportation, job opportunity and revenue to the government. The Egyptian government estimates that the annual contribution of activities performed on the Suez Canal would double before 2023 (Malsin, 2015). The canal has also linked Europe, Africa, and South Asia and as a result, the transportation of goods and services from one continent to another fort international trade has been significantly enhanced.
Costs of the Suez Canal
The Suez Canal resulted into several issues that directly affected all the key stakeholders. The project required a lot of capital for its establishment. Furthermore, the construction of the canal implied that no other activity such as irrigation farming would be conducted in the area. All these values can be treated as the total cost of the project as far as this paper is concerned.
Comparison between Cost and Benefits of the Suez Canal
As it has already been mentioned herein, the initial cost of the project was valued at 200 million francs which translates into about $35.666 million using a conversion rate of 1 franc equals to $0.178330 (XE, Corporation, 2018). The value can be treated as the cost of the project. On the other hand, the estimated revenue of the project can be interpreted as its benefit which stands at $3 billion per year (Malsin, 2015). By comparison, the benefit exceeds the cost by far, and this makes the project viable.
Assessments of Risks, Scope, and Strategy
The pioneer developers of Suez Canal failed to consider future risks and scope. As a result, scope creep has been experienced. For instance, the recent regimes have been compelled to spend a considerable sum of capital in expanding the channel to accommodate larger water vessels. The act leads to a conclusion that the initial design of the project was only intended to take care of a specified size and number of ships. The initial design ignored to consider the fact that human beings would gradually invent larger water vessels and also the ever-expanding business activities. Notably, the canal has also been faced with threats due to piracy especially on the coast of Eastern Africa which has led to the redirection of ships (Huber, 2013). The situation has affected the canal negatively although it was not considered in the earlier development.
5. Conclusion
The Suez Canal has contributed massively towards the development of international trade and revenue for the Egyptian government. However, some challenges such as the needs for its expansion to cater for the increased number of ships using the route have always been experienced. To address the problems, the Egyptian government should ensure that any change in the structure of the project is done correctly to consider the ever dynamic transportation industry. Broader and deeper channels should be created to avoid the possibility of incurring extra burden in the future.
References
Galil, B. S., Boero, F., Campbell, M. L., Carlton, J. T., Cook, E., Fraschetti, S., & Marchini, A. (2015). ‘Double trouble’: the expansion of the Suez Canal and marine bioinvasions in the Mediterranean Sea. Biological Invasions , 17 (4), 973-976.
Huber, V. (2013). Channeling mobilities: migration and globalization in the Suez Canal region and beyond, 1869-1914 . Cambridge University Press.
Malsin, J. (2015). Egypt to Open New Improved Suez Canal. Retrieved from https://timedotcom.files.wordpress.com/2015/07/suez-canal.jpg
Suez Canal. (2018). Historical Outline. Retrieved from https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/CanalHistory.aspx
XE Corporation. (2018).XE Currency Converter: FRF to USD. Retrieved from https://www.xe.com/currencyconverter/convert/?Amount=1&From=FRF&To=USD
