Megaprojects: 10 Facts You Should Know

In this article, we will dive into the world of megaprojects and unravel the key elements that contribute to their success.

What Is a Megaproject?

“Mega” comes from the Greek word “megas”. It means great, large, tall, and mighty.Megaprojects are large-scale, complex ventures that typically cost $1 billion or more, take many years to develop and build, and involve multiple public and private stakeholders. Its definition extends beyond the meaning of a traditional project because megaprojects are transformational and impact millions of people.

Some examples of megaprojects are high-speed rail lines, airports, seaports, motorways, hospitals, national health or pension ICT systems, national border control, national broadband, server farms, offshore oil and gas extraction, aluminium smelters, and the logistics systems used to run large supply-chain-based companies such as Apple, Amazon, and Maersk.

How Is a Megaproject Different From Other Projects?

It is not only high costs that make projects "mega". Typically, they involve many stakeholders, take many years to develop and implement, and are significantly more complex than other projects in technology and design. Understanding the distinctions between megaprojects and typical projects is vital for effective planning and execution. Because of these factors, megaprojects need a dedicated approach to project management to be delivered successfully.

Furthermore, megaprojects are not only large, but they are also constantly growing. They require different strategies and management due to their vast size and complexity.

Megaproject managers often have experience working on long-term operations or complex projects. Multiple leaders for different departments may also be required for such projects. If you wish to learn more about managing mega projects effectively, look at the Project Management Professional course we offer at your institute.

The McKinsey Global Institute esti­mates global infrastructure spending at US$3.4 trillion¹ annually through 2013–2030, mainly delivered as large-scale projects.

The size of megaprojects is staggering no matter the comparison and is matched only by the challenges of managing one. Consider that in delivering a megaproject, one must - over a relatively short period of time - set up, run, and take down a temporary organisation that is often the size of a billion-dollar corporation.

Elements of Megaprojects

Understanding megaproject elements is essential because it helps project managers and stakeholders understand the complexities of such projects. Below are some explanations for those elements.

Scope and Scale

During the planning of a megaproject, the most important thing to consider is the scope and scale of the project. Megaprojects transcend the conventional project scope and scale limits. This element sets the stage for multiple challenges and opportunities involved in the megaproject.

Managing Resources

Megaprojects can have many resources coming from different sources. This element includes the time delegated to manage resources during the completion process of a megaproject. Managing resources is essential as it addresses all project requirements.

Budget and Schedule

Project leaders must navigate the financial landscape to ensure sustained funding. The organisation's financial department analyses all aspects of the megaproject to determine the most effective way to use the funding. Teams often make financial adjustments when prices change during the megaprojects.

A megaproject's schedule spans years or even decades. Therefore, organisations create goals or deadlines as the years proceed. Creating an initial timeline with clearly defined goals is necessary. There is always room for change, as challenges may occur during any part of the project.

Project Management Processes

Considering different project management processes helps organisations determine the most effective way to complete their megaproject. Current project management techniques are analysed and improved.

All the team members should understand the strategies if an organisation adopts a new project management strategy. It also includes analysing the benefits and potential risks of the new strategies later put into the processes.

Stakeholder Management

Effective stakeholder management is critical because it requires clear communication, engagement strategies, and mechanisms to address varying interests and concerns.

Sustainability

Sustainability ensures that the final product maintains its originality in terms of functions and services after completion. Integrating sustainable practices and demonstrating environmental responsibility are essential elements.

Understanding and navigating these elements is crucial to the successful execution of megaprojects. Each element represents a puzzle piece in the larger picture, and effective project management requires aligning and integrating these pieces seamlessly.

Benefits and Drawbacks of Megaprojects

While megaprojects offer unparalleled opportunities for growth and development, they also come with numerous challenges. Exploring the benefits and drawbacks provides a balanced perspective on these ambitious initiatives.

Benefits

• The extensive construction, employment opportunities, and increased economic activity contribute to local and national economic growth. 
• Megaprojects often result in the development of transportation networks, energy facilities, and technological hubs, enhancing overall connectivity and accessibility.
• State-of-the-art infrastructure and technological capabilities contribute to attracting international investments and fostering a competitive economic environment.
• The sheer size of megaprojects demands a significant workforce. This leads to extensive job creation across various sectors, providing employment opportunities for diverse skill sets.

Drawbacks

• Megaprojects often exceed their initially estimated budgets. Unforeseen challenges, changes in scope, and inflation can contribute to significant cost overruns, straining financial resources.
• Permitting issues, regulatory hurdles, and unexpected technical challenges can extend project timelines.
• Construction activities, resource extraction, and changes to natural landscapes may lead to ecological disruption, requiring meticulous environmental management.
• Megaprojects often necessitate the relocation of communities or disruption of existing neighbourhoods.
• Navigating complex stakeholder relationships is challenging, especially when numerous stakeholders are involved. Balancing divergent interests and ensuring transparent communication becomes imperative.
• Changes in political landscapes, international relations, or diplomatic tensions can impact project continuity and success.

Characteristics of Megaprojects

1. Megaprojects are inherently risky because of long planning horizons and complex interfaces.
2. Projects are often led by planners and managers without deep domain experience, who keep changing throughout the long project cycles that apply to megaprojects, leaving leadership weak.
3. Multiple stakeholders, public and private,  can have conflicting interests.
4. Technology and designs are often non-standard, leading to “uniqueness bias” among planners and managers, who tend to see their projects as singular, which impedes learning from other projects.
5.  There can be over-commitment to a certain project concept at an early stage, resulting in “lock-in” or “capture.” It leaves alternative analysis weak or absent, leading to escalated commitment in later stages. “Fail fast” does not apply; “Fail slow” does.
6. Because of the large sums of money involved, principal-agent problems and rent-seeking behaviour are widespread, as is optimism bias.
7. The project scope or ambition level will change significantly over time.
8. Delivery is a high-risk, stochastic activity with overexposure to black swans. It refers to extreme events with massively negative outcomes. Managers ignore this, treating projects as if they exist largely in a deter­ministic Newtonian world of cause, effect, and control.
9. Statistical evidence shows that such complexity and unplanned events are often unaccounted for, leaving budget and time contingencies for projects inadequate.
10. Misinformation about costs, schedules, benefits, and risks is common throughout project development and decision-making. The result is cost overruns, delays, and benefit shortfalls that undermine project viability during project delivery and operations.

Reference Literature:

This article is based on an extract of the book: The Oxford Handbook of Megaproject Management, ISBN: 9780198732242 Edited by Bent Flyvbjerg and published by Oxford University Press.

Flyvbjerg succeeds admirably with his objective to produce a well-rounded book that is a must-read for anyone embarking on study, research, or practice in megaproject management, or who is impacted by megaprojects and wants to understand them better.

¹ McKinsey Global Institute. 2022. "Projecting Infrastructure Needs and the Financing Mechanism: A Review of Estimations by ADB, McKinsey, and the OECD."