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Megaprojects: 10 Facts you should know

18 Jul 2017
Megaprojects: 10 Facts you should know

With the Irish government coming under pressure to slacken the fiscal reins on capital spending and increase the investment in large infrastructural investment, the prospect of the Megaproject again looms on the horizon.

What is a Megaproject?

Megaprojects are large-scale, complex ventures that typically cost $1 billion or more, take many years to develop and build, involve multiple public and private stakehold­ers, 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 a large number of stakeholders, take many years to develop and implement, and are significantly more complex than other projects in technology and design. Because of these factors, megaprojects need a dedicated approach to project management to be delivered successfully. If you wish to learn more on how to manage mega projects effectively, take a look at our Project Management Professional course

The McKinsey Global Institute (2013) esti­mates global infrastructure spending at US$3.4 trillion per year through 2013–2030, mainly delivered as large-scale projects.

The size of megaprojects is staggering no matter what 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 organization that is often the size of a billion-dollar corporation.

Megaprojects Characteristics

  1. Megaprojects are inherently risky because of long planning horizons and complex interfaces.
  2. Often projects are 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. Decision making, planning, and management are typically multi-actor pro­cesses involving multiple stakeholders, public and private, with 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. Frequently there is over-commitment to a certain project concept at an early stage, resulting in “lock-in” or “capture,” leaving alternatives analysis weak or absent, and 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 typically change significantly over time.
  8. Delivery is a high-risk, stochastic activity, with overexposure to so-called black swans; that is, extreme events with massively negative outcomes. Managers tend to 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. As a consequence, misinformation about costs, schedules, benefits, and risks is the norm throughout project development and decision making. The result is cost overruns, delays, and benefit shortfalls that undermine project viability during project delivery and operations.

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.