Ten Things You Should Know about Megaprojects

How to avoid the worst pitfalls in multi-billion-dollar capital investments

Photo by Mark Plötz from Pexels

Misinformation about costs, benefits, schedules, and risks is the norm

If you’re involved in megaprojects — as a citizen, politician, planner, or manager — here are ten things you should know, or you’ll be tripped up.

1. Megaprojects are inherently risky due to 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 many stakeholders, public and private, with conflicting interests.
4. Technology and designs are often non-standard, leading to “uniqueness bias” amongst planners and managers, who tend to see their project as singular, which impedes learning from other projects.
5. Frequently there is overcommitment 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 slowly” does.
6. Due to the large sums of money involved, principal-agent problems and rent-seeking behavior are common, 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,” i.e., 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 inadequate, and benefits receding into the future.
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 implementation and operations, when reality catches up with initial delusions and deceptions.

Managers treat projects as if they exist in a deterministic Newtonian world of cause, effect, and control. They don’t!

For more detail, including solutions to the above challenges, read more here.