Project Journal

There�s an excuse why Mega Projects are only called �MegaProjects.� Extremely large in scale with significant impacts on communities, environment and budgets, megaprojects attract a lot of public attention and often cost more than 1 billion. For the grandiose, an excellent megaproject uses a great deal of planning, responsibility and work. Likewise, the magnificence of such projects also produces a large margin to fail.

Mega-projects have big expectations. But a project�s success is often from the eye of the beholder

Despite their socio-economic significance mega-projects - delivering airports, railways, power plants, Olympic parks along with other long-lived assets - have a good reputation for failure. It really is considered that over optimism, over complexity, poor execution, and weakness in organizational design and capabilities are the most popular root factors behind megaproject failure.

Blinded by enthusiasm for your project, individuals and organizations involved with megaprojects often miscalculate the complexity in the project. Each time a megaproject is pitched, its common for costs and timelines to become underestimated whilst the cooking with your project are overestimated. According Danish economist Bent Flyvbjerg, it is not unusual for project managers that are competing for funding to massage the info until it is deemed affordable. In the end, revealing the real costs in advance makes a task unappealing, he said. Therefore, these projects are destined for failure.

Programme Management

For instance, building new railways spanning multiple countries can be to get disastrous if plans are overly complex and over-optimized. A real large-scale project involves national and native governments, various environmental and health standards, an array of skills and wages, private contractors, suppliers and consumers; therefore, one issue could put an end to the project. Such was the case when two countries spent nearly 10 years exercising diplomatic considerations while developing a hydroelectric dam.

Complications and complexities of megaprojects must be considered thoroughly before launch. One method to assess the how to go about a job is by reference-class forecasting. This procedure forces decision makers to think about past cases which may reflect similar outcomes with their proposed megaproject.

Poor execution is also a cause of failure in megaprojects. As a result of overoptimism and overcomplexity of your project, it�s possible for project managers and decision makers to cut corners wanting to maintain cost assumptions and protect profit margins. Project execution will be overwhelmed by problems for example incomplete design, unclear scope, and mathematical errors in risk assessment and scheduling.

Researchers at McKinsey studied 48 struggling megaprojects determined that in 73 percent of the cases, poor execution was responsible for cost and time overruns. Another 27 percent encountered difficulties with politics for example new governments and laws.

Low productivity is another part of poor execution. Though trends show manufacturing has nearly doubled its productivity in the last 2 decades, construction productivity remains flat and in some instances has even declined. However, wages always increase with inflation, ultimately causing higher costs for the same results.

Based on McKinsey studies, efficiency in delivering infrastructure can reduce total costs by Fifteen percent. Efficiency gains in areas like approval, engineering, procurement and construction can result in just as much as 25 percent of savings on new projects without compromising quality outcomes. This proves that planning before execution may be worth the weight in gold.

We usually exaggerate the value of contracting procedure for project failure or success

Finally, weaknesses in organizational design and capabilities results in failed megaprojects. For instance, organizational setups will surely have multiple layers and perhaps the project director falls four or five levels beneath the top leadership. This leads to problems because the top tier from the organizational chain (as an example, subcontractors, contractors and construction managers) have a tendency to focus on more work plus more money as the lower levels with the chain (as an example, owner�s representative and project sponsors) are dedicated to delivery schedules and budgets.

Likewise, too little capabilities proves to be a worry. Due to large-scaled, complex nature of megaprojects, there's a steep learning curve involved and also the skills needed are scarce. All of the problems of megaprojects are compounded through the speed of which projects are started. When beginning scratch, megaprojects may create organizations of countless people within Yr. This scale of training resembles the running operational and managerial challenge a whole new start-up might face.

In the long run, it seems that if organizations take time to thoroughly prepare and insurance policy for their megaprojects, problems like overcomplexity and overoptimism, poor execution, and weaknesses in organizational design and capabilities may be avoided. In fact, megaprojects are so large and not affordable to rush into.