{"id":69006,"date":"2019-12-10T10:41:19","date_gmt":"2019-12-10T10:41:19","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=69006"},"modified":"2019-12-10T10:41:19","modified_gmt":"2019-12-10T10:41:19","slug":"why-megaprojects-fail","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/why-megaprojects-fail\/69006\/","title":{"rendered":"Cursed megaprojects: Why are they never finished on time?"},"content":{"rendered":"

Thomas Owen of Re-Space<\/a> explores the dilemma governments often face when building megaprojects \u2013 mainly, why they always seem to cost a lot more and take a lot more time than planned<\/h2>\n

If it always seems like a megaproject is destined to cost more and arrive later than planned \u2014 then you are right. At least, that\u2019s according to the Oxford Global Projects Database<\/a>, which holds the data on nearly 12,000 different projects.<\/p>\n

According to the OGPD, nearly every category failed to meet its time and budget deadlines, including 39% of rail projects and 61% of aerospace projects. Only 7.8% of all projects were delivered on time and on budget, and only 0.5% provided all of the \u201cexpected benefits\u201d that they were intended for.<\/p>\n

For example, consider the UK\u2019s big railway infrastructure projects<\/a> at the moment: Crossrail and HS2. Crossrail was due to open in 2018 and now could be looking at a 2021 opening date. It was originally budgeted with \u00a33bn for contingency purposes \u2014 a figure had to be more than doubled to around \u00a36.2bn.<\/p>\n

HS2\u2019s first-phase budget<\/a> is already a massive \u00a357bn. If it needs a contingency budget anything like Crossrail has, that will be an additional \u00a320bn. Which is more money than was initially budgeted for the entire Crossrail project<\/a> (\u00a317.6bn).<\/p>\n

Some of the biggest overruns in world history include the Suez Canal, which cost nearly 2,000% the estimated cost, and the Sydney Opera House, which cost roughly 1,400% more than its original budget.<\/p>\n

Why megaprojects fail<\/h3>\n

Professor Bent Flyvbjerg of Oxford Major Projects database believes that the problems for megaprojects begin with the forecasting models. Megaprojects are staggeringly complex, so where does a project manager<\/a> even start?<\/p>\n

Traditionally, projects are compartmentalised into ever-smaller projects and run through a form of risk management known as the Monte Carlo analysis that involves thousands of computer simulations of any probable thing that can go wrong. The simulations provide project managers with what they call as \u201cthree-point estimate\u201d which gives a range of dates that predict when a project is very unlikely, somewhat likely, and very likely to be completed.<\/p>\n

But Flyvbjerg believes this process is flawed due to innate human biases.<\/p>\n

\u2018Uniqueness bias\u2019<\/h4>\n

For example, most megaprojects suffer from \u2018uniqueness bias\u2019. Because they are often staggeringly large and complicated, it is easy to assume nothing like them has ever been done before. But this is a wrong way of going about it. There will always be great projects that engineers and project managers can learn from, that has already been done. For example, with Crossrail, it is easy to think that no one has ever tried a large railway extension in London before, and so they cannot possibly learn anything from, say, the Metro extension in Paris.<\/p>\n

\u2018Black swan\u2019 events<\/h4>\n

Megaprojects are also bad at planning for \u2018Black Swan\u2019 events \u2014 disasters that are extremely rare but devastating when they do happen. But because megaprojects take so long to finish, there is more opportunity for them to occur.<\/p>\n

Once they are inevitably completed, megaprojects are often so essential that the public and politicians alike quickly take them for granted and \u2018forget\u2019 their enormous costs in the first place. Meaning that project managers often \u2018get away with it\u2019 despite the enormous costs.<\/p>\n

Communication breakdown<\/h4>\n

Lastly is a general failure of communication that begins to manifest early on in construction, where things will go wrong but there\u2019s no system in place to flag them, and no proper rules on how to deal with them.<\/p>\n

Making realistic forecasts and learning from past experience<\/h3>\n

There may be a new way of forecasting on the horizon that can dispel the problems so typical of traditional forecasting methods.<\/p>\n

Pioneered by the behavioural scientists Daniel Kahneman and Amo Tversky, \u201creference class forecasting\u201d will work by compiling and analysing previous megaprojects with the experience of the project managers and engineers who worked on those megaprojects. It is thought that this could help to \u201cde-bias\u201d forecasting.<\/p>\n

With this new method, instead of making assumptions on hypothetical questions, AI-algorithms will take to work on a large dataset of construction data and find the most relevant information to help with the forecasting.<\/p>\n

Data trust: Big data with benefits\u2026 if it works<\/h3>\n

But this new method can only work if the construction industry champions a culture of \u201cdata trust\u201d. This would require every project to record its mistakes, compensation events, inspection data, and more and put it into a graph database. Data analysts from future projects will then be able to access this database and learn directly from real-world project case studies.<\/p>\n

But many organisations have expressed scepticism for this approach, as understandably some of the data could be commercially sensitive. One proposal, according to Martin Paver of Projecting Success, could be a \u201cfederated ownership and access structure\u201d that will only provide access to third-party analytics companies, and not competing firms.<\/p>\n

It will understandably be difficult to build a culture of data trust but, if it works, it could finally spell the end of an era for large, overrun, costly megaprojects.<\/p>\n

 <\/p>\n

Thomas Owen<\/strong><\/p>\n

Re-Space<\/a><\/p>\n

Twitter: @ReSpaceltd<\/a><\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

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