Decision-Making on Mega-Projects-Cost-Benefit Analysis, Planning and Innovation - Edited by Hugo Priemus, Bent Flyvbjerg, and Bert van Wee (original) (raw)

Megaproject Policy and Planning: Problems, Causes, Cures

Summary of Dissertation for Higher Doctorate in Science, (Dr. Scient.), Aalborg: Aalborg University, 62 pp., 2007

This paper focuses on problems in megaproject policy and planning and their causes and possible cures. After considerations of methodology, the paper first identifies as a main problem in megaproject development pervasive misinformation about the costs, benefits, and risks involved. A consequence of misinformation is cost overruns, benefit shortfalls, and waste.

Megaprojects, Complexity, and Investment Decisions

The need for basic infrastructure for economic development in developing countries has made megaprojects popular, in such parts of the world. Megaprojects can be very important to a host country: the Nigeria Liquefied Natural Gas (NLNG) Project has contributed about four percent of Nigeria's Gross Domestic Product. However, due to the complexity involved with megaprojects, project failure rate is high around the world, especially so for upstream oil and gas projects. This paper recommends a systems approach to megaprojects analysis, for a better understanding of these projects: from the pre-final investment decision (FID) stage through project execution. This author believes that a system approach to megaprojects analysis should provide better decision quality for decision makers.

Mega-Projects' Cost Performance and Lock-In: Problems and Solutions

In Hugo Priemus and Bert van Wee, eds., International Handbook on Mega-Projects, Cheltenham, UK and Northampton, MA: Edward Elgar, pp. 333-355, 2013

A major problem in the planning of mega-projects is the high level of misinformation about costs (and benefits) that decision-makers face in deciding whether to build and the high risks such misinformation generates. The inaccuracy of construction cost estimates is typically measured as the size of cost overrun. There are many well-known mega-projects with major cost overruns. One of the most famous ‘project disasters’ in this respect is the Channel Tunnel. This undersea rail tunnel linking the United Kingdom and France is the longest of its kind in Europe with a length of about 50 km. Construction costs increased from £2600 million to £4650 million (1985 prices), which is 80 per cent higher than the forecasted costs (Flyvbjerg et al., 2003a). Another well-known mega-project failure is the Central Artery/Tunnel project in Boston, USA, also known as the ‘Big Dig’ or Big Dug’ due to persistent tunnel leaks. This large and complex underground highway project suffered a cost overrun of US $11 billion or 275 per cent (Flyvbjerg, 2007). Bangkok’s underground subway was 67per cent over budget. Many other examples of projects with cost overruns exist, for example, the Great Belt link in Denmark (54 per cent overrun),the Humber Bridge in the UK (175 per cent overrun) and the Paris Nord TGV in France (25 per cent overrun) (Flyvbjerg et al., 2003a). Cost overruns appear to be a global phenomenon, existing across 20 nations on five continents (Flyvbjerg et al., 2003b).

Policy and Planning for Large-Infrastructure Projects: Problems, Causes, and Curses

In Thomas L. Harper, Michael Hibbard, Heloisa Costa, and Anthony Gar-On Yeh, eds., Dialogues in Urban Regional Planning, vol. 4, New York: Routledge, pp. 223-248, 2011

This chapter focuses on problems and their causes and cures in policy and planning for large-infrastructure projects. First, it identifies as the main problem in major infrastructure developments pervasive misinformation about the costs, benefits, and risks involved. A consequence of misinformation is cost overruns, benefit shortfalls, and waste. Second, it explores the causes of misinformation and finds that political-economic explanations best account for the available evidence: planners and promoters deliberately misrepresent costs, benefits, and risks in order to increase the likelihood that their projects, and not those of their competition, that gain approval and funding. This results in the ‘survival of the unfittest’, in which often it is not the best projects that are built, but the most misrepresented ones. Finally, it presents measures for reforming policy and planning for large-infrastructure projects with a focus on better planning methods and changed governance structures, the latter being more important.

Policy and Planning for Large-Infrastructure Projects: Problems, Causes, Cures

Environment and Planning B: Planning and Design, vol. 34, no. 4, pp. 578-597, 2007

This paper focuses on problems and their causes and cures in policy and planning for large-infrastructure projects. First, it identifies as the main problem in major infrastructure developments pervasive misinformation about the costs, benefits, and risks involved. A consequence of misinformation is cost overruns, benefit shortfalls, and waste. Second, it explores the causes of misinformation and finds that political-economic explanations best account for the available evidence: planners and promoters deliberately misrepresent costs, benefits, and risks in order to increase the likelihood that it is their projects, and not those of their competition, that gain approval and funding. This results in the ‘survival of the unfittest’, in which often it is not the best projects that are built, but the most misrepresented ones. Finally, it presents measures for reforming policy and planning for large-infrastructure projects with a focus on better planning methods and changed governance structures, the latter being more important.

Truth and Lies about Megaprojects

Inaugural Speech for Professorship and Chair at Faculty of Technology, Policy, and Management: Delft University of Technology, 27 pp., 2007

In what follows I will: (1) Argue that a major problem in megaproject policy and planning is the high level of misinformation about costs and benefits that decision makers face in deciding whether to build, and the high risks such misinformation generates; (2) Explore the causes of misinformation and risk, mainly in the guise of optimism bias and strategic misrepresentation; (3) Present measures aimed at better policy and planning, including changed governance structures and better planning methods; and (4) Identify the most promising areas for further research, especially as they pertain to the Dutch situation and the Chair in Infrastructure Policy and Planning at Delft University of Technology.

Shaping mega-projects: practical steps for success

1.0 Synopsis While measuring success in mega-projects is not straightforward and often interpreted differently by different individuals and stakeholders, there is a general perception that too many large engineering/science facility projects fail in terms of budget overruns, schedule slippage, and or promised performance. This failure to be designed appropriately and/or delivered on time and within budget has profound implications not only for the construction and commissioning organisations, but also for the funding agencies (often spending public money), and the clients or user community. Successful design and delivery is therefore not only a commercial necessity but also a societal imperative. In recent years, there has been a growing recognition of the importance of front-end shaping to project success. In this paper, I look at the inception, planning and feasibility phases of complex mega-projects in some depth, based on extant and updated research into the literature and several case studies. I focus on key success drivers from recent studies of large scale complex projects; drawing out factors shown to be especially potent at the preliminary stages. In particular, I discuss the importance of deciding the project goal(s) and success definitions, especially those beyond the physical structure; tackling the multi-headed Hydra of complexity; and early selection of competent procurement (contracting) processes. I explore resilience-building processes to curb optimism, learning from like-projects, and instilling a " mission-assurance " mindset. Lastly, I advocate an approach to risk management that goes beyond the traditional risk assessment models to help prepare project organisations against unexpected mishaps (Black Swans). Importantly, this paper newly captures a particular grouping of success precursors that require simultaneous attention specifically at the project initiation stage for maximum effect. The goal of this paper is to draw out the more subtle, often overlooked, aspects of complex mega-project management shown to be crucial at the start-up stages. I present strategies, practical approaches, and finally, proffer a project audit tool, readily applicable to large engineering projects. 2.0 Introduction/background Success and failure in projects is a topic frequently discussed among engineers and other project management (PM) practitioners. Similarly, public funded mega-scale projects especially are scrutinised for performance by funders, users, and the popular press. While a good number of notable mega-projects are delivered within acceptable parameters of time, budget and scope, many large complex projects-especially those underpinned by, or delivering, new technology-too often fail in

Megaprojects redefined – complexity vs cost and social imperatives

International Journal of Managing Projects in Business, 2018

Purpose The purpose of this paper is to provide a brief overview from the literature on how best to define megaprojects in contemporary contexts. There is a need for a definition that encompasses a complex matrix of characteristics, inclusive of positive and negative aspects, which are not necessarily industry or sector specific. Whilst megaprojects have often been described and defined in terms of cost, they are more accurately delineated by their convolutions. Intricacies arise from political intrigues surrounding funding of such projects and managing and governing complex social and organizational relations. Points for future research are also identified. Design/methodology/approach An analysis of international megaproject literature over the past five years combined with seminal works was undertaken, drawing on the broad literature of project and program management combined with elements of organizational theory. Whilst some examples are cited, in-depth case analysis has not bee...

Megaprojects and Risk: An Anatomy of Ambition

2003

Back cover text: Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multi-billion dollar megaprojects systematically and self-servingly misinform parliaments, the public and the media in order to get projects approved and built. It shows, in unusual depth, how the formula for approval is an unhealthy cocktail of underestimated costs, overestimated revenues, undervalued environmental impacts and overvalued economic development effects. This results in projects that are extremely risky, but where the risk is concealed from MPs, taxpayers and investors. The authors not only explore the problems but also suggest practical solutions drawing on theory, experience and hard, scientific evidence from the several hundred projects in twenty nations and five continents that illustrate the book. Accessibly written, it will be the standard reference for students, scholars, planners, economists, auditors, politicians and interested citizens for many years to come.