How to break the Iron Law of Megaprojects

Sydney-Opera-House-close-up

Have you ever been across the Brooklyn Bridge? Or flown in through Denver? Or visited the Sydney Opera House? If so, you were experiencing the results of a “megaproject” — and one that had failed in its original intent.

The Brooklyn Bridge was completed 100% over budget. Denver International Airport was completed 200% over budget. And the Sydney Opera House was completed a whopping 1,400% over budget.

(As an aside, imagine reporting the CPI (Cost-Performance Index) to your management – 0.1, -0.2 and 0.07 !!!)

These are not isolated examples. Megaprojects have such a poor success record that that an Oxford research team could not find enough examples of successful projects to allow for a statistically valid finding.

The “Iron Law” of megaprojects was developed in 2011 by one of those same Oxford scholars, Bent Fyvbjerg. It deliberately echoes the “Iron Triangle” of Cost, Scope and Schedule from project management, but this time with a simple cadence and malevolent outcome: “Over budget, over time, over and over again”

Researchers such as from Williams (2016) are moving away from the constraints of the Iron Triangle and now emphasize “that the nature of project success is multidimensional, with different criteria, only some of which are clearly measurable”.

Indeed, there is such a need to improve the overall success of megaprojects that the 6th International Megaprojects Workshop will be held in Shanghai this year (October 25-26, 2018). It is this outpouring of research, with practitioners and academics working together, that gives hope to managing the challenges these projects present. In a seminal 2017 article, for example, Aaron Shenhar and Vered Holzmann researched 14 megaprojects and isolated their critical success factors. The success criteria identified were:

  • Having a clear strategic vision: Think of Kennedy’s vision to put “a man on the Moon and bring him back before the end of the decade.” Contrast this with the lack of specific vision for the NASA Space Shuttle program.
  • Having total alignment (“full alignment of all parties with the goals, the means, and the difficulties expected”): Think of the 2012 London Olympics (known as the ‘austerity’ Olympics, coming after the global financial crisis) where managers, planners and contractors used a common set of rules and risk-sharing agreements to align with the vision. Contrast this with the arguments and politicking involved in the building of the Sydney Opera House.
  • Adapting to complexity: Think of the Guggenheim Museum in Bilbao — a building nearly as iconic as the Sydney Opera House — delivered on-time and on budget. Contrast this, the researchers suggested, with Boeing’s 787 Dreamliner program, involving new materials, new business models and a new organisation.

With infrastructure spending on the increase, and especially in the emerging world, this simple yet effective model will help more megaprojects as they get underway.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: