Men have long admired grandeur of their own making. Industrialization magnified the scale which could be attempted. As the hoary proverb goes: the bigger they are, the harder they fall.
Megaprojects are expensive, extensive construction projects which create the monuments considered hallmarks of modern civilization: public arenas, power plants, transportation hubs and land lines, including railways and motorways. “Megaprojects are extremely risky ventures, notoriously difficult to manage, and often fail to achieve their original objectives,” said British project manager Juliano Denicol. British construction project manager Peter Hansford: “The success of megaprojects is vital to economies across the world. But all too frequently, they fail – sometimes with very serious social and economic consequences.”
This essay centers on an analysis of megaprojects by British project managers Juliano Denicol, Andrew Davies, & Ilias Krystallis, hereafter referenced as DD&K.
Megaprojects are executed by temporary standalone organizations with a myriad of managers, suppliers, workers, and stakeholders. DD&K: “Each megaproject is usually decomposed into many smaller inter-related projects and organized as a program. A large organization – the client, prime contractor, and/or delivery partner – is established to coordinate and integrate the efforts of numerous subgroups and suppliers involved in project activities. This organization manages the overall program and the interfaces between projects; deals with external suppliers through separate contracts; and is accountable for meeting time, cost, and quality performance goals.”
The psychological limitations and tendencies of humans figure heavily in the earliest stage of megaproject development: planning.
Our minds are object oriented – the project culmination may readily be envisioned, but the process to achieve the vision is obscure. To compensate for our meager ability to think through processes, we employ trail and error. Contrastingly, corvids solve multi-step procedures in their minds before making the single attempt solution.
People also tend toward optimism. While sanguinity makes for sunnier days, studies have repeatedly shown pessimists to be better realists. Such grumps are not the norm for megaproject managers.
DD&K: “The 3 most predominant behaviors associated with poor performance in decision-making are: (1) optimism bias (delusion): executives are overly optimistic and thus overestimate benefits and underestimate costs; (2) strategic misrepresentation (deception): executives strategically misrepresent the truth and seek to satisfy their own interests; and (3) escalating commitment: executives continue to follow the pattern of behavior leading to unsuccessful outcomes rather than follow an alternative course of action.”
The main cause of poor performance associated with optimism bias is biased judgment and advice provided by experts in their fields who tend to create an optimistic scenario and circumvent known risks and unforeseeable uncertainties. This is an unconscious phenomenon that psychologists classify as the planning fallacy, leading executives to underestimate costs in several areas of complex projects. The leading cause related to strategic misrepresentation refers to diverse pressures (political, organizational, and individual) forcing the decision maker to manipulate the situation by usually underestimating costs and ignoring risks. Early estimates and forecasts are used deceptively to inform decision making and achieve the necessary alignment and support from stakeholders (including the taxpayer) to proceed with that preferred project. The primary cause connected to escalating commitment is the overall perception, which mostly works as a norm, that, once started, a megaproject is too big to fail and too costly to stop. Managers allocate resources in order to complete the project, even when subsequent assessments and audits indicate a decision in another direction, where the final benefits are no longer superior to the necessary investment.”
During execution, poor communication and lack of teamwork facilitate failure. DD&K: “The main cause of poor performance is inadequate definitions of roles and responsibilities. In the absence of a long-term vision and clear definitions of roles, the entity promoting the project often seeks to transfer the risk to the supply chain. As a result, client organizations are rarely willing to bear the risk. The leading cause related to governance is an inadequate attention to the design of the governance structure and its evolution over time. The leading cause connected with delivery model strategy is the poor understanding and definition of the balance between the in-house capabilities of the client organization and those outsourced to the market and allocated to partners and contractors. Often, the mechanisms used to procure capacity and capability from the market result in transactional and adversarial relationships with the supply chain, rather than integrative and collaborative ones.”
The main cause of poor performance associated with project leadership is an inappropriate definition of the project culture and sense of purpose, which lead to intra- and inter-organizational misalignments. It promotes dysfunctional structures that encourage behaviors driven to attend to individual goals rather than the collective vision and objectives. The leading cause related to competencies is a poor definition, recruitment, and maintenance of the right team. It stimulates high staff turnover, impacts the appropriate level of expertise necessary to deliver the project, and creates a reinforcing negative loop given the shortage of qualified resources. The primary cause connected with capabilities is the inability to assemble the organizational capabilities to address the requirements of different phases of the project as well as its transitions.”
The main cause of poor performance associated with program management is an inability to obtain the information required to coordinate projects and subprojects at the right time during various phases of the project life cycle – limited systemic understanding about interdependencies during the life cycle.”
There is the tendency to want to use the latest technology – to be “state of the art.” Alas, that state is often wobbly, as complex technologies are like miniaturized megaprojects. DD&K: “The uncertainty about how to deal with a new technology often requires longer design and development phases of the project. The main cause of poor megaproject performance associated with technological novelty is the introduction of unproven technology leading to cost and time overruns.”
Squabbling among stakeholders is common in megaprojects: big wallets with big egos. DD&K: “The main cause of poor performance associated with institutional context is an inadequate understanding of the parties, interests, and the power relationships surrounding the project. Conflicts, inefficiencies, and delays often arise. The leading cause related to stakeholder fragmentation is due to the numerous parties involved in a project and the inability to achieve an alignment with the competing and often conflicting priorities, goals, and interests.”
The primary cause connected with community engagement is due to the poor engagement, communication, and transparency with external parties affected by the project during its life cycle. Local communities negatively impacted by a project often become mobilized to ensure their interests are realized, often exploiting the media to achieve their objectives.”
Failure is easy and success an achievement. Amplify that obvious statement exponentially; add in human weaknesses related to process cognition, planning, communication, leadership, teamwork, and technology; and it’s amazing that megaprojects succeed, or that industrialized civilization works at all.
Then again, other ingredients account for the present state of humanity: ongoing optimism, resignation when optimism fails, and police-state political regimes when resignation gets ugly. Megaprojects are money incarnate, and governments are invariably plutocratic. The police state is an insurance policy.
References:
Juliano Denicol, Andrew Davies, & Ilias Krystallis, “What are the causes and cures of poor megaproject performance? A systematic literature review and research agenda,” Project Management Journal (13 February 2020).
“Reasons why megaprojects fail,” University College London (13 February 2020).
Ishi Nobu, The Echoes of the Mind, BookBaby (2019).