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23 Feb 2016
The Three Gorges Dam Project
Project Management

There�s a reason why Mega Projects are merely called �MegaProjects.� Extremely large in scale with significant impacts on communities, environment and budgets, megaprojects attract plenty of public attention and frequently cost more than 1 billion. For the grandiose, an effective megaproject takes a lot of planning, responsibility and work. Likewise, the magnificence of these projects also generates a large margin to fail.

 Mega-projects include big expectations. However a project�s success is often inside the eye of the beholder

Despite their socio-economic significance mega-projects - delivering airports, railways, power plants, Olympic parks as well as other long-lived assets - have a reputation for failure. It can be believed that over optimism, over complexity, poor execution, and weakness in organizational design and capabilities include the most popular root factors behind megaproject failure.

Blinded by enthusiasm to the project, individuals and organizations associated with megaprojects often miscalculate the complexity of the project. Whenever a megaproject is pitched, its common for costs and timelines being underestimated as the cooking with your project are overestimated. According Danish economist Bent Flyvbjerg, it isn't unusual for project managers that are competing for funding to massage the data until it is deemed affordable. In the end, revealing the genuine costs up front makes a project unappealing, he stated. As a result, these projects are destined for failure.

For example, building new railways spanning multiple countries could prove to be disastrous if plans are overly complex and over-optimized. This kind of large-scale project involves national and local governments, various environmental and health standards, many skills and wages, private contractors, suppliers and consumers; therefore, one issue could finish the work. Such was the situation when two countries spent nearly ten years training diplomatic considerations while developing a hydroelectric dam.

Complications and complexities of megaprojects have to be considered thoroughly before launch. A good way to evaluate the nuances of a task is thru reference-class forecasting. This procedure forces decision makers to think about past cases that may reflect similar outcomes on their proposed megaproject.

Programme Management

Poor execution is a reason for failure in megaprojects. Due to the overoptimism and overcomplexity of the project, it�s feasible for project managers and decision makers to slice corners trying to maintain cost assumptions and protect income. Project execution will then be overwhelmed by problems including incomplete design, unclear scope, and mathematical errors in risk assessment and scheduling.

Researchers at McKinsey studied 48 struggling megaprojects determined that in 73 percent with the cases, poor execution was to blame for cost and time overruns. The other 27 percent bumped into difficulty with politics including new governments and laws.

Low productivity is an additional element of poor execution. Despite the fact that trends reveal that manufacturing has nearly doubled its productivity in the last Two decades, construction productivity remains flat as well as in some instances has declined. However, wages still increase with inflation, resulting in higher costs for the similar results.

As outlined by McKinsey studies, efficiency in delivering infrastructure can reduce total costs by 15 %. Efficiency gains in areas like approval, engineering, procurement and construction can cause as much as 25 percent of savings on new projects without compromising quality outcomes. This proves that planning before execution will be worth the weight in gold.

 We usually exaggerate the importance of contracting approach to project failure or success

Finally, weaknesses in organizational design and capabilities results in failed megaprojects. As an example, organizational setups might have multiple layers and even the project director falls four or five levels beneath the top leadership. This leads to problems since the top tier with the organizational chain (for example, subcontractors, contractors and construction managers) tend to give attention to more work plus more money as the lower levels in the chain (for example, owner�s representative and project sponsors) are focused on delivery schedules and budgets.

Likewise, deficiencies in capabilities is an issue. Due to large-scaled, complex nature of megaprojects, there is a steep learning curve involved and also the skills needed are scarce. All the problems of megaprojects are compounded through the speed where projects are started. When starting from scratch, megaprojects may create organizations of thousands of people within 12 months. This scale at work is just like the significant operational and managerial challenge a new start-up might face.

In the long run, it appears that if organizations take time to thoroughly prepare and plan for their megaprojects, problems like overcomplexity and overoptimism, poor execution, and weaknesses in organizational design and capabilities could possibly be avoided. In fact, megaprojects are so large and very costly to rush into.


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