Megaproject management is a new-ish subfield of project management. Originally considered to be the special case of project management where the budgets were enormous (billions of dollars), it is developing into a separate specialization because of the high complexity and tradition of failure among such projects. The driving force behind treating it as a separate field appears to be Bent Flyvbjerg, previously known around here for Reference Class Forecasting as the first person to develop an applied procedure. That procedure was motivated by megaprojects.
I will make a summary of the paper "What you should know about megaprojects, and why: an overview" from 2014. For casual reading, there is an article about it from the New Yorker here.
History
Megaprojects got their name from the association of mega with big, so think mega-city rather than mega-joule. It did match the unit prefix in the beginning however, as such projects were mostly dams, bridges, or very large buildings in the early 20th century.
The next shift upward took place with the Manhattan Project and then the Apollo program, which are also frequently drawn on as positive examples. The term 'megaproject' picked up steam in the 1970s, at the same time project costs crossed over into the billions.
Currently project costs of 50-100 billion are common, with even larger projects less common but not rare. If you were to view certain things which need dedicated management as a project, like the stimulus packages from 2008 or US defense procurement, then we have crossed over into the trillions and are entering a 'tera era' of megaprojects.
Ignoring these special cases, but counting infrastructure and industries where billion dollar projects are common, megaprojects account for ~8% of global GDP.
Four Sublimes
These are four reasons which drive the popularity of megaprojects. They are kind of a group bias for each type of stakeholder. They are:
1. Megaprojects are inherently risky due to long planning horizons and complex interfaces (Flyvbjerg, 2006).
3. Decision-making, planning, and management are typically multi-actor processes involving multiple stakeholders, public and private, with conflicting interests (Aaltonen and Kujala, 2010).
4. Technology and designs are often non-standard, leading to "uniqueness bias" amongst planners and managers, who tend to see their projects as singular, which impedes learning from other projects.
5. Frequently there is overcommitment to a certain project concept at an early stage, resulting in “lock-in” or “capture,” leaving alternatives analysis weak or absent, and leading to escalated commitment in later stages. "Fail fast" does not apply; "fail slow" does (Cantarelli et al., 2010; Ross and Staw, 1993; Drummond, 1998).
6. Due to the large sums of money involved, principal-agent problems and rent-seeking behavior are common, as is optimism bias (Eisenhardt, 1989; Stiglitz, 1989; Flyvbjerg el al., 2009).
7. The project scope or ambition level will typically change significantly over time.
8. Delivery is a high-risk, stochastic activity, with overexposure to so-called "black swans," i.e., extreme events with massively negative outcomes (Taleb, 2010). Managers tend to ignore this, treating projects as if they exist largely in a deterministic Newtonian world of cause, effect, and control.
9. Statistical evidence shows that such complexity and unplanned events are often unaccounted for, leaving budget and time contingencies inadequate.
10. As a consequence, misinformation about costs, schedules, benefits, and risks is the norm throughout project development and decision-making. The result is cost overruns, delays, and benefit shortfalls that undermine project viability during project implementation and operations.
The Iron Law of Megaprojects
They start off badly, but they do still manage to get completed, which is due to...
Break-Fix Model
Since management of megaprojects doesn't know what they are doing or don't have the incentives to care, inevitably something breaks. Then additional time and money are spent to fix what broke, or the conditions of the project are renegotiated, and it limps along to the next break. This process continues until the project is finished.
If it is so terrible and we know it is terrible, why do we do it this way?
I will make a summary of the paper "What you should know about megaprojects, and why: an overview" from 2014. For casual reading, there is an article about it from the New Yorker here.
History
Megaprojects got their name from the association of mega with big, so think mega-city rather than mega-joule. It did match the unit prefix in the beginning however, as such projects were mostly dams, bridges, or very large buildings in the early 20th century.
The next shift upward took place with the Manhattan Project and then the Apollo program, which are also frequently drawn on as positive examples. The term 'megaproject' picked up steam in the 1970s, at the same time project costs crossed over into the billions.
Currently project costs of 50-100 billion are common, with even larger projects less common but not rare. If you were to view certain things which need dedicated management as a project, like the stimulus packages from 2008 or US defense procurement, then we have crossed over into the trillions and are entering a 'tera era' of megaprojects.
Ignoring these special cases, but counting infrastructure and industries where billion dollar projects are common, megaprojects account for ~8% of global GDP.
Four Sublimes
These are four reasons which drive the popularity of megaprojects. They are kind of a group bias for each type of stakeholder. They are:
- Technological sublime: because engineers and technologists love making the newest/tallest/fastest things.
- Political sublime: because politicians love being able to associate with huge projects and the publicity that comes with them.
- Economic sublime: because unions, contractors, and business people love all the jobs and fees.
- Aesthetic sublime: because designers love making beautiful things, and the public loves to adopt big beautiful things as distinctive for their city/country.
The following characteristics of megaprojects are typically overlooked or glossed over when the four sublimes are at play and the megaproject format is chosen for delivery of large-scale ventures:
1. Megaprojects are inherently risky due to long planning horizons and complex interfaces (Flyvbjerg, 2006).
2. Often projects are led by planners and managers without deep domain experience who keep changing throughout the long project cycles that apply to megaprojects, leaving leadership weak.
3. Decision-making, planning, and management are typically multi-actor processes involving multiple stakeholders, public and private, with conflicting interests (Aaltonen and Kujala, 2010).
4. Technology and designs are often non-standard, leading to "uniqueness bias" amongst planners and managers, who tend to see their projects as singular, which impedes learning from other projects.
5. Frequently there is overcommitment to a certain project concept at an early stage, resulting in “lock-in” or “capture,” leaving alternatives analysis weak or absent, and leading to escalated commitment in later stages. "Fail fast" does not apply; "fail slow" does (Cantarelli et al., 2010; Ross and Staw, 1993; Drummond, 1998).
6. Due to the large sums of money involved, principal-agent problems and rent-seeking behavior are common, as is optimism bias (Eisenhardt, 1989; Stiglitz, 1989; Flyvbjerg el al., 2009).
7. The project scope or ambition level will typically change significantly over time.
8. Delivery is a high-risk, stochastic activity, with overexposure to so-called "black swans," i.e., extreme events with massively negative outcomes (Taleb, 2010). Managers tend to ignore this, treating projects as if they exist largely in a deterministic Newtonian world of cause, effect, and control.
9. Statistical evidence shows that such complexity and unplanned events are often unaccounted for, leaving budget and time contingencies inadequate.
10. As a consequence, misinformation about costs, schedules, benefits, and risks is the norm throughout project development and decision-making. The result is cost overruns, delays, and benefit shortfalls that undermine project viability during project implementation and operations.
The Iron Law of Megaprojects
- Over time.
- Over budget.
- Under utilized.
They start off badly, but they do still manage to get completed, which is due to...
Break-Fix Model
Since management of megaprojects doesn't know what they are doing or don't have the incentives to care, inevitably something breaks. Then additional time and money are spent to fix what broke, or the conditions of the project are renegotiated, and it limps along to the next break. This process continues until the project is finished.
If it is so terrible and we know it is terrible, why do we do it this way?
by Ryan_b., LessWrong | Read more:
[ed. I used to do this for 30 years in Alaska, megaprojects: multi-billion dollar dams, oil field exploration and development, large mining projects, whatever. Many of them did not get built for the reasons stated above. For additional insight into how this process works, see: How the Process Works - An Outsider's Guide to Cherry Point (Duck Soup).]
