Megaprojects are complex, largescale undertakings with price tags climbing into the billions. Annual global spending on Megaprojects is estimated to be between US$6 and US$9 trillion1.
When these kinds of projects overrun, as they frequently do, the cost increases exponentially, and can result in astronomical budgets, with the additional cost exceeding the original budget many times over. This issue of overruns is pertinent given the rate at which they occur, to give just two examples from a panoply; hydrocarbon megaprojects overrun about 64% of the time2 while the average cost overrun for rail projects is 45%3.
What are Megaprojects?
“Megaprojects are large-scale, complex ventures that typically cost a billion dollars or more, take many years to develop and build, involve multiple public and private stakeholders, are transformational, and impact millions of people…Megaprojects, therefore are not just magnified versions of smaller projects. Megaprojects are a completely different breed of project in terms of their level of aspiration, stakeholder involvement, lead times, complexity, and impact. Consequently, they are also a very different type of project to lead.” 4 Flyvbjerg, 2017
Pcubed has 20 years’ experience working with clients’ Megaprojects, like the 2012 Olympic games, the Airbus A380, the European Space Agency and High Speed Rail. Our experience has taught us that the ability to make the right strategic, investment and technical decisions, at the right time, by the right groups of people is a critical success factor in any Megaproject.
The ability to make the right strategic, investment and technical decisions, at the right time, by the right groups of people is a critical success factor in any megaproject.
As the project evolves, there can be a requirement to manage the volume and interdependent nature of the decisions made centrally, across sub-projects and even across multiple organisational boundaries.
Today, we are seeing more projects spanning multiple government periods (longevity), an increased level of working across organisational boundaries (breadth), and deeper organisational and work breakdown structures (depth).
Although it is important for organisations to remain flexible and able to make quick decisions in the control of a project (read more), it’s just as important, especially at the early stages of the lifecycle, for the leadership team to be proactive in understanding and mapping out the decisions that will need to be made in the future.
Here are 5 tips to consider in Megaproject decision making:
- Ensure the governance is appropriate
Which board should this decision go to? Does the decision need to go to a sub-board beforehand? How far in advance does the board paper need to be submitted? Does the board sit in time for the decision to be made?
Sound governance (read more) is a key factor in determining the outcome of any project. However, one of the challenges posed by a megaproject is the number of oversight boards that need to be navigated.
Seeing decisions ‘bounced back’ or referred to a different forum is a sign that the preparatory work for that decision is inadequate, but it could also be an indication that the governance isn’t fit for purpose and needs to be reworked.
- Consider joint governance
Decisions are often joint across organisational boundaries and can even be industry wide.
In the APM’s ‘Governance of Co-Owned Projects’, the authors assert: ‘The challenge for organisations who sponsor or deliver co-owned projects is that traditional project management frameworks and methods are based on governance structures that assume a single hierarchical route for authority and accountability. This is rarely the case for co-owned projects, which is why organisations’ are rightly challenging whether their traditional governance arrangements are fit-for-purpose.’ 5
In this case, setting up centralised oversight forums to make these decisions may be appropriate.
- Appreciate the ‘tadpole effect’
A decision may be made at a single point in time, but the lead-in to a final decision point can take anywhere from 3 to 12 months of reviews and sub-decisions. The only way to be fully prepared for a final decision point is for it to have gone through the appropriate lead-in points; e.g. forums lower down in the governance hierarchy.
Pcubed recommends mapping decisions and categorising them (e.g. strategic/investment/technical), identifying which are joint and hence do not have a singular hierarchical route. Doing so enables the senior team to ‘see’ individual decisions through the forward-looking master list of all key decisions, including their interdependent nature, what route and how long they will take and perhaps most importantly, to appreciate how far in advance teams need to start the preparatory work for a decision.
Keep the focus on being proactive rather than reactive by appreciating the tadpole effect.
- Decisions can drive the schedule
Decisions are integral to achieving key project commitments. Often the final approval point of a major decision will either be linked to, or will be, a key milestone.
A “no” decision or a delayed decision will result in schedule slippage.
Therefore we recommend that all the steps relating to a decision (including stakeholder consultation) are captured within the project schedule to ensure decisions are made, and made on time.
- Feedback loop is key
It is important that the project governance implements a feedback loop from all management boards to quickly and efficiently cascade outputs from the meetings – e.g. notify the right individuals if the decision paper was approved.
In the interests of traceability, the project should keep a centralised record of key decisions made across the programme. This feedback loop could be the key to resolving any future disputes, and may better identify lessons learned for future megaprojects.
1 Bent Flyvbjerg, 2017, “Introduction: The Iron Law of Megaproject Management” in Bent Flyvbjerg, ed., The Oxford Handbook of Megaproject Management (Oxford:Oxford University Press), Chapter 1, p. 6
2 Cost overruns in hydrocarbon megaprojects: a critical review and implications for research” in Olaniran, O. J., Love, P. E. D., Edwards, D., Olatunji, O. A., & Matthews, J. (2015), Project Management Journal, 46(6), 126–138.
3 Bent Flyvbjerg, 2017, “Introduction: The Iron Law of Megaproject Management” in Bent Flyvbjerg, ed., The Oxford Handbook of Megaproject Management (Oxford:Oxford University Press), Chapter 1, p.10
4 Ibid p. 6
5 “Governance of Co-Owned Projects”, Association for Project Management, 2017, p. 20
Osian Evans is a Principal Consultant for Pcubed based out of the London office with 10 years’ experience of delivering major projects, programmes and change initiatives across a diverse range of clients.