Why do megaprojects fail?

Such projects have higher likelihood of not meeting key infrastructure delivery targets

NORTHAMPTON: Megaprojects are defined as large infrastructure projects such as airports, railways and motorways, power plants and aerospace projects, typically costing more than $1 billion.

The China-Pakistan Economic Corridor (CPEC), currently under construction in Pakistan, is a key example of a megaproject in totality as all infrastructure projects combined under its umbrella are valued at $62 billion as of 2017.

Megaprojects due to their sheer size, complexity and multiplicity of players involved have a higher likelihood of not meeting key infrastructure delivery targets such as timely and within budget completion, value perception by key stakeholders and overall business performance.

In Pakistan’s context, the Peshawar Bus Rapid Transit (BRT) project is a recent case, which has faced continuous criticism in terms of inordinate delay and excessive costs. This article delves into some of the key reasons why megaprojects perform poorly and provides solutions to cure them.

Poor megaproject performance

Why are megaprojects so prone to poor performance? A recent paper published in the Project Management Journal by Professor Andrew Davies, Dr Juliano Denicol and Dr Ilias Krystallis has developed an extensive systematic literature review of the causes and cures of poor megaproject performance.

The authors have identified six key themes and looked at areas where a megaproject might fail, analysing the problems and solutions.

The six key themes are decision-making behaviour, strategy, governance and procurement, risk and uncertainty, leadership and capable teams, stakeholder engagement and management, supply chain integration and coordination. The paper calls all six themes to be of equal importance when analysing megaproject failures.

These themes have emerged after looking into details of some of the largest megaprojects around the world including the world’s largest airport, the Daxing International Airport in Beijing, the Gotthard rail tunnel (the world’s longest rail tunnel) in Switzerland, California’s high-speed rail, London’s Crossrail and High Speed-2 rail in the UK – the biggest megaproject in Europe.

What lessons can be applied specifically to the case of Pakistan from the performance of megaprojects around the world?

Lessons for Pakistan

Of the key themes identified as causes for poor megaproject performance, I believe the most applicable amongst them is the decision-making behaviour.

Behaviours in the front-end of the project cycle, defined as the stage where the idea of a particular project is conceived, are associated with poor decision-making. Psychological and behavioural reasons play a crucial role in decision-making, leading to poor performance. These are categorised into three main concepts. First is optimism bias, as reflected in executives being overly optimistic, leading to overestimating benefits and underestimating costs.

Second is strategic misrepresentation or deception where executives strategically misrepresent the truth and seek to identify their own interests. Third is escalating commitment where executives continue to follow the pattern of behaviour leading to unsuccessful outcomes rather than follow an alternative course of action. All of these can be directly employed in the case of Peshawar BRT project which faces serious allegations of route selection without taking into account several important factors such as technical feasibility, sewerage, traffic and water supply studies.

Project managers are quick to take on projects, reflecting optimism bias but without a detailed analysis of some of the key aspects that could affect the costs during the construction and operation phase.

What steps can be taken to minimise poor megaproject performance due to decision-making?

Steps that should be taken to mitigate optimism bias require strong benchmarking exercises by looking extensively towards similar projects. The Peshawar BRT could learn from looking at the Lahore Metro and analyse to see what has worked and what aspects need further improvement.

In addition to this, it is crucial to chalk out a proper contingency plan or earmark financial reserves/buffers at the initial stage of a project to deal with possible uncertainties that the project could encounter at a later stage of its lifecycle.

More importantly, investing appropriate time at the conception stage to develop tools and processes to scrutinise and prevent biases would lead to better project delivery.

The writer is a doctoral candidate at the Bartlett, UCL

 

Published in The Express Tribune, March 2^nd, 2020.

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