Capital Projects: Mega Projects Failure Learnings
Working with some outstanding capital project managers helped me to assess project complexity and inherent risks more easily.
I recently noted a Bent Flyvbjerg article on the Megaprojects Paradox. This article reminded me of project events I have been involved in. And reinforced some good learnings.
Learnings from large capital project failures
Bent is a Professor at the Oxford Said Business School and the author of several business management books.
He presents compelling arguments that are equally valid for smaller and medium-sized capital projects.
What is a Megaproject?
Four criteria define Megaprojects:*
- cost more than a billion US dollars
- take more than 5 years to move from design to operations
- affect more than a million people
- have a transformational impact on the area in which it is located
I have worked on projects that were well below a billion USD. However, they could have been considered ‘mega’ given the context of their impact on the business and the community.
Why is the time factor critical?
Bent argues that the biggest challenge of large capital projects is time, the duration from now to the future:
“Our experience tells us that it is not the size or scope of the megaproject that makes it complex, but rather the time factor.”*
As time stretches complexity increases. This impacts the likely hood of project success. Completion on time and within budget.
What’s changing as time passes?
Technology tends to change quickly between planning and delivery. By the time an asset is commissioned, the technology selected in the planning phase may indeed be obsolete.
Or demands regular upgrades.
I recall a forestry product project I was involved in.
The equipment software required frequent upgrades.
Since this was proprietary software, it took some time until it was authorized and sourced. This led to significant project delivery delays.
Political changes on local and/or national levels, particularly when it comes to environmental issues.
I remember a capital project implementation was virtually delayed by years due to one person’s objection. The case had to go through legal hearings and court proceedings. Again, significant project delivery delays ensued.
Financial imperatives change due to key decision-makers departing or new ones arriving. The original decision-makers may no longer be present. Pet projects are shelved or re-discovered.
Yet most capital project returns are over the longer term.
Project Team Composition
Bent’s recommendation makes sense:
“Select a management team that can provide proven experience in project delivery.
Someone who has a track record for delivering these types of projects on time and to budget and benefits.”*
‘Grey hair’ is indeed an asset in project management.
Any capital project taking more than three months to complete would benefit from having input from ‘seasoned’ implementers.
In Summary
Capital projects and the life cycle of assets encounter a multitude of changes. This complexity is pretty challenging for project managers:
“The human brain is not particularly equipped to prophesize future trends and disruptions.”
One tool I use regularly to reduce capital project complexity is the Project Pre-Mortem method.
A great way to ensure project success before major investments are made.
1-4 Flyvbjerg, Bent. (2013). The Megaprojects Paradox. Insight Magazine. 12-15.
