Megaprojects are defined as projects that will cost more than $1 billion or affect more than 1 billion people. They are the subject of research by Bent Flyvbjerg, the BT Professor and Inaugural Chair of Major Programme Management at Oxford University and the author of "What You Should Know about Megaprojects and Why: An Overview." On May 14, 2015, Dr. Flyvbjerg was interviewed on Dr. Russ Roberts’s podcast, EconTalk and, while they discussed public works projects, key points are applicable to projects that many project managers see.
We have identified the fundamental megaproject insight such as:
- The four sublimes that make megaprojects appealing
- Lessons from megaprojects that can help deliver more value to your business
- Common characteristics of successful projects
Megaprojects are ambitious. They are often more complicated than they need to be. Dr. Flyvbjerg calls the four reasons that megaprojects are often too excessive in size and frequency “sublimes." Sublimes are the reason that projects get approved even though they are excessively complex or aspiring. The four sublimes (political, technology, economic, and aesthetic) encourage stakeholders to approve projects for reasons other than return on investment.
So what are the four sublimes that can make megaprojects appealing?
Lessons From Megaprojects Deliver More Value To Your Business
While megaprojects are appealing for the four sublimes, they often go wrong. According to Dr. Flyvbjerg, 9 out of 10 megaprojects take longer, cost more than estimated, or produce fewer benefits than expected. Many megaprojects were discovered to have all three of these failures. In spite of these realities, the Megaprojects Paradox, the term invented by Dr. Flyvbjerg, confirms that megaprojects are getting bigger as a percentage of GDP, but delivery is worsening, and stakeholders are less happy.
Dr. Flyvbjerg’s work indicates that stakeholders must become more accurate when estimating a project’s schedule, costs, and benefits. He and his team have built tools that help de-bias estimates. De-biasing tools look at similar projects and their expected versus actual performance. De-biasing tools assume that the project being proposed will be subject to the same estimation errors as those projects used as a baseline. Corporations could use this methodology if they baseline their project portfolio’s schedule, costs and (post-closure) benefits and then measure that versus actual project results. Those deltas could then be used to re-estimate the schedule, cost, and benefits of proposed projects.
An example of the de-biasing tool’s usefulness would be a new product launch. The new product development team would estimate the project’s cost, schedule, and benefits using their existing tools. The program manager would then de-bias the estimates with the corporation’s historical averages in these areas. These de-biased estimates would be used to consider if the project should proceed.
Another way that Dr. Flyvbjerg suggests avoiding the Megaproject Paradox is to do smaller projects. In the podcast, he states that Norway is looking to do smaller hydro-electric projects. Companies in cities like Dayton or Cincinnati could, when possible, take that advice by breaking existing projects into smaller components. Also, they could prioritize projects with a lower projected ROI but less cost and shorter schedules (i.e., hitting for singles instead of home runs). Of course, some projects are necessary and cannot have their scope narrowed.
What Do Successful Projects Have in Common?
The discussion ended with Dr. Flyvbjerg revisiting his initial research findings on what successful projects have in common.
Successful projects have:
- An active owner who has clear objectives and is the owner throughout the span of the project. If project owners can leave before the project is completed, they get credit for project generation but are not culpable for project failures.
- A project team that has executed similar projects before.
- Estimating techniques that produce realistic evaluations. A de-bias estimation exercise is a vital tool that can aid in producing realistic schedule, cost, and benefits.
The interview with Dr. Flyvbjerg was informative about projects that most project managers will never have the opportunity to manage. However, the lessons learned from the conversation can be used by any project management office (PMO) to deliver more value to the business.
- Flyvbjerg, B. (2014, April 7). What You Should Know About Megaprojects and Why: An Overview. Retrieved December 29, 2015, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2424835
- Roberts, R. (2015, May 25). Bent Flyvbjerg on Megaprojects | EconTalk | Library of Economics and Liberty. Retrieved December 29, 2015, from http://www.econtalk.org/archives/2015/05/bent_flyvbjerg. html
Project Manager | AfidenceIT