Why 99% of Big Projects Fail

February 6, 2023

Oxford economist Bent Flyvbjerg is an expert in the planning of “megaprojects,” huge efforts that require at least $1 billion of investment: bridges, tunnels, office towers, airports, telescopes, the Olympics. He’s spent decades studying the many ways megaprojects go wrong and the few ways to get them right. His new book How Big Things Get Done, is summarized in The Wall Street Journal (Feb. 4-5, 2023).

Spoiler alert! Big things get done very badly. They cost too much. They take too long. They fall too short of expectations too often. This is what Flyvbjerg calls the Iron Law of Megaprojects: “over budget, over time, under benefits, over and over again.”

His work can be distilled into three pitiful numbers:

 47.9% are delivered on budget. 
 8.5% are delivered on budget and on time. 
 0.5% are delivered on budget, on time and with the projected benefits.

The Guggenheim Museum in Bilboa Spain is a rare example of proper project planning

Flyvbjerg found that the complexity, novelty and difficulty of megaprojects heighten their risk and leave them vulnerable to extreme outcomes.  “You shouldn’t expect that they will go bad,” he says. “You should expect that quite a large percentage will go disastrously bad. Despite the fact that trillions of dollars had been spent around the world on such projects, nobody knew if they stayed on schedule or budget.”

Over the years, he compiled a list of 16,000 major infrastucture projects: skyscrapers, airports, museums, concert halls, nuclear reactors, roads and hydroelectric dams across 136 countries—not just megaprojects, but projects of all shapes and sizes.

What he found is that people struggle with projects for a simple reason: They’re people. Humans are optimistic by nature and underestimate how long it takes to complete future tasks. They ignore previous mishaps and delude themselves into believing this time will be different. Megaprojects are also plagued by politics as much as psychology.

What fascinates him more than the failings of the 99.5% is why the 0.5% succeed. Many projects are late because not enough time is spent planning, which is the most efficient way to shrink risk. You don’t start digging before you know exactly what you’re doing. Frank Gehry experimented with designs and tinkered with models in his studio for two years before starting to build the Spanish Guggenheim Museum. That meticulous planning was the reason the architectural wonder opened in 1997 on time and under its $100 million budget.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

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