The trouble with megaprojects

The latest stage of the HS2 rail project has been approved by the government, but not without criticism. The project, designed to link London, Birmingham, Manchester and Leeds, is likely the take far longer than anticipated and a review has suggested that costs may double to as much as £106 billion. When HS2 was pitched, it was imagined as a £33 billion project that would open partly in 2026, with new estimates suggesting that 2031 may be a more reasonable expectation. Delays were, of course, predicted when HS2 was announced, and it’s just one of many major projects facing time and cost increases – so why are these so-called megaprojects so susceptible to overrunning?

   What is a megaproject? Simply put, it is a large project, with a significant scale or complexity – these days, most megaprojects are commissioned by governments, public bodies and large companies, normally with a budget of more than $1 billion. A 2013 National Audit Office (NAO) report found that most major government projects failed on their initial cost-benefit analysis – the NAO blamed “over-optimism”, saying that many projects began with unrealistic assumptions about the time, costs and risks involved and were therefore forced to alter these predictions mid-project.

   Easy as it is to just blame the government, this isn’t a problem that is unique to the UK. According to Nick Davies, from the Institute for Government think tank: “Nine out of 10 megaprojects around the world (where costs are over £1 billion) go over time and over budget.” Nor is it a particularly recent issue – when the Suez Canal was constructing more than 150 years ago, it cost 1900% more than initial estimates.

   This is not to say that government involvement is a minimal factor – often, political pressure and the attempts to cater to the will of voters take precedence. HS2 was one such example, with critics arguing that the idea of the rail network was essentially a bung, offering the pretext of caring for Northern voters, without really looking at detail. The HS2 project also suffered huge delays when there was public objection to some of its proposed routes. Meg Hillier, chair of the Public Accounts Committee (which examines how the government spends public money) said: “There’s often a lot of political pressure to make an early announcement and this means it’s a bit of a back of an envelope when it comes to initial costings.”

   The Channel Tunnel is one of the biggest engineering projects ever undertaken in the UK. It was touted as a means of transforming travel to Paris and Brussels, making us truly connected to the continent, but it was soon beset by delays and spiralling costs. When it finally opened in May 1994, it was one year behind schedule and £2 billion over budget. According to Alan Myers, a retired project director on the Channel Tunnel project, much of the extra spending was to deal with safety issues. He said: “They were wondering how to manage such a long tunnel under the sea, they needed extra cooling, these sort of things.” Because the scheme was a one-of-a-kind project, managers could not rely on their past experience to guide them, and many issues are unpredictable.

   The Brandenberg airport in Berlin was meant to open in 2011, but that date has been shifted to this year at the earliest. The major problem was that the initial plan kept being revised to deal with issues that arose, and many of these revisions were completely unnecessary. To give an example, the airport’s design was changed partway through the project in order to accommodate Airbus A380s, the largest operating passenger planes. When the planemaker announced a few years later that it would stop building the model, the plans had to be changed again. Such revisions mean the original budget of €2.8 billion is expected to rise to at least €7.6 billion – the top global infrastructure expert Bent Flyvbjerg called it a “national trauma”.

   We could go on listing projects which have overrun and which went over budget. London is still in the middle of Crossrail development (it was meant to open last December), the California High-Speed Rail now costs $46 billion more than expected and is a decade behind schedule, and the issues with cost and delivery of the 2004 Scottish Parliament building eventually led to a public inquiry. Lord Fraser’s report concluded that the initial £40 million budget “never had any basis in reality”, and wrote that “it verges on the embarrassing to conclude, as I do, that virtually none of the key questions about construction management were asked”. One of the most interesting megaprojects is La Sagrada Familia, Antoni Gaudi’s cathedral in Barcelona – it is not expected to be completed until 2026, 137 after work began, because the project relies solely on private donations.

   If megaprojects seem destined to overrun, it does rather beg the question – can anything be done to ensure they don’t? A team at UCL analysed the working practices and end results of more than 6000 megaprojects, identifying six key themes that explain why a project may fail: “decision-making behaviour; strategy, governance and procurement; risk and uncertainty; leadership and capable teams; stakeholder engagement and management; supply chain integration and coordination.” Importantly, all of these reasons were of equal significance to a megaproject’s poor performance.

The UCL team, led by researcher Dr Juliano Denicol, also noted a number of potential preventative measures and solutions that could help facilitate the needs of those delivering megaprojects. These five avenues are as follows: designing the system architecture; bridging the gap with manufacturing; building and leading collaborations; engaging institutions and communities; decomposing and integrating the supply chain. As Peter Hansford, the UK Government’s former Chief Construction Adviser, says, it is “of urgent importance to understand why megaprojects underperform and what needs to be done to prevent them doing so”.

In a 2017 paper, Aaron Shenhar and Vered Holzmann also identified three ingredients for megaproject success. These were a clear strategic vision, total alignment between those involved in the project and the ability to adapt to complex and novel circumstances. They cite the 1969 Moon landing as an example of a successful megaproject. In May 1961, President Kennedy said: “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.” It was a clear objective, all teams were working to that objective and it was impossible to rely on past experience because the mission was completely unprecedented. Come July 1969, and they all succeeded.

   It’s impossible to offer a generalised solution that will fit all megaprojects because they are, by their very nature, unique projects. The major identifiable issue seems to be a lack of sufficient preparatory work to mitigate as many issues as possible, but no amount of preparation will be able to foresee everything. It’s unlikely that we’ll see an end of an era of overrunning, overbudget megaprojects (as we’ve seen, they’ve always been like that), but perhaps shifting some of the tighter deadlines will alleviate a lot of pressure. No-one really expected HS2 to be ready on time – shifting from short-term positives to longer-term planning can only be a societal positive, even if it’s a politically weaker step.