Monday, June 05, 2017

Megaprojects: Over budget and under performance

Amazon

From the Antiplanner:

The Iron Law[of megaprojects] is, simply “Over budget, over time, under benefits, over and over again.” He says that 90 percent of megaprojects go over budget and most end up under performing...

Although Flyvbjerg defines megaprojects as projects whose costs are in billions of dollars, many of these rules also apply to much smaller projects if they are undertaken by agencies or entities that are not used to such projects. 

For example, neither the Norfolk light rail nor the Austin commuter rail lines would qualify as megaprojects, but both were beyond the skills and capabilities of the agencies that undertook them, and as a result the agencies nearly went bankrupt, the general managers lost their jobs, and the cities that rely on their transit services ended up getting poorer service.

Truly, you really only need to know one thing about megaprojects, and that is: Don’t do them. This is especially true for governments, but also for the private sector. It is much better to do things incrementally or to undertake projects that can yield rewards immediately without having to wait for the investment of billions of dollars. 

Of course, if Apple or Google want to spend some of their surplus billions on megaprojects, that’s up to them. It’s quite a different story when politicians use other people’s money.

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