/ News / Research from Saïd Business School shows how to slash the cost of megaprojects while boosting delivery speed

Research from Saïd Business School shows how to slash the cost of megaprojects while boosting delivery speed

pdubey@v1-media.com on October 25, 2021 - in News, Projects

Megaproject world expert Bent Flyvbjerg also shares his top five best in-class modular megaprojects, and the five worst offenders

Megaprojects expert Bent Flyvbjerg shares his expertise on why so many megaprojects fail and how they can triumph in Harvard Business Review’s spotlight article.

Research by Bent Flyvbjerg, Emeritus Professor at Saïd Business School and the Villum Kann Rasmussen Professor and Chair of Major Program Management at the IT University of Copenhagen, has shown that there are two factors which decide the fate of any megaproject.

Modularity and speed

Megaprojects need to have modularity in design and speed in delivery if they are to succeed. This is particularly important in the face of the climate crisis, because many climate projects ignore this crucial insight, placing humankind at a fatal risk of not meeting its 2030 and 2050 climate goals.

Professor Flyvbjerg’s HBR article explains: ‘If a project can be delivered fast and in a modular manner, enabling experimentation and learning along the way, it is likely to succeed.’

The Channel Tunnel: Slow and bespoke

The creation of the Channel Tunnel between the UK and France in the 1990’s is one example of how a lack of modularity and speed has led to huge losses for the megaproject and the British economy. Over 25 years later, the custom-made project is still unlikely to reach economic viability in the near future, despite being operational for decades. The slow build rate and tailor-made design are to blame for its failings.  

The Madrid Metro: Fast and iterative

The expansion of the Madrid Metro took a different approach: from its inception, it had a focus on speedy delivery which led to a re-imagining of the way in which tunnels and stations had traditionally been built. Combine this with every station following a modular design, emphasising the functional over the bespoke, and you have a megaproject that is fit-for-purpose and has beaten industry averages for built cost and completion time.

If all megaprojects across the world followed the Madrid Metro example, and reduced cost by 50 per cent through a strictly modular approach, it could generate global savings of around £4 trillion a year, equal to the gross domestic product of Japan.

Modular megaprojects and climate change

Climate projects must be built like the Madrid Metro, and not like the Channel Tunnel, Flyvbjerg emphasizes. Nuclear power and hydroelectric dams are out, despite being low on CO2-emissions. They are simply too slow and bespoke. Wind and solar and batteries are in, because they can be built like Legos: modular and fast. Click, click, click!

The need for speed is a practical one. Not only do delays mean that planned income disappears into the future but Professor Flyvbjerg explains in HBR that: ‘The longer the time, the higher the risk of ultimate failure, with little opportunity to learn along the way.’

Lessons from the pandemic: the risk of a long build time

The increased risk becomes progressively apparent due to the protracted nature of megaprojects. Forecasting likelihoods beyond a year can make predictions inaccurate, the Covid-19 pandemic being one example of a huge risk that those planning megaprojects during the last decades will not have foreseen, for instance Tokyo 2020.

‘If major pandemics occur once every century and a megaproject takes 10-15 years to complete, as is common, then the risk of a pandemic during any one project is 10-15%, which is unacceptably high’, Flyvbjerg explains. ‘If, instead, you redesign delivery to take 3 years, like in Madrid, then your risk is 3%, which is palatable’.

‘Keep it short’, Flyvbjerg concludes. ‘It’s the key to success in any megaproject, and especially for projects aimed at tackling the climate crisis’.

 

Flyvbjerg Top 5 modular projects from around the world:

  1. Empire State Building, New York City.
  2. Hornsea One, UK, world’s largest offshore wind farm.
  3. Bhadla Solar Park, India, world’s largest solar farm.
  4. Madrid Metro, Spain.
  5. Tesla Gigafactory 1, Nevada, USA.

And top 5 worst offenders:

  1. Virgil 2-3 nuclear reactors, South Carolina, USA.
  2. Channel Tunnel, UK, France.
  3. Berlin Brandenburg Airport, Germany.
  4. Kmart IT enterprise system, USA.
  5. Airbus A380, France.

Flyvbjerg is also co-writing a forthcoming book (with Dan Gardner, co-author of Superforecasting) that will bring his decades of research to a popular audience. Big Plans: Why Most Fail, How Some Succeed will be published by Penguin Random House in 2022.

About Saïd Business School, University of Oxford

Saïd Business School at the University of Oxford blends the best of new and old. We are a vibrant and innovative business school, but deeply embedded in an 800-year-old world-class university. We create programmes and ideas that have global impact.  We educate people for successful business careers, and as a community seek to tackle world-scale problems. We deliver cutting-edge programmes and ground-breaking research that transform individuals, organisations, business practice, and society. We are a world-class business school community, embedded in a world-class University, tackling world-scale problems. www.sbs.ox.ac.uk

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