Mega Projects
Mega Claims
The Hero/Heroines Quest
Up and Running or Up and Stumbling?
The Biggest, The Costliest The Most Technologically Advanced, The most Architecturally Adventourous, The most Iconically Inclined
Everyone loves a statistic or 10
2008 GDP 1. Vietnam $99 billion 2. Singapore $193 billion 3. Malaysia $231 billion 4. Australia $1 trillion 5. UK $3 trillion 6. China $ 4.5 trillion 7. USA $ 14.7 trillion.
The 2008 estimated world wide value of infrastrcutre projects for the decade to 2018 $22,000,000,000,000
NO!!!
$11 trillion $11,000,000,000,000
HS 2
Context is everything. Well at least in this talk..
Building your Dream House
?
BAD BUILDING
A Mega Project is anything over the value of $1 billion dollars.
a) UAE - Dubai Al Maktoum Airport - current estimate $82 billion (and rising) estimated completion 2027 b) UAE - Dubailand - $ 64 billion combination of theme parks, sports venues, eco- tourism, health facilities, science attractions, and hotels. Estimated completion 2025 c) UK - London Cross Rail Project $23 billion - final completion 2020 d) China - South- to- North Water Transfer Project $78 billion (as of 2014 and rising) estimated completion 2050 (yes that is correct!) e) UK - HS2 (high speed rail link in the UK from London to Birmingham and beyond) current estimate $55 billion (and rising) estimated completion 2023
Heroes and Villians?
Bent Flyvbjerg
Afloat on the High Seas of Costly Over-runs
Flyvbjerg s Iron Law of Megaprojects "Over budget, over time,. over and over again."
McWalter s Golden Law of Mega Claims Bugger the Cost, Bugger the Time, Bugger the Consequences
Project Cost overrun (%) Suez Canal 1,900 Sydney Opera House 1,400 Concorde supersonic aeroplane 1,100 Panama Canal 200 Brooklyn Bridge 100
Project Cost overrun (%) Boston s artery/tunnel project 196 Humber bridge, UK 175 Boston-Washington-New York rail, USA 130 Great Belt rail tunnel, Denmark 110 A6 Motorway bypass, UK 100 Shinkansen Joetsu rail line, Japan 100 Washington metro, USA 85 Channel tunnel, UK, France 80 Karlsruhe-Bretten light rail, Germany 80 Øresund access links, Denmark 70 Mexico City metro line 60 Paris-Auber-Nanterre rail line 60 Tyne and Wear metro, UK 55 Great Belt link, Denmark 54 Øresund coast-to-coast link 26
Examples of projects that have experienced serious revenue/benefit problems Actual traffic as percentage of forecast traffic, opening year Calcutta metro, India 5 Channel tunnel, UK, France 18 Miami metro, USA 15 Paris Nord TGV line, France 25 Humber Bridge, UK 25 M65 Huncoat Junction to 35 Burnley Section, UK Tyne and Wear metro, UK 50 Mexico City metro 50 Denver International Airport 5
A Bit of Psychology
How to increase or decrease Cognitive Strain
Refusing to change our mind, even in the face of irrefutable facts
The 4 Sublimities: or the 4 Raptures 1) technological sublime 2) political sublime 3) economic sublime 4) aesthetic sublime
So what is optimism?
Optimists generally live longer than realists. Realists are more prone to depression.
We don t see things as they are. We see them as we are. Anais Nin
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Who? Me?
in December 2013 the National Audit Office, part of the UK Civil Service, noted: Historically, the majority of major projects in government have not delivered the anticipated benefits within original time and cost expectations.
They further noted: the challenges of delivering government projects are compounded by the endemic over- optimism which characterises decisions to commit to projects often leading to substantial cost overruns, delays in completion and failure to deliver the benefits.
Daniel Kahneman Executives make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities.
They overestimate benefits and underestimate costs pursue initiatives that are unlikely to come in on budget or on time.or even to be completed.
2003, the UK s HM Treasury produced the Supplementary Green Book 19 - Guidance for Projects, on how to deal with Optimism Bias.
The main factor that determines the amount of optimism bias is whether the project is standard or nonstandard. an amount of between 3% and 45 % should be added to the estimated project cost.
The 2012 London Olympics which the UK government suggested had come in under budget, according to Flyvbjerg, went over budget by around 76%.
Optimism Bias Yes, but Why?
What is a fair claim??
The Pinocchio Illusion
What is a Mega Claim? Something that comes out of a Mega Project usually with lots of 000,000,000,000 s attached usually from failure to manage risk and design not usually from accidents per se
Two Drivers of Mega Claims: 1) The search for cost recovery 2) The inability to say Stop
Why cant we Stop?
Because. a) Subject to Liquidated Damages b)contract termination - claim for damages c) It s just too expensive to stop - stand down costs, loss of critical staff etc, etc, etc
Doing Nothing Drives Us Nuts
Never confuse movement with Action.
Loss of Control is emotionally destabilising for human beings. and rats
to have a sense of being able to do something, not simply wait passively for whatever came.
As denial diminishes, depression increases.
The Summary
Building megaprojects the way we have been doing is enormous waste of time, money and human endeavour Telling people they are wrong, producing facts to prove it does little or nothing. People must be allowed to keep their self-esteem and sense of control.
Denial Optimism
The Biggest Mega Project you will ever be involved in.