By Eric Lunt
Everything seems to be bigger these days, including the size of projects. Megaprojects – defined as projects over US$1 billion – currently account for US$6-9 trillion per year or 8% of global GDP[i]. With this huge investment, the stakes to get a megaproject right are extremely high, yet megaprojects continue to fail at surprising rates. Ninety percent of megaprojects are over budget and over half are considered failures – defined as the project having failed to achieve the planned benefits due to high-cost and schedule overruns.[ii] Why are so many megaprojects prone to failure and what can be done about it?
One reason is many megaprojects start with an optimism bias. To secure funding and the initial approvals required to start the megaproject, costs are underestimated, and benefits greatly overestimated.[iii] This establishes an unrealistic scope and timeline for the available project funding. This mis-step is largely uncontrollable by those tasked with executing a safe, on-time, on-scope project execution, but is important to realize as context.
A second reason megaprojects fail is that they neglect to implement adequate Front-End Planning, a vital component of Front-End Loading (FEL). FEL is usually in three stages:
- case development and appraisal,
- scope development, and
- front-end engineering design (FEED), which also includes Front-End Execution Planning.
This failure to plan not only happens at the project start but is repeated at each new phase, leading to disastrous results as unplanned scope and their associated costs are identified.
Typically, megaproject teams, and in particular those leading the overall project, respond with alarm after prolonged periods of scope growth and rising costs. The project is paused, reorganized, re-baselined. AKA “fixed”; however, this fix is short lived. Without rigorous Front-End Planning including the appropriate stakeholders to produce executable schedules, the project will remain mired in a highly reactive project execution rut as project managers scramble to put out one fire after another, all the while their newly baselined schedules slip and cost overruns continue to rise.
RLG International’s work in megaprojects has grown in recent years. In Australia, Asia and America, RLG’s teams of performance coaches work alongside and between contractor crews, engineering and planning staff helping to improve productivity by over 20 percent by bringing rigor and discipline to client project planning and project execution processes.
Schedule Quality Review (SQR) is one tool our teams use to improve schedule quality while strengthening and improving critical path. Part of our Project Excellence (Px™) performance model, SQR is helpful in the space between scope and schedule development and a thorough schedule optimization – that is, when schedule accuracy, executability and awareness is still lacking.
During the recent commissioning of one of Australia’s largest Liquefied Natural Gas facilities, RLG worked within the Commissioning and Start-Up team on a megaproject that was already in the construction phase. This project was falling considerably behind schedule and was at risk of failing to achieve the critical first-shipment milestone. Along with other tools from the Px™ model, RLG coaches used SQR facilitated sessions to optimize a level-4 schedule by regularly bringing all stake holders together to scrutinize the schedule line-by-line, focusing on the Critical Path. They looked for opportunities to:
• Remove items from critical path by moving them into pre- and post-work
• Improve critical path durations through efficiency optimization
• Identify and reduce risk through mitigating activity
From the dozens of actions generated in multiple Scheduled Quality Review sessions, a detailed level-4 schedule emerged that fully aligned with planning, scheduling, and engineering. More important, since they were involved in the SQR sessions, the plan was now owned by the front-line construction teams in the field. The result? Their plans resulted in a 26% duration improvement with six days saved on commissioning critical path with zero incidents.
Interested in more information? We’d love to hear from you. Please contact us, and check out some of our case studies from clients around the world.
[i] Bent Flyvbjerg, 2014 “What you Should know About Megaprojects and Why: An Overview,” Project Management Journal, vol. 45, no. 2, April-May, p. 6.
[ii] Merrow, E. W., 2011 “Industrial Megaprojects Concepts. Strategies, and Practices for Success.” New Jersey: John Wiley & Sons, Inc.
[iii] Flyvbjerg, p. 18.