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"#$41+5"63
8y 8enL llyvb[erg, Said 8uslness School, unlverslLy of Cxford
lull reference: llyvb[erg, 8enL, 2013, "Mega ueluslonal: 1he Curse of Lhe Megapro[ecL," New
5cleotlst, uecember, pp. 28-29.
u8L: hLLp://blL.ly/19CLrLn
1belt costs ote osttooomlcol ooJ beoeflts poestloooble, yet meqoptojects bove oevet beeo so
popolot. wbot's qoloq oo?

AS 88AZlL prepares Lo hosL Lhe 2014 World Cup and Lhe 2016 Clymplcs, money has become a key
lssue. lnfrasLrucLure work ls expecLed Lo cosL a budgeL busLlng $14.3 bllllon for each. ln a show of
ouLrage, 8razlllans rloLed, angered aL Lhe rlslng cosL and scandals of Lhese megapro[ecLs among
oLher Lhlngs.
Across Lhe world ln 8ussla, Lhe blll for hosLlng Lhe 2014 wlnLer Clymplcs ln Sochl ls clalmed by some
Lo have splralled Lo $30 bllllon from $6 bllllon. 1he vlLrlol ls flylng. Meanwhlle Lhe uk's plan Lo bulld
lLs second hlgh-speed rall llnk has seen cosL esLlmaLes rlse Lo 42.6 bllllon from 32.7bn and a war of
words over lLs worLh. 1hen Lhere are Lhe many l1 and defence pro[ecLs wlLh vasL overspends and
dysfuncLlonal ouLcomes. WasLe from falled and underperformlng l1 pro[ecLs ln Lhe uS alone ls
esLlmaLed aL $33 bllllon annually.
uesplLe such a poor Lrack record, megapro[ecLs have never been more popular wlLh pollLlclans. 1oLal
global spendlng on Lhem ls $6-9 Lrllllon annually.
WhaL drlves Lhls enLhuslasm ln Lhe face of repeaLed fallure? 1here ls Lhe rapLure englneers and
LechnologlsLs geL from bulldlng large and lnnovaLlve pro[ecLs, pushlng Lhe boundarles for whaL
Lechnology can do. Slmllarly pollLlclans love bulldlng monumenLs Lo Lhemselves and Lhelr causes.
Crand schemes are medla magneLs, pollLlclans seem Lo en[oy few Lhlngs beLLer Lhan Lhe vlslblllLy
Lhey geL from sLarLlng megapro[ecLs, excepL maybe cuLLlng Lhe rlbbon of one ln Lhe company of
royals or presldenLs.
Lqually Lhere ls Lhe dellghL of buslness people and Lrade unlons ln maklng loLs of money or seelng
[obs creaLed off megapro[ecLs. ConLracLors, englneers, archlLecLs, consulLanLs, consLrucLlon and
LransporLaLlon workers, bankers, lnvesLors, landowners, lawyers, and developers lap up Lhe rewards
whlle Lhe flnanclal rlsks frequenLly fall on Lhe Laxpayer. llnally, Lhere ls aesLheLlc pleasure ln
someLhlng very large LhaL ls also lconlc. Sydney Cpera Pouse anyone?
All Lhese are drlvers of Lhe megapro[ecL. 1hey ensure Lhose who beneflL are plenLlful and wanL more
of Lhe same.
Cf course a scepLlcal publlc does need Lo be persuaded. 1he sell ls usually on Lhe grounds of [ob
creaLlon, economlc galns, beLLer publlc servlces and envlronmenLal beneflLs. 8uL Lhere ls a blg lf -
such beneflLs only Lruly follow lf Lhe pro[ecL ls done rlghL". Cnly when Lhls caveaL ls dlsregarded - as
lL ofLen ls - can megapro[ecLs be seen as an effecLlve way Lo dellver lnfrasLrucLure. ln facL,
convenLlonal megapro[ecL dellvery has a dlsmal record ln Lerms of cosLs and beneflLs.
ln reallLy, many psychologlcal facLors are aL work Lo malnLaln Lhls sLaLus quo. 1hey lnclude
unlqueness blas ln Lerms of Lechnology and deslgn - LhaL ls planners and managers Lend Lo see Lhelr
pro[ecLs as flrsLs, whlch lmpedes learnlng from oLher pro[ecLs. lrequenLly Lhere ls overcommlLmenL
aL an early sLage, resulLlng ln a lock-ln" menLallLy. Callfornla SLaLe Assembly member Wlllle 8rown,
dlscusslng a cosL overrun on Lhe San lranclsco 1ransbay 1ermlnal megapro[ecL Lhls year puL lL well:
1he ldea ls Lo geL golng. SLarL dlgglng a hole and make lL so blg, Lhere's no alLernaLlve Lo comlng up
wlLh Lhe money Lo flll lL ln."
A false sense of conLrol ls also common and lgnores black swans" - exLreme evenLs wlLh masslvely
negaLlve ouLcomes Lo whlch megapro[ecLs are overexposed. Managers Lend Lo LreaL pro[ecLs as lf
Lhey exlsL ln a deLermlnlsLlc unlverse of cause, effecL, and conLrol. LasL buL far from leasL ls Lhe
opLlmlsm blas whlch plagues cosL esLlmaLes.
Some say Lhls doesn'L maLLer, because whlle opLlmlsm blas rules cosL esLlmaLes, pesslmlsm rules
beneflL esLlmaLes, so lL all balances ouL ln Lhe end. 1hey say we need such blases and LhaL noLhlng
grand would ever geL bullL lf we leL all Lhe Lhlngs LhaL could go wrong puL us off, LhaL human
creaLlvlLy wlll always geL us Lhrough. LconomlsLs such as AlberL Plrschman ploneered such vlews and
Lhey Look rooL flrmly.
1oday we have much beLLer daLa and Lheorles. We know LhaL, whlle Lhere may be elemenLs of LruLh
ln such Lhlnklng, Lhe samples and concluslons of Plrschman are unrepresenLaLlve. ln parLlcular, Lhe
odd assumpLlon LhaL opLlmlsm would apply Lo cosL esLlmaLes buL pesslmlsm Lo esLlmaLes of beneflLs
has been dlsproved. 8aLher opLlmlsm blas applles Lo boLh. lL leads Lo cosLs ouLsLrlpplng pro[ecLlons
and far fewer users of your new LransporL llnk Lhan forecasL.
ln facL Lhe slLuaLlon ls even worse. WhaL we ofLen have ls an lnverLed uarwlnlsm, Lhe survlval of Lhe
unflLLesL. lL ls noL Lhe besL pro[ecLs LhaL geL chosen, buL Lhose LhaL look besL on paper. And Lhe
pro[ecLs LhaL look besL on paper are Lhose wlLh Lhe largesL cosL underesLlmaLes and beneflL
overesLlmaLes. 1hey are dlsasLers walLlng Lo happen.
lL has become lncreaslngly clear LhaL when megapro[ecLs go wrong Lhey are llke Lhe proverblal bull
ln Lhe chlna shop: Lhey can wreak serlous damage on naLlonal economles. lL has become slmllarly
clear Lo many lnvolved LhaL someLhlng needs Lo be done.
lorLunaLely ln some cases lL ls. lor example, Lhe uk 1reasury now requlres all mlnlsLrles Lo develop
and use procedures for megapro[ecLs LhaL curb opLlmlsm blas. SwlLzerland and uenmark have
followed LhaL lead. AusLralla conducLed an lnqulry lnLo how Lo secure more successful dellvery of
slgnlflcanL pro[ecLs. Slmllarly, Lhe neLherlands works Lo llmlL mlslnformaLlon abouL large
lnfrasLrucLure endeavours. ln 8osLon, cosL overruns ln Lhe noLorlous '8lg ulg' road Lunnel proved a
caLalysL for change Lhere.
llnally, research on how Lo reform megapro[ecL managemenL ls beglnnlng Lo have a poslLlve lmpacL.
CreaL sLrldes have been made ln undersLandlng whaL causes fallures. lor lnsLance, we now beLLer
undersLand Lhe roles played by varlous psychologlcal blases.
And wlLh a beLLer undersLandlng has followed a beLLer grasp of cures. 1he Lruly opLlmlsLlc mlghL
even say LhaL one day Lhe word megapro[ecL wlll no longer be synonymous wlLh unexpecLed cosLs
and quesLlonable beneflLs.
ltofessot 8eot llyvbjetq ls tbe foooJloq Jltectot of OxfotJ uolvetsltys 81 ceotte fot Mojot
ltoqtomme Moooqemeot ooJ ootbot of Meqoptojects ooJ tlsk - Ao oootomy of ombltloo. ne ls
ocoJemlc Jltectot of OxfotJ's M5c lo Mojot ltoqtomme Moooqemeot.