Megaprojects are the most complex, time-consuming and costly form of major capital projects, typically categorized as those which cost $1 billion or more. Projects of this magnitude are often characterized by massive organizational supply chains of tens of thousands of people. These can involve multiple public and private stakeholders from several countries and take years to develop. On top of this, every single project is absolutely unique; there are no two alike.
A reoccurring problem in these projects, however, is what Bent Flyvbjerg, Oxford University’s Saïd Business School Professor, calls the “Iron Law of Megaprojects”: Over budget, over time, under benefits, over and over again. This is aptly demonstrated by evidence. Only one out of ten megaprojects is on budget, one out of ten is on schedule, and one out of ten is delivering the promised benefits. In other worrying numbers, the research firm McKinsey estimates that 77 percent of projects are at least 40 percent late.
Measured as a share of world GDP, infrastructure spending has never been this high. With so many resources tied up in ever-more, ever-larger megaprojects, the management of such projects has never been more important. If the rapid increase of megaprojects continues, the question then becomes how we can manage these projects better than before.
Problems in Time Management of Megaprojects
The only thing that is ever certain to be scarce in organisations is time. Thus, time generates importance and pressure. For example, scheduling is a core mechanism of organising: deadlines determine decision processes, create urgency, and trigger communication.
Unfortunately, companies don’t focus enough on useful time management thinking. What one needs to realize is that time speeds by no matter what, but that time can also be used in an organized effort to achieve a goal. Every instance time is not utilized, it is wasted. Research shows that while the degree of failure seems to be the same for all complex projects – regardless of industry sector, the size of penalties imposed for late completion and the form of contract used – they were all directly influenced by the effective use of time management processes. The better the use of those processes in and of themselves, the better the outcome.
Like the projects themselves, these processes are ever changing. However, some common identifiable stages are planning, estimating, scheduling and control. Despite all the sophistication in today’s world, optimizing all of these stages is, unfortunately, something we can only attempt with a limited degree of accuracy. After all, human error and imperfect working conditions are always present.
Megaprojects are inherently risky endeavours given the long planning horizons, sometimes spanning decades, leading to temporal complexity and unpredictable developments. Nobody can therefore perfectly foresee everything during such large time spans for such humongous endeavors, especially as they are unique from project to project. What we can do, though, is strive to plan everything carefully and optimize as much as possible.
Time Management in Construction
Effective time management is especially vital in construction, as the project risks being delayed completely if the construction is not on time. For instance, if one part of the construction is behind schedule, it may mean other groups or companies are forced to wait before they can begin with the next step.
Research indicates that the growth in training, education and skill levels within the industry in the use of time management techniques has not kept pace with the technology available. In addition, there are very few projects which are currently managed by reference to modern methods of time control.
Time management in construction is also important because if projects aren’t finished in a timely manner, or at least as quickly as promised, this can cause the construction company to lose payment for breach of contract. This, in turn, can cause enormous problems for the company down the road, as projects that are not finished on time can derail company efforts to secure bids on future projects. Utilizing effective time management skills will also help a construction company maintain a positive reputation, which can lead to more work in the future.
Lack of Transparency in Capital Projects
In too many cases, project owners have poor real-time visibility of complex megaprojects throughout the execution phase. Some projects don’t have the needed visibility due to a lack of knowledgeable technical leadership. In most cases, though, the lack of real-time visibility is due to inappropriate application of the latest information.
While managing a megaproject, managers need to consider the entire environment, be able to incorporate timely information into their decision-making, and continuously consult with a broader range of stakeholders. In fact, it’s vital to make a “buy-in” with all the stakeholders, especially those who participate in implementing the project’s activities. By doing so you can guarantee the schedule is realistic and up-to-date.
A network-centric approach like this translates into benefits of participation across all stakeholders. Rapid feedback and collective decision-making saves time, enabling on-time delivery with maximally efficient use of resources for all subcontractors and minimal disruptions to the ongoing operations. Such a model allows the team to engage with a broad range of systems and experts, both internal and external to the organization.
However, the tighter the time horizon, the more restricted the communication must be to avoid information overflow and allow for quick reaction by everyone. Communication can be very time consuming, and gathering and analysing information together is not acting. Rather, it inhibits fast and necessary (but maybe less sophisticated) action. Thus, communication should be selective, specific and intense but be done in an efficient and easy way and according to a predefined communication form for each type of information.
Conclusion
Flyvbjerg, one of the most renowned megaproject researchers, estimates that the global Megaproject market is valued at US$6-US$9 Trillion per annum. These estimates would account for approximately 8% of global total Gross Domestic Product (GDP) per year. Measured by value, the size of infrastructure projects has also grown by 1.5% to 2.5% annually in real terms over the past century, which is equivalent to a doubling in project size two to three times per century.
Overruns can be found in every type of project, in private as well as public sectors, and things are not improving. Overruns have stayed high and constant for the 70-year period for which comparable data exist. Geography doesn’t seem to matter either; all countries and continents for which data are available suffer from overruns. Similarly, benefit shortfalls of up to 50% are common, and even above 50% not uncommon, again with no signs of improvements over time and geography.
Just as an example, the troubled Olkiluoto 3 nuclear reactor would have significantly helped alleviate the problems of the energy crisis during winters in Finland. The project was finally completed in 2023, 14 years behind schedule and severely over budget.
Therefore, it has never been more important for companies and managers to understand the problems of bad time management in megaprojects, what leads to these problems and how to combat them – or even avoid them completely.
At LogiNets, we believe essential time management is vital for all capital projects. Time management analysis may still be somewhat scarce and processes need improvement. But there are innumerable benefits for those willing to utilize the correct tools, which is something we strive to develop at LogiNets.
What LogiNets Offers
At LogiNets, we provide material management platforms through which you can easily track materials and shipments across your entire supply chain. Our software is designed with ease-of-use in mind and can be used by all participants in the project network. It covers everything from planning to final installation. Be it suppliers, forwarders or managers who utilize the platform, it will give them complete visibility to the material deliveries throughout all the project’s different stages. The system can also be deployed for customers’ projects within 5 working days.
We would love to help with your material handling questions. If you’d like to know more about our software, please don’t hesitate to contact us or book a demo at the link below.
Sources:
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Flyvbjerg, B., Skamris Holm, M. K., & Buhl, S. L. (2005). How (in) accurate are demand forecasts in public works projects?: The case of transportation. Journal of the American planning association, 71(2), 131-146.
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McKinsey (2015) https://www.mckinsey.com/capabilities/operations/our-insights/megaprojects-the-good-the-bad-and-the-better
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