Lecture 11: Mega Projects & Success Flashcards
Whats a Megaproject? + Examples
- takes many years to develop/build (decades)
- involves multiple publc and private stakeholders and impact millions of people
- goverment plays a key role
- inherently risky, cause of long planning horizons and complex interfaces
- led by changing Planner and PJM
- multiple public/private SH with conflict interests
- tech and design are often unique → leads to uniquness bias among planners and PJM
- overexposure to “black swans”
- often over budget and late
Examples: high-speed rail lines, airports, hospital, major sport events
Present the Motorola iridium Mega Project
-Motorola wanted to implemented a new sattelite phone with its own technology
Expectation:
- lightweight phones
- usuabl inside buildings
- calls beein cheap
Reality:
-heavy
-didnt work inside building
-costing around 10$ per minute
→ 7 billions, market price 35millions
Lose of 99,5%
What are causes for MPJ to fail?
- optimism bias (people think they are less likely to experience something negative)
- strategic misrepresentation
- overconfidence
-
Explain psychological determinants: “reinforcements traps”
- difficulties in withdrawing from a previously rewarded activity
- individual motivation, such as the need for self-justification
- decision making errors, like trying to recoup “sunk cost”
- biases in information processing, such as tendencies to slant data in the direction of pre-existing beliefs
Explain PJ determinants: objective aspects of a PJ
- closing costs
- salvage value
- the causes of setbacks to its completion
- the economic merits of pursiong or dropping it
What is the difference between Cost Overruns and Cost growth?
Cost overruns → difference between the budget for the completed work and actual cost of the completed work
Cost growth → difference between inital budget for a PJ and its final cost
as additional work is added to a PJ, total budget and total cost rise. If new budget for new work is adequate, there would be not cost overrun but there would be cost growth
Chose a project and explain why it can be considered a megaproject
Building a nuclear power plant in a newcomer country
- Above 1 billion….
- Organisational complexity…
- Engineering complexity…
- Long time in planning & construction…
- Government involved in various roles…
Provides and briefly explain 3 common reasons for projects and megaprojects being late and over budget
- optimism bias
- scope creep
- scope change
- (rework)
Provide and explain 3 examples of best practice to avoid overbudget and delay
-Benchmark cost and time forecast against historical data
→ goal is to identifiy and measure data and compare results to improve PJ while using KPI to measure the state of MPJ
-establish proper SCM mechanism to avoid gold plating/scope creep
→
-Implement an appropriate risk management process starting from an accurate risk identification
→
- Establish an appropriate stakeholder management strategy
- Create a detailed WBS with time and cost of each WP calculated using historical data
We discussed the idea of “Project management success vs. project success”. For each of the following points, provide an example of a project and explain
→ PJM success means if the planned PJ is successful in terms of its set goals, costs and time aspects
→ deliver on timer, budget, quality/scope
→ PJ success means if the PJ is an achivement in the long run, by enhancing the scope, despite having a longer time or higher costs
→ deliver something where “value outweigh costs”
Explain why the iron triangle is not always adequate to discuss project success
-PJ can be a success even though time and costs limits are surpassed.
→ example: tower of pisa. Took a long time and is not straight, now its a success.
Water barrier in London. Over time it got changed, costed a lot, but know its protecting the city nicely
Explain the difference “optimism bias” vs “strategic misrepresentation”
-
Optimism bias
- in PJ forecast benefits are overstatet
-understate timescale and cost, -
strategic misrepresentation
-purposely trying to present things about a PJ in a over oder understated way
→ overstating benefits and understating costs to others
Provide 3 common reasons (different then “optimism bias” and “strategic misrepresentation”) to explain why megaproject are frequently overbudget and late
- winners course
→ infrastructure which appears to have most optismitc cost/benefit analysis is selected → seems “most optimistic - poor risk allocation
→not implementing risk identification into planning process- bad Scope management
→PJM does not know what has to be done in total, so there could be to little personnel for the work
- bad Scope management
Name an example for PJM success and PJ success
Metro Extrension in Rotterdam
-was completed on time and budget
-motto was: keep uncertainty in the managle domain
→ optimism bias and strategic misrepresentation were left out
-used existing techniques and was kept in the transportation domain
-route was kept above ground as much as possible + focussed on reducing worries of neighbourhoods
Name an example of PJM success but not PJ success
Nuclear Power Station “Montalto di Castro” in Italy in the 80s
-was delived on time/budget and was state-of-the-art tech.
-after Chernobyl disaster and Nuclear Referendum in Italy the programm was terminated
→ plant never operated and was decommissioned by italian citizens
