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monday morning manager

CELIA KRAMPIEN/The Globe and Mail

Nuno Gil has a lot of sympathy for politicians who routinely break their promises when it comes to the financing and scheduling of megaprojects.

The people who oversee such ventures are not crooks or liars, he says, but determined leaders trying, within the limits of Western democracy, to accomplish something worthwhile when so much is stacked against them managerially.

A professor of infrastructure development at the Manchester Business School, he has just completed a study with doctoral candidate Colm Lundrigan and Insead Professor Phanish Puranam on three British megaprojects, to understand the dynamics that seem inevitably to lead to cost overruns and failure to meet deadlines.

It's an unusual study because most of us prefer to complain about megaprojects than understand them, and the researchers have developed a new way to view their organizational structure. It's also timely, as Toronto prepares for the Pan Am and Parapan American Games this summer and governments consider reinvesting in infrastructure.

"Democracies are complex institutional contexts for megaprojects. We were not interested in how China or Qatar do it but Anglo-Saxon democracies, which seem to systematically not deliver on time and on budget. And often they end up with white elephants," he said in an interview.

They looked at three projects in London: The 2012 Olympic Park, Heathrow Airport's Terminal 2, and the Crossrail development to increase the capacity of London's railway network by 10 per cent. A key finding, requiring a conceptual reboot for most of us, is that for public efforts in Western democracies, there is not a single actor in control of the vision and implementation. Instead, megaprojects are produced by a network of private and public entities. The goals and strategies are forged by a core group of key stakeholders representing governments, land and resource ownership, public interest and local communities. That means compromise is needed to develop consensus and that can, of course, be unwieldy since sometimes the key players will have opposing viewpoints.

As well, the influential core coalition guiding the effort is not static. New players join and demand big changes, while others drift off or take a lesser role. The changes can affect costs, scheduling, and scope of the effort. New expectations develop but the problem is that the public tends to be fixated on the original promises and not easily persuaded that the new budget isn't an overrun driven by incompetence and similarly hapless scheduling changes. "It keeps evolving but the public is hoping it won't evolve," he said.

He compares a megaproject to Facebook, which has a small, closed core of people that operate the social media empire. They meet in private and then announce their changes, with users, who produce the content, adapting. But in a megaproject, it's far more open at the core. The London Olympics started with the British Olympic Association, the Mayor of London, and the country's government, but they couldn't just announce and implement. They needed to bring others under the core umbrella – first the boroughs where installations were to be placed – each of which wanted something for their co-operation. Architects, for example, wanted signature assets created by luminaries.

When corporations undertake big projects, they select their designers and builders carefully. But government projects require a tender process that is focused on getting the best price. He also notes that when tenders are issued, the managers are pretending to know what they want. So bidders lowball against poorly framed guidelines. "Surprise, surprise – you find out it's impossible to deliver at the price they promised and it goes up," he said.

In the United Kingdom, the tendency now is to effectively have two budgets. "The government realizes the people and press want to believe for the next 10 years the budget price won't change. So they build in contingencies that allow them to pretend the budget is under control. It's a gimmick, but it works," he says. The problem is that if you have money set aside for contingencies, it will be spent. But it protects the political actors.

As a megaproject's performance is usually judged on the gap between its initial targets and eventual progress, the researchers believe managers should do more to persuade leading stakeholders to delay the release of time and budget estimates for as long as possible. They should also be vague on completion dates. That's hard to do with the Olympics but more feasible with a railway, which can stage openings for different arms of the network. Megaproject managers should also keep the media and political opponents advised of developments to minimize headlines about overspending.

But it's also vital, he believes, that we change our thinking and stop being so quick to blame megaproject problems on managers and politicians, deeming them crooks and liars, and instead understand the complications of the process in a democracy.

"There's a lot of mistrust. But the world needs infrastructure. It's a pillar of economic development," he concluded.

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter

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