“Megaprojects” — defined as projects with budgets exceeding $1 billion — are important contributors to numerous sectors, including health care, defense, mining, telecommunications, transport, energy and water infrastructure, sporting events, science, and manufacturing. They represent a significant proportion of many nations’ economic activity and profoundly affect productivity, social cohesion, and the environment. Yet megaprojects have proved notoriously difficult to deliver on time and on budget; one estimate suggests that 90% of them end up over budget.
Based on more than 10 years of research into a number of megaprojects in London, including the infrastructure for the London 2012 Olympics and the construction of two new terminals at Heathrow Airport, the authors conclude that one way to manage the uncertainties inherent in megaprojects is to innovate throughout the course of the project. What’s more, they argue that their suggestions are applicable to all large-scale, long-term projects — not just projects with billon-dollar budgets.
Specifically, the authors offer five rules for innovation in large high-risk projects, providing managers with guidance on how to modify their plans and processes when opportunities arise or conditions change. The five rules are: (1) assess what’s worked before by studying comparable projects before
you begin; (2) organize for the unforeseen by encouraging project teams to be flexible and using more flexible contracts for more unpredictable parts of the project; (3) rehearse first by testing any new technologies and practices in off-site trials, dry runs, or other operational environments before introducing them to the large project; (4) calibrate and apportion risks appropriately by creating different contracts and collaborative arrangements to address the varying challenges of individual subprojects within the program; and (5) harness innovation from start to finish with an innovation strategy that can be communicated to partners working on the project.
“These simple rules,” the authors write, “challenge traditional project management, which has pushed too far toward control and prescription and been characterized by complicated, highly rigid contracts that stifle flexibility and innovation. These five rules might seem like common sense, but the marked failures of past megaprojects show the value of making such sense much more common.”