construction density of megaprojects as it has reached its peak in history .... conflicts, it stood up to first oil emergency after being ousted from United Nations.
MEGAPROJECTS FAILURE/SUCCESS PERCEPTION “A Comprehensive approach towards megaprojects unique nature”
Contents: I. II.
III. IV.
Introduction; Megaprojects within a social context Why do projects fail? vs megaprojects i. The Definition Process “Contingency Theory” – “ uncertainty management” ii. Megaprojects; Keep It Simple? Appraisal Optimism; “underestimating costs in megaprojects” i. Error or lie? “Safety Valve Theory” - “Social Conflict Theory” Conclusion Keywords: MegaProject Risk Planning, Project life cycle, Definition process, Sociological sense; “Social Conflict Theory”; “Safety Valve Theory” – Appraisal optimism, Feasibility Studies, Simplicity, “Contingency theory”
i.
Introduction :
In times of Social conflicts, Megaprojects are found to be an optimistic effective solution for lifting the status of a society in global political, economic systems and other aspects of society. Nowadays, higher attention is being directed towards the construction density of megaprojects as it has reached its peak in history (Zhao, 2006). However, this is not to say that megaprojects are capable of catching up with the new stage in the globalization pace of development. According to Turner and Muller (2003), it is important to acknowledge that a megaproject is not simply a project, Lack of a new perception, new tools, criteria and concepts is a vital problem to understand megaprojects. How did “appraisal optimism” influence megaprojects into failing to meet the planned schedule and budget although the feasibility studies were approved just like the Euro Fighter Typhoon/channel tunnel? Why has a project like the Opera Sydney House caused disputes though it was finished a long time ago? In order to answer these questions, Stakeholders should follow an integrated approach in recognizing megaprojects function within the surrounding social context as well as other fundamental factors, G.Jia et al. (2011) stated that “a megaproject is the outcome of a social conflict” as well as “it functions as a safety valve in the society”. This literature gives megaprojects a perception in a sociological sense, explaining how an optimistic bias feasibility study can both solve social conflicts as well as causing them in terms of risk.
ii.
Why Projects Fail?
i.
The Definition Process “Contingency Theory”
“ Early Project Life Cycle - “ Feasibility study” -
According to Elearn (2005), a project passes by a multiple stages starting from the definition process-“conceptualization” process to the projects termination, the definition process is defined in the first stage of a project life cycle, where multiple complex layers of feasibility studies and specifications are conducted establishing its size, scope and complexity. Hoagland and Williamson, 2000, clarified that a “feasibility study” is done to determine whether the project is realistic, practical and viable preventing any optimistic bias perspectives that only focuses on the positive aspects leaving out the negatives of the opportunity. In other words, it answers the question “should/can we proceed with the proposed project?”. The pre stage is called “Prefeasibility study” and it is done in multiple scenarios to determine which scenario is more acceptable and successful. Hoagland and Williamson, 2000, set the guidelines for cooperatives when conducting a feasibility study to follow in order to make the right decisions for the success of their project; • • • • • •
Firm situation and competition with other Source of raw product. Assembly distribution. Sustainable site location in terms of access to transportation-water and surroundings. Waste and sewage disposal accessibility. Labor supply; local skilled labors and so on.
The “Iron triangle” Cost, time and quality have become inevitably related to defining a projects success in terms of project management and planning over the last 50 years (Atkinson 1999). Consequently, the project’s success is inevitably related to a successful definition process which includes accurate feasibility studies unbiased of optimism. When projects fail, mostly the investigation is fixated towards the technical and the engineering reasons. Yet, in many cases the main problems are based on the managerial process in the early “Definition Process” (Suaser, Reilly and Shenhar, 2009). According to Kerzner, (n.d), typical reasons for a projects failure are; • • • • •
weak initial business case business case deterioration Scope creep poor financial feasibility studies optimistic technological advance
• • • • •
Poor project definition Environmental factors outdating the scope Corporate vision not meeting different stakeholders in terms of goals weak communication between different stakeholders Poor project management; team members have a poor understanding of project management, etc.
A complex multi-layered “definition process” for the project and the feasibility studies reduces the amount of risks and uncertainties as much as possible. Ward and Chapman (2003) stated that “the term project risk management should be transformed into project uncertainty management” as the term “risk” draws in a restricted focus on the management of project uncertainty, the term “risk” gives more of a threatening perspective as well as being linked to events rather than more general resources of significant uncertainty. Outlining how risk management can be modified to opportunity management through understanding the origins of project uncertainties before seeking to manage it which removes all sorts of optimistic decisions. According to Suaser et al, 2009, The “Contingency approach” to project risk management considers finding the extent of fit or misfit between project characteristics and project management approach. Applying that theory through analysis and testing could allocate the magnitude of the uncertainties in order to probably avoid them and turn them into an opportunity “opportunity management”.
ii.
Megaprojects; Keep It Simple?
According to Terano (2008), a common expression in project planning, Keeping it “Simple Stupid”, or the “KISS principle”. Portrayed as an outline standard that targets keeping the utilized techniques, all the more formally said is diminishing many-sided complexity as could be expected and simple as would be prudent to comprehend and repair (stupid). The reason for doing so is that with the reduction of complexity in later project life cycle stages comes a reduction of uncertainty management (Antoniadis et al., 2011). Vidal et al. (2011) stated that a project complexity is the property of an undertaking which makes it hard to comprehend, predict and hold under control its general conduct, actually when given sensibly finish data about the project framework. However, there are some apparent disadvantages in the simplification method. Generally critically, a project could get to be excessively simple that the attention on keeping a tight control on time and plan could prompt an underperformance in achieving the project quality and targets, However, the input of complexity in the early stages “project definition” is necessary, on the other hand reducing complexity in the more strategic phases “execution stages” can be extremely beneficial.
Megaproject planners need to take into account the "secondary key factors" from the initial stages of planning so that people can guarantee the megaproject to play a positive role for social, political and economical purposes as most planners only focus on the main factor for the project neglecting the other factors. Furthermore, planners should consider the project life cycle of a megaproject which differs from an ordinary project in terms of feasibility studies; megaprojects need more advanced technology, investment and a much more advanced construction process. megaprojects also have another important aspect which is post contruction phase that has to be calculated in the feasibility studies which is the sustainable maintanence and the operation of the project after completion. An organization called Veterans Affairs responsible for the maintanence of more than 2000 buildings in the U.S, they found that the mantainence costs are 6.7 times the conctruction costs (Zhou, 2009).
iii.
Appraisal Optimism; “Underestimating costs in megaprojects”
i.
Error or lie? “Safety Valve Theory”
Comparative studies of real and estimated costs in megaproject development are few. Where studies exist yet in a more specified project types in a more systematic and statistical analysis. (bruzelius et al., 1980; Nijkamp & Ubbe,s, 1990; skamris & flyvbjerg, 1997; szyliowicz & Goetz, 1995; Walmsley & pickett, 1992). Regardless, these studies haven't statistically conveyed any legitimate answers whether cost estimates are due to an error or a lie in for understanding of the mismatch. Pickrell (1990) concludes the inaccuracy of the cost assessments, notwithstanding that the actual costs are typically much higher than the estimated costs due to appraisal optimism, then again, Nijkamp and Ubbels (1999) claim that the cost estimates are fairly correct. Flyvbjerg, Holm and buhl, 2002, support the “social conflict theory-fig.1” by concluding that the cost estimates used in public confrontations of social conflicts, media scopes and decision making for megaproject development are exceptionally, systematically optimist bias and deceptive to maintain a strategic distance from any social clashes. In 9 out of 10 transportation megaprojects, expenses are underestimated, For all megaprojects, actual costs are all things considered 28% higher than estimated costs. Conflicts may act as a catalyst to form new better process. Taking America for instance, each social conflict caused the draft of new law to better secure the privileges of regular citizens. The constitutional struggle in the early 70s of eighteenth century created the Constitution and Bill of rights; in the nineteenth century, the civil war brought individuals the Civil rights act and Supplementary terms of Constitutional 14 article (Dahrendorf, 2007).
In support to that comes the “safety valve theory”; According to G.Jia et al. (2011), megaprojects function as a safety valve in the society. Coser enhanced Simmel’s perspective “ first to propose the theory”, Comparing the social conflicts capacity of a social valve to that of a boiler, venting out all the threatening vibe sentiments and emotions. Consequently, a stable social structure is established. (Chen and Gao, 2009). However, it is common to see the failure of a megaproject particularly in a rigid society to function as a “safety valve. In the event that the mechanism of rule-adjust alter can't be acknowledged, then once a serious conflict develops, it can crush the social structure. Taking the poor economic situation in Taiwan in 1978 in Chiang Ching-kuo reign confronting a great deal of inward and outer conflicts, it stood up to first oil emergency after being ousted from United Nations. Needed to have an optimistic proposal to support the down-side situation, Chiang Ching-kuo acquired a lot of cash from different nations after acquiring different opinions, arranged and began an optimistic progression of "ten major construction projects". These optimistic bias decisions acted as a safety valve for Taiwan to escape from the situation and establish a strong framework for the later taking off of its economy resolving the social conflict (check table.1 for different examples). Fig 1. A conceptual model of megaproject from the perspective of conflict theory (G.Jia et al. 2011),
Table.1. Functions and dysfunctions of typical megaprojects (G.Jia et al. 2011),
iv.
Conclusion
In a brief, a megaproject is merely a project yet it has an unique nature of success/failure making it in a need of an additional criteria in comparison to ordinary projects, As a megaproject can be the outcome of a social conflict or an event and in process too many feasibility studies and appraisals are conducted to make it seem reasonable and avoid any negatively down sided conflicts. Optimism bias is required in certain conditions related to social conflicts and serious down-hills acting as a safety valve to the community. Megaprojects require a more complex project definition stage as planners need to take into account the "secondary key factors" from the initial stages of planning, ensuring that a megaproject makes a positive impact in a sociological sense. Additionally, planners should consider the project life cycle of a megaproject in terms of post construction phase in order to be sustainable as well as many complex factors in the early project life cycle stage “definition process”. This comprehensive approach creates a mechanism for which megaprojects can rely to.
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