Taking the bias out of megaprojects

Oxford research is changing the way infrastructure and ICT projects are planned, managed, and assured

From rail links and power plants to major events and IT systems, large-scale projects and programmes are the key to innovation, change, and growth across the world. However, they often fail, going over-time and over-budget ‒ or at the very least not delivering all the benefits they promised at the outset.

Oxford research into why megaprojects and major programmes go wrong has informed the work of managers and policymakers in both the public and private sectors. It has contributed to improved decision-making and better management of projects. In particular, it has provided a means of identifying early indicators of projects that are at high risk of failure.

Research by academics at the BT Centre for Programme Management in the Saïd Business School focused on building a database of 1,493 transport infrastructure projects from 34 different countries, dating back 90 years. The team found that at the root of cost overruns, schedule delays, and benefits shortfalls were optimism bias and strategic misrepresentation. That is, that the people running the projects either had a naïve belief that nothing bad could possibly happen to them, or they deliberately under-estimated the costs and over-estimated the benefits just to get the projects off the ground. Based on these findings, the research team developed an eight-step theoretical process model to conduct quality control and due diligence of decision making on megaprojects.

A second, more recent, stream of research looking at ICT projects challenged prevailing assumptions about social and technical complexity as a factor influencing project performance. The research was based on a global sample of nearly 4,300 projects from 189 public and private sector organisations. The key finding was that ICT projects were more often scuppered by a rare and unexpected event than by a problem that is common and predictable. Decision-makers tend to ignore these low-probability events in calculating risk – to their peril.

This body of research has had a direct impact on how megaprojects are implemented and measured in a range of sectors worldwide. Researchers worked with the UK’s National Audit Office (NAO) to identify measures of project complexity which would help identify high-risk projects. 10 factors were identified, showing that risks are mostly associated with the social and political environment of projects. In January 2013, this new assessment was rolled out as part of Infrastructure UK‘s ‘route map toolkit’ and applied to the pipeline of 576 projects worth GBP 300 billion.

A series of workshops about the research helped management consultancy McKinsey re-conceptualise their way of thinking about project management and change their methodology. McKinsey consultants then applied this new ‘value assurance’ methodology to advise more than 30 global clients between 2012 and 2013.

In 2012, Bent Flyvbjerg, BT Professor and Chair of Major Programme Management at Saïd Business School, University of Oxford, advised the US Government Accountability Office (GAO) on assessing the California High Speed Rail project ‒ at USD 51.8bn, the federal government‘s single largest civil investment. At the time, estimates showed that it was heading for USD 90bn at the end of the first phase alone. Professor Flyvjberg’s methodology allowed GAO to develop a definition of what it considers best practice, and also made the project team consider more realistic and de-biased cost and revenue forecasts.

Research team