Managing Construction Megaprojects

Battersea Power Station - Managing Megaproject RiskLast year, Aconex announced its appointment as the construction management software provider for the redevelopment of Battersea Power Station, an iconic landmark in central London. By any measure, this is a construction megaproject – seven phases over a 10-to-15-year period and a total value of £8 billion GBP (US$13.6 billion).

Engineering News-Record (ENR) recently published a brief video of the Battersea Power Station project and the new community that will result from it.

Megaprojects = “Megarisk”

In the last several years, the increasing complexity of construction and engineering projects has bred a new species – the megaproject. With megaprojects comes “megarisk” – project risk so high that it requires a collaborative culture and industry-specific software to manage effectively.

In some cases, mitigating megarisk requires joint ventures, public-private partnerships (PPPs) and other creative alliances to share the exposure of stakeholders. The relative success of megaproject delivery can make or break careers for professional project managers directing teams of hundreds or thousands across organizational and geographic boundaries.

Project Risk Factors

Megaprojects pose a number of information and process management risk factors related to their size and scope:

  • Stakeholders and participants across hundreds of different organizations – each focused on its own interests in the project outcome
  • Millions of documents and several different document types, including 2D design drawings and 3D building information models (BIM)
  • Large files (up to a gigabyte or more) and total project data volume in the terabytes
  • Tens of millions of items of project correspondence, from requests for information (RFIs) and technical queries (TQs) to extension of time requests
  • Complex workflows reflecting the interdependencies of participants and stakeholders
  • High potential for conflict and disputes between organizations on the project team – which is exacerbated by the challenge of finding the right information when it’s needed.

The likelihood of schedule delays and cost overruns in megaprojects – as well as the “downside leverage” of these deviations from plan – is magnified by their complexity.

$40-Trillion Opportunity for Project Cost Savings

Joel Levy, editor of Construction Digital, recently published an article covering the work of Strategy& (formerly Booz & Company) on risk and inefficiency in construction megaprojects across all sectors globally.

Christopher Dann, a partner in the firm’s Energy, Chemicals and Utilities practice, says: “Because of the nature of the projects and the nature of the complexity, in short, projects that are that large and complex create systemic issues and interdependencies, so the risks are magnified.”

Levy cites Dann in identifying schedule delays and cost overruns amounting to 30% of project value. According to Dann, the 30% figure is a median average and could range as high as 200-300% for specific megaprojects. This creates a $40-trillion opportunity for savings over the next 20 years.

In Quartz, reporter Tim Fernholz paints an even more dramatic picture. He states that between $6 and $9 trillion – approximately 8% of annual worldwide economic production – is currently being spent on megaprojects. Citing the work of Oxford University economist Bent Flyvbjerg, Fernholz writes, “Nine out of ten projects faces a cost overrun, with costs 50% higher than expected in real terms not unusual.”

Project Controls for Risk Management

In Levy’s article, Dann calls out four key causes of megaproject inefficiency:

  1. Inadequate planning and analysis prior to construction
  2. Incomplete detail design engineering prior to construction
  3. Lack of unified construction partnerships between owners and contractors
  4. Ineffective project controls, which impact decision making and risk management throughout the project lifecycle.

The fourth point underscores the need for deep collaboration across large numbers of interdependent organizations whose common interest is successful project delivery. As Levy puts it, “Clients also seek Booz and Co’s advice on improving governance and project controls, with a view to streamlining decision making, project controls and risk management processes on projects. During execution planning, the execution can be optimised from a cost and schedule standpoint and the sequencing of activities or improving the efficient design of processes and activities.”

Successful Megaprojects

Despite the failure rates noted by industry observers, megaprojects can be and have been managed to positive outcomes. Here are several examples from the Aconex client portfolio:

Megaproject Success = Culture + Technology

The common denominators of the megaprojects listed above are: 1) a culture that fosters collaboration and teamwork between many different organizations; and 2) construction management software that improves visibility and mitigates risk. Clearly, the culture created by the project leadership led to the adoption of technology which systematized project collaboration.

Aconex provides owners and contractors with project controls to address specific risk factors:

  • Secure, cloud-based construction software for the exchange and management of all project information in one neutral location
  • Document management with version control for unlimited numbers of documents and multiple document types, from contract bids and RFIs to drawings and BIM models
  • Unlimited file sizes and data volumes to support project scalability through multiple phases
  • Unlimited project communications between large numbers of participants on a single platform to ensure delivery and highlight outstanding or overdue responses
  • Project-defined workflows for controlling all processes and managing interdependencies, including review and approval of plans, designs and documents
  • A permanent audit trail of all discussions, decisions and actions to resolve conflicts and pre-empt disputes between participants and stakeholders
  • Web search capabilities for fast, easy data retrieval to provide project-wide visibility, transparency and accountability.

To support the entire project lifecycle, Aconex also enables multi-company teams to collaborate on field inspections and checklists, as well as the development of comprehensive operation and maintenance (O&M) manuals before practical completion.

Manage a Megaproject – Manage Any Project

Aconex has helped owners and contractors deliver more than 16,000 construction projects across multiple industry sectors to date. We’ve learned that best practices in managing huge, complex developments generally apply to capital projects of all sizes. In other words, if you prepare your team to manage a megaproject, you’ll optimize your chances of success with any project.

Contact us today for a demo, and let’s talk about your projects – mega and otherwise.

 

Featured Image: Battersea Power Station – Andrew Missingham Creative Consultancy

Tod Bottari
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Tod Bottari

Communications Director at Aconex
Tod Bottari is the Communications Director for Aconex, the world's leading collaborative construction management software.
Tod Bottari
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