Sixty-Five Percent Of All Mega-Projects Fail . . . For those of us in the project delivery business, this is a staggering statistic! 65% of all mega projects end up failing.
In this context, a mega project is loosely defined as a project over $1 billion USD and project failure is defined as one or more of the following:
- 25% over budget
- 25% behind schedule
- Not able to meet business objectives within one year of the facility start date
These mega project failures result in billions of additional dollars being spent every year to get the projects back on track and completed. Billions more are lost due to the late start and the inability to create product or provide services during this delay.
From 2013 to 2015, it was my privilege to participate in a research project with the Construction Industry Institute (CII). Our research was focused on the successful delivery of mega projects. In fact, our research project was called RT-315 – Successful Delivery of Mega-Projects. The research has now been completed and our results and recommendations were presented in Boston at CII’s annual conference in August 2015. They will be available for purchase from CII’s website in the near future.
So, what are the results and what can we do to avoid mega project failure? Our research team studied over 100 projects and identified over 130 factors that contribute to project failures. We prioritized and characterized these factors and narrowed them down to 34 Impact Factors within five major categories. These 34 Impact Factors were further refined through project surveys, interviews and case studies. The research identified the frequency of occurrence of these Impact Factors on mega projects as well as the cost, schedule and production impact if that Impact Factor did occur on the mega project.
I have listed the Impact Factors below for your reference.
Location and Technology
- A1 New or Unproven Technology
- A2 Logistics Challenges
- A3 Jurisdictional Complexities
- A4 Unavailability of Qualified Craftsmen
Team, Organization and Communications
- B1 Unplanned Changes in Key Personnel
- B2 Ineffective Stakeholder Communication
- B3 Multi-Location Challenges
- B4 Inadequate Organization Planning and Staffing
- B5 Ineffective Interface Management
- B6 Inadequate Document Management Plan
Planning and Execution Processes
- C1 Lack of Execution Input to FEP
- C2 Optimism Bias
- C3 Inadequate FEP Resources
- C4 Inadequate Risk Assessment & Mitigation
- C5 Inadequate Project Controls Systems
- C6 Lack of Execution Plan Alignment
- C7 Inadequate Integrated Schedule
- C8 Regulatory & Environmental Delays
- C9 Baseline Schedule Acceleration
- C10 Quality Compromised for Schedule
- C11 Ineffective Change Management
- C12 Incomprehensive Risk Management
- C13 Unfit Documents, Procedures, and Processes
Governance and Stakeholders
- D1 Unclear Definition of Roles, Responsibilities and Authority
- D2 Inadequate Size, Skills, and Experience of Project Management Team
- D3 Cultural Differences Across Stakeholders
- D4 Inadequate Owner Participation in Risk Management
- D5 Misalignment Within Partner Organization
- E1 Inappropriate Project Delivery Contracting Strategy
- E2 Limited Capable Contractors
- E3 Unclear Scope Definition in Contracts
- E4 Unexpected Materials and/or Equipment delays.
- E5 Underperforming Contractor or Key Subcontractor
If you are in the project delivery business I highly recommend you understand the risk that these Impact Factors impose on your projects and build plans to ensure that the risks are mitigated. I also recommend going to CII’s website and purchasing the RT-315 research summary and the Mega Project Assessment of Criticality Tool (MPACT) and integrating this tool and process into your risk assessment and mitigation processes.