Part of the following is from our book on Leading Megaprojects, A Tailored Approach. It is about the illusion of risk transfer that project owners might experience as a result of fixed-price contracting. We will first address the culture of fixed-price contracting, and next, we will discuss the illusion of risk transfer.
Let me start with a few notes and clarifications. We define megaprojects as massive projects with capital costs around US$1 billion and a high level of complexity. Industrial megaprojects seem to perform better than infrastructure megaprojects. However, at best, what we have seen reported is a 35% success rate on the high end and as low as 0.5% on the questionable end. We do question the 0.5%, although it is reported by a reputable source. We also know that many organizations do follow a stage-gate process and might have project management systems. Then, why more projects fail than succeed? The response requires an analysis of the root causes. Next, the challenge is on finding a tailored approach for leading megaprojects concept to success. SUKAD has such an approach; therefore, it makes sense to write about it.
The following file includes the challenges that we have identified for megaprojects from observations, experience, literature review, and case studies. The table is from our book, Leading Megaprojects, A Tailored Approach, which is work in progress now.
Let us repeat the title question: Do project owners need help transforming to lead megaprojects? Studies by the Independent Project Analysis (IPA) and others have clearly identified a few key facts. The facts include project owners that manage their own projects directly, achieve better results than if the projects were managed by external parties. Another finding is that about half of their clients (IPA) have an organizational project management system (OPMS) that are poor or in needs of drastic improvements. Therefore, considering these two facts, then we raise more questions.
In the previous post, we wrote explaining why we are writing a book about megaprojects. In this post, I will share one of the chapters that discuss two megaprojects. These megaprojects share a lot of similarities but different outcomes. This chapter is from my upcoming book, Leading Megaprojects, a Tailored Approach.
We define megaprojects as massive projects with capital cost around US$1 billion and a high level of complexity. Industrial megaprojects seem to perform better than infrastructure megaprojects. However, at best, what we have seen reported is 35% success rate on the high end and as low as 0.5% on the other end. We do question the 0.5%, although it is reported by a reputable source. Then, the challenge is on finding a tailored approach for leading megaprojects and since we have such an approach, it makes sense to write about it.