A megaproject is defined as a project costing over $1B. Edward W. Merrow's book, Industrial Megaprojects chronicles why big projects often fail. The getAbstract summary starts by citing some jarring examples:
Shell Oil's $10B Sakhalin-2 project came in at $22B ($12 billion over budget), and Russia nationalized a sizable part of the project.
BP's $5B Thunder Horse semi-submersible oil platform, a supposed technical marvel, experienced structural failure.
BHP's $2.6B Hot Briquetted Iron plant failed when an explosion killed one worker and seriously injured three others, and the company's market value decreased by more than 50%.
Planning and executing a big complex project is no easy task. Due to sheer size and associated complexity, Merrow points out that the common mistakes are:
"I want to keep it all."
Sponsors that develop megaproject deals in which they win big and other stakeholders lose are asking for big trouble.
"I want it now!"
Rushing a megaproject is a recipe for disaster. Cutting corners often costs more than handling matters properly.
"Don't worry; we'll work out the details of the deal later."
The initial deal should govern everything, including all project priorities and parameters.
"Why do we have to spend so much up front?"
For success, project owners must invest properly in front-end analysis, scope definition and strategic alignment, yet they are reluctant to pay large up-front sums in case the project gets canceled and they then get stuck with the bill. If that realistically could happen, the project already has big problems.
"We need to shave 20% off that number."
Insisting on arbitrary cuts on megaproject estimates means asking contractors to ignore their experience and knowledge about labor and equipment costs.
"The contractors should carry the risk; they're doing the project."
Contractors profit from selling services to project sponsors. Most cannot cover project losses.
"Fire those project managers who overrun our projects."
Project managers are seldom responsible for cost overruns. Usually, overruns stem from the sponsor not performing the necessary opportunity shaping.
Of note is that Merrow contends that many industrial corporations do not want to spend the necessary funds (3% to 5% of a megaproject's full capital cost) and the time (30% to 40% of the project's cycle time) on front-end loading activities. Such was not the case with a megaproject right in our own backyard. The participants included:
DPR Construction is a national general contractor and construction manager specializing in technically complex and sustainable projects for the advanced technology/mission critical, life sciences, healthcare, higher education, and corporate office markets.
The University of California at San Francisco is the only campus in the 10-campus UC system dedicated exclusively to the health sciences, employs about 22,800 faculty and staff, and generates nearly 17,000 additional jobs in the local community through its construction and expenditure projects.
The Stantec community unites more than 13,000 specialists that collaborate across disciplines and industries to make buildings, infrastructure, and energy and resource projects happen.
For the UCSF hospital, a $1.2B project, the management team (DPR/UCSF/Stantec) gathered people from each of the key disciplines of the process — about 85 people overall and got them into a room, right at the start of the project. These were owners, contractors, subcontractors — anyone who would have a role in building the hospital. Next the management team told them they weren't going to pour any concrete, or do any other construction, for 18 months. Instead of building a hospital, they were going to do something else — something much more valuable. They were going to build a virtual hospital. After creating a building information model (BIM) for the megaproject, they reaped its rewards.
Reduction in Rework
Before anything was actually built, the team found 3 million clashes, and 37,000 of those clashes would have been critical, change-order grade issues.
Work Got Done Faster
They were able to take advantage of some very efficient digital manufacturing technologies. For instance, all of the drywall was CNC-made, and as a result, they went from the typical 12% rework to less than 1%.
Don't have a COW, man
In the past they used a computer on wheels, or a "COW," as well as a lot of printed plans. Now, they could use iPads to keep track of everything, and this saved them millions of dollars, as well as being more convenient and efficient.
In an industry where 30% waste is a decades-old standard, this virtual-build-first approach helped them to save $100 million on construction costs.
So here is a megaproject where Revit software supported architectural design, MEP engineering, structural engineering, and construction — all from the unified BIM. The savings were made possible because the BIM was regarded as the single source of truth during the execution of the project. There were even times when construction crews refused to act until issues were ironed out in the BIM.
So if you want to avoid the 7 common mistakes associated with a megaproject, the first step is to construct a building information model. It is great to see Autodesk software make such a significant contribution to such large projects.
BIM is alive in the lab.