Emergent Cross-Case and Cross-Sectoral Themes from the MEGAPROJECT Portfolio:

An Interim Review

A document produced for The MEGAPROJECT COST Action: TU10003

Naomi Brookes

January 2012

Emergent Cross-Case and Cross-Sectoral Themes from the MEGAPROJECT Portfolio

Introduction and Aim

The aim of this monograph is to bring together the diverse work streams that have been undertaken within the MEGAPROJECT COST Action. Its aim is to identifycross-case themes that emerge from the behaviour of the megaprojects in the MEGAPROJECT case portfolio. These themes are then triangulated to establish meta-themes that relate to the whole of the MEGAPROJECT portfolio across sectoral boundaries. This paper follows the initial work published in “MEGAPROJECT Cross- Case Themes: An Initial Examination” produced in April 2012.

Existing Work Streams

The following represent the work streams carried out under the auspices of the MEGAPROJECT COST Action to establish cross-case themes:

  • The Cross-Sectoral Working Group’s Activities
  • The Transport Working Group’s Activities
  • The Energy Working Group Activities
  • Initial Review
  • Inductive and Deductive Approaches
  • Semantic Analysis
  • Non-Parametric Statistical Analysis Approach to verification
  • The Transport Working Group Activities
  • The non-parametric statistical analysis of the whole MEGAPROJECT portfolio
  • The MEGAPROJECT Training School and Think Tank held on 30/11/12 – 2/11/12
  • A Short-Term Scientific Mission undertaken between Robert Hickey and Professor Mauro Mancini at the Politecnicodi Milano

All of these work streams have produced individual reports that are available from the MEGAPROJECT Project Executive, Sarah King, at . This monograph has used these reports in its construction.

The Cross-Sectoral Working Group Activities

These activities have been coordinated through two working group meetings: one held at the last Whole Action Workshop in Bratislava and one held in Edinburgh in September. Emergent cross-case themes and potential hypotheses were identified through a brainstorming process and the results of this are presented in the table below.

Origin of Thematic Finding / Thematic Finding
Cross-SectoralWorking Group / EMERGING THEMES
  • Designing megaprojects – the differences depending on the starting points, with some of them renewals of former projects, some running for years and changing and some with purely new start
  • Designing megaprojects – the difference related with the type of investments and management, some fully private, some fully public and those most difficult with a combination of public and private money and/or management of the process
  • Defining the project value and the different incentives to it
  • The relation between the complexity, predictability, goals and objectives in a megaproject
  • The accessibility of data on the a megaproject
  • Regulations and limitations when a megaproject is financed under a EU funds (programmes like Jessica and the ERDF projects)
  • Contractual agreements in the megaprojects and their specifics in the time and decision making
  • Clear definition of a business model, influencing the final outcomes (products) of it
  • Risk management challenges with megaprojects
  • Identifying the performance “gap” between the majour projects and the mega projects – possible implications on the EU terminology
  • Evaluation tools application to mega projects – the specifics of the Cost Benefit Analysis
  • The models of technology parks design and development – comparative analysis between Scandinavian and South-East European practices
POTENTIAL HYPOTHESES(not proven)
‘Heavy’ Front End:
  • Sound planning leads to successful megaproject performance
  • A clear definition of the business model of the megaproject leads to successful megaproject performance
  • Early involvement of the supplier network leads to successful project performance
  • A correct balance between strong leadership and participative leadership leads to successful megaproject performance.
Dealing with Uncertainty:
  • Project management can not avoid uncertainty
Complex Multi-Programs:
  • Business models of products have impact on project performance
Institutional Impact:
Hypothesis
  • Good balancing of strong leadership and stakeholder participation has a high impact on project success

Table 1: The Cross-Sectoral Working Group’s Thematic Findings

The Transport Working Group’s Activities

These activities have been coordinated through two working group meetings: one held at the last Whole Action Workshop in Bratislava and one held in Brussels in November. The Transport Working Group has used the work of the Energy Working Group as a ‘seed’ to brainstorm further hypotheses that relate megaproject performance to its characteristics. The working group aims to adopt a ‘fuzzy logic’ approach to ratifying these hypotheses and is, to this end, devising a range of granulations and scaled linguistic variables to describe each of these granulations. These are provided in Annex A of this monograph. As of yet, these hypotheses have not been empirically tested.

The Energy Working Group’s Activities

The Energy Working Group began the initial construction of a set of cross-case themes in its Working Group meetings in the first Year of MEGAPROJECT’s operation. This work has been further developed and coordinated through two working group meetings: one held at the last Whole Action Workshop in Bratislava and one held in Milano in July 2012. Three processes were investigated to generate cross-case themes:

  • An inductive process inspired by Eisenhardt’s work(Eisenhardt 1989)
  • A deductive approach based on operationalising hypotheses (generated by a brainstorming process) and verifying these through the case portfolio
  • A semantic based rule elicitation and validation process

Theprocessesused for the first two of theseapproaches are illustrated in the figures below:

Figure 1: ‘Operationalising Brainstormed Hypotheses’ Approach

Figure 2 Inductive Approach to Hypothesis Generation

The relative advantages of deductive and inductive approaches are discussed in the MEGAPROJECT Monograph entitled “Inductive and Deductive Theory Generation from Case Studies: The Experience of the MEGAPROJECT COST Action” produced in August 2012. The inductive approach did produce additional propositions to those generated through the deductive approach. These propositions were then operationalised into a series of formal hypotheses which were tested using the Fisher Exact test to examine if they were (or were not) supported by the MEGAPROJECT Energy Portofolio. This process was then replicated for the whole of the MEGAPROJECT portfolio and is described in this context in more detail elsewhere in this monograph.

A semantic based rule elicitation and validation processwascarried out using the followingphases:

  • Semantic clustering of individual brainstormed propositions to derive from these a set of clusters, with attached concise statements (typically of a maximum of twenty words) reflecting most of the ideas in each cluster. This was done manually for the purposes of MEGAPROJECT but would normally be performed by automated linguistic analysis tools. These semantic aggregated clusters become hypothesis,
  • Hypothesis validation where each case was assessed by each author checking whether each case satisfied either in binary terms (i.e. Yes/No) or insome form of percentage evaluation/in. (In this phase It wasmandatory that all completed cases were included.) Then an average (with spread) hypothesis validity (from the case sample base ) was computed for each hypothesis across the case sample. (In this phase hypotheses with over 50 % validation are frozen and become rules; those with less than typically 50 % validation are normally discarded, or the hypothesis is refined, and the process starts over again untill convergence on a stable small set of revised hypotheses with all >50 % validity.)
  • Group rule validationwas performed at the end, to avoid that the accepted rules are not just "motherhood statements" .(This is normally achieved by sending back the set of rules to all case authors asking them if that *set of rules* has jointly covered eg. at least 75 % of the general and specific issues in each case.)

This approach produced two semantic based ‘rules’ for MEGAPROJECTS which are contained in Table 2 below. (Successive refinements and increments could have been continued.) Table 2 also contains summaries of the propositions generated by the other Energy Working Group activities.

Activity / Thematic Finding
Initial Milano Meeting /
  • The more unemployment in the megaproject’s local environments, the less resistance to it from local residents. (H, M)
  • The more local residents perceive property values to increase/decrease, the less/more resistance to the megaproject. ( D, H)
  • The more spending by the megaproject on the local community, the less the resistance to the megaproject ( A, H, M)
  • The more trust the general population has in regulators, the less opposition to megaprojects ( F, H)
  • The successful completion of a megaproject requires a specific articulation of national government support ( M, H, G)
  • The more ‘mega’ the megaproject, the more difficult to identify the stakeholders and the more likely for the stakeholders and their needs to change during the lifecycle of the megaproject (M,H,A,M,G,F)
  • The more innovative the megaproject, the more likely to fail to meet iron triangle success criteria (supporting proposition G, F not supporting proposition A)
SIMILARITIES IN MEGAPROJECTS
Formation of project based organisations (H,G, A, M?)
There is frequently a joint venture organisation ( often an equity joint venture) formed between organisations to be the client/owner for the megaproject. The degree to which this is a ‘real’ organisation ( staffed with people and with project management responsibility) or a ‘ghost’ organisation ( not staffed with the project activities still being undertaken by the owners varies.
Financing of Megaprojects ( H,G,A, M)
Most megaprojects are financed by consortia of organisations and not by a single organisation.
Similar Patterns of Actors (H,G,A,F,M,D)
Energy Megaprojects in Europe have a similar pattern of stakeholder actors and those actors are often act in the same capacity across a number of cases:
  • Owners (either directly or of temporary project organisation): Trans-European Energy Companies with a substantive state ownership, e.g. E-ON, RWE, EDF, ENEL
  • Prime contractors: Turbo-machinery ( Siemens, Rolls-Royce, Alstom); Nuclear Steam Systems (Arreva); EPC ( Aker, Fluor, AMEC, Saipem
Optimism Bias (G, H, F, A?)
Energy Megaprojects do demonstrate optimism bias in the forecasts of leadtime and costs for completion but the reason for this is not clear. (It does not seem to be for reasons of misrepresentation to create a business case c.f. Flyvbjerg)
Lack of Scope Changes (G,H, A,F,D?)
Energy megaprojects don’t seem subject to scope creep (e.g. target for MWe seems to remain the same throughout the project)
Similarities in Scale (G,H,A,F)
Energy megaprojects in Europe seem to be of a similar scale. They take about 10 years from the first project idea to full operation. They involve a peak of 3000-5000 in construction. The y cosy €2bn-€7bn
Semantic Based Rule Elicitation /
  • Good management and good outcomes on projects are correlated.
  • Links and incentives must be created for success for the different categories of Users and Builders

Table 2: TheEnergy Working Group’s Thematic Findings

The MEGAPROJECT Training School and Think-Tank

The first MEGAPROJECT Training School and ‘Think-Tank’ was held in Leeds on November 30th – December 2nd 2012. This event had dual aims:

  • To develop the skills in cross-case analysis of Early-Stage Researchers(ESRs) involved in the project
  • To use these skills to review the whole of the MEGAPROJECT portfolio to identify emergent themes.

To this end, the ESR’s were divided into four groups and each tasked with giving their view on emergent themes in the MEGAPROJECT portfolio. Each team produced an individual report summarizing their perspective on emergent themes and the process that they used to establish these. Individual reports are available from the Project Executive, Sarah King, at . The emergent findings of each group are summarized in the table below along with additional comments. It is to be noted that all groups found the construct of ‘project success’ as difficult to operationalise in a unitary fashion.

Group / Thematic Finding / Comments
Group A /
  • the presence of only one major stakeholder is related to a delay in construction and project and costs
  • the megaproject having national public acceptability (no protest at the national) is associated with the project being on budget
  • the mega-project fitting into the long-term plan of the country’s government is associated with no delay in construction and the project no going over budget.
But evidence is not conclusive / Difficulty of success/failure as a construct
Need for a ‘mediating factor’ to explain the results (see diagram below

Group B /
  • Increasing prices of equipment/technology impact upon cost
  • Environmentalist groups delay projects and have impact on cost
  • Additional requirements of authorities increase costs
  • Good stakeholder management has a positive impact on performance
  • Congruency between needs (e.g. needs of community) and project goals improves performance
  • Congruency between political goals (e.g. change in environmental law) and project goals improves performance

Group C /
  • The typology of contract doesn’t affect the project acceptance.
  • Stakeholder network complexity always occurs (megaprojects are complex by definition), but seems to have no so much impact on project acceptance.
  • Project output performance (understood as Time, Cost , Quality) seems to be always weak but have no so significant impact on project acceptance
  • Environment conditions (understood as legal, political as economic) have not much impact on project acceptance.
/ Project ‘success’ is a problematic construct therefore derived a new performance characteristic , ‘project acceptance’
Group D / Tentative links surrounding local stakeholder involvement

Table 3 The Training School’s Thematic Findings

Short Term Scientific Mission(STSM) hosted by Professor Mauro Mancini at the Politecnicodi Milano.

The Short-Term Scientific Mission (STSM) was undertaken by Robert Hickey of the International Business School in Bulgaria in June 2012 Its aimwas to develop the work of the Energy Working Group in a cross-case analysis for the MEGAPROJECT portfolio and to understand the implications for using it more widely in the MEGAPROJECT Action. This included:

  • Laying the groundwork for testing the hypotheses and questions posed during the Energy Working Group brainstorming session, by identifying related project characteristic information that is needed to test the validity of the hypotheses for the megaprojects in the energy and cross-sectoral case studies. It also included adding hypothesis, questions and potential lines of analysis for determining success factors for megaprojects.
  • Reflecting on the implications of the energy theme methodology to the cross-sectoral case studies.
  • Identifying methodologies that would help identify cross-case themes in the Megaprojects case studies through the development of a bibliography.

The findings of the STSM are contained in a separate report produced by Robert Hickey and are summarised in Table 4. A table was designed to capture if a relationship between a postulated construct and megaproject performance could be viewed as positive or negative, weak or strong, or unconfirmed. The process was based on approaches to capturing MEGAPROJECT performance derived by Merrow (2011).Constructing the table highlighted the need to return to the original cases and to supplement them.

Thematic Finding
  • Off-site construction is associated with cost overruns
  • Highly innovative projects are associated with cost over-runs
  • Less spending on the local community is associated with slips in schedule
  • The passage of unforeseen regulations is associated with schedule slippage
  • Changes in ownership structure are associated with schedule slippage
  • Decreases in local property values as a result of a megaproject are associated with schedule slippage.

Table 4: Thematic Findings of the STSM

The non-parametric statistical analysis of the whole MEGAPROJECT portfolio

As a development of the work of the Energy Working Group, Giorgio Locatelli assisted by Naomi Brookes and Sarah King, undertook an analysis to ascertain statistically significant relationships between megaproject characteristics and megaproject performance. An overview of this activity is contained in a power-point presentation and is obtainable from the Project Executive, Sarah King, at . Theoperationalised MEGAPROJECT characteristics derived by the Energy Working Group were used to code the remainder of cases from the MEGAPROJECT portfolio. These characteristics were operationalised in a binary fashion (i.e. either present or not present). These characteristics are shown in Table 5.

Brainstormed Megaproject Characteristics
Project has a foreign EPC company
Siemens is involved as a contractor in the project
There is a presence of one major stakeholder
The EPC has a clear goal
The project is mono Cultural
More than 50% share of the client is under government control
An experienced project director is present
Green Peace or other international environmental activists have been involved in the project
The project has national public acceptability (no protest at national level)
The project has local public acceptability (no protest at local levels)
Environmental activists and regulators have been engaged ex-ante, not ex post
Local communities had a conservative attitude to development
Investment on external communication was above 0,01% of the total budget
The project has a strong regulation system as evidenced by:
a) The authority stopped the project or similar projects in the same country
b) The authority give fine to the EPC (main contractor) or one of the internal stakeholders in the project
c) The project start has been delayed by the authority
The project fit in the long term plan of the country's government
There is planned a long term stability in usage and value
The project enjoys political support as evidence by:
a) Support of the central government
b) Support of the local government
The megaproject is decomposed in many sub-projects which can use the learnings from other project
Heavy usage of planning by milestones
Heavy usage of Formal project management tool and technique
Usage of performance metrics
Client and Owner are different
Turn key contract between Client and EPC (main contractor)
There is a formal litigation procedure (e.g. international chamber of commerce) between Client and EPC
Project has a high quality feasibility study
Project has a well developed FEED
Modular project - consider only the related sentences below -
a) The project is modular - dependent modules
b) The project is modular - independent modules
High level of technical innovation
FOAK (First Of A Kind) or unique Project (like Veneziamose)
Tough environmental condition (dangerous local situation)
Tough physical or environmental conditions
Financial Support from the European Union
Financial Support from the national government
National Public Acceptability
Local Public Acceptability
Local residents were involved in the project
Previous national similar project was successful
Unemployment in the area above national average
The population trusts the regulatory authority.
The Compensation of local community above 0,1% of the total budget
The density of population of the province is below the national average
The project is nuclear

Table 5: Brainstormed Characteristics that Affect Megaproject Performance