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MegaProjects and Risk: An Anatomy of Ambition

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Abstract

Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multi-billion dollar megaprojects systematically and self-servingly misinform parliaments, the public and the media in order to get projects approved and built. It shows, in unusual depth, how the formula for approval is an unhealthy cocktail of underestimated costs, overestimated revenues, undervalued environmental impacts and overvalued economic development effects. This results in projects that are extremely risky, but where the risk is concealed from MPs, taxpayers and investors. The authors not only explore the problems but also suggest practical solutions drawing on theory, experience and hard, scientific evidence from the several hundred projects in twenty nations and five continents that illustrate the book. Accessibly written, it will be the standard reference for students, scholars, planners, economists, auditors, politicians and interested citizens for many years to come.
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... The rapid development of mega-transport projects can be viewed as an implication of globalising capital into cities (Chandrashekar and Aithal, 2021), aiming to improve countries' economic competitiveness. Flyvbjerg, Bruzelius, et al. (2003) observe the project development as a new politics of distance to eliminate distance friction and facilitate rapid mobility of capitals. This development often involves multiple stakeholders having diverse interests and operating at different spatial levels (Flyvbjerg, 2014;Marrewijk, Clegg, et al., 2008). ...
... However, stakeholders think, articulate, and frame issues strategically and in various ways. For example, project developers often shorten the duration of adverse effects to give the impression of low financial risks (Flyvbjerg, Bruzelius, et al., 2003;Mentis, 2015). Environmental groups are primarily concerned with prolonged and much broader adverse environmental impacts (Priemus, 2010). ...
... Our findings have also substantiated that the limited scale choice occurs from a lack of open-process auditing of impacts. From such behaviour, other stakeholders will likely be excluded (Flyvbjerg, Bruzelius, et al., 2003). Moreover, the owners may fail to capture various aspects associated with the sustainability of the development projects (Howitt, 2013;Stoffle, Stoffle, et al., 2013). ...
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Some urban megaprojects are framed as a strategic move to achieve broader economic benefits. Project proponents often claim that adverse socio-environmental effects are mitigated accordingly and that all aspects of sustainability are integrated successfully. Using a case study of the Bali Mandara highway, this study drew upon the politics of scale to investigate multiple frames of these effects and mitigation efforts on various scales (and levels). Semi-structured interviews were conducted, and secondary data sources were collected to explore and examine the variety and mix of the scale frames representing all sustainability aspects. Words and phrases related to scale-related issues were identified and tracked in the development phases (i.e., pre-construction, construction, and usage). The study shows that different stakeholders used specific preferred scale types to frame the effects and mitigation efforts, and these frames evolved throughout the project phases. Our findings substantiate that limited scale choices can occur from a lack of open process, resulting in a limited representation of all scale-related issues affecting the sustainability of the highway project development. This paper adds insights into the use of scale to explore the broad effects of urban megaprojects and calls for more transparent and accountable impact audits.
... The reason for many of the overruns is attributed to "insufficient realism in the original estimates" [1], which do not take into account unforeseen costs, or do not take into account, but not significantly, the cost of stoppages during construction, which may occur not only for organizational reasons, but also due to technological difficulties arising during the construction, a unique object. Safety and environmental compliance costs are not fully taken into account and since each project is unique, modern forecasting tools are unable to account for all the possible factors that may affect the progress of the project. ...
... The results of these studies are similar to those conducted earlier, namely it was shown that among those projects, which were involved in the analysis, in nine out of ten there is cost overrun, the real cost of all types of projects is higher by 28% than the estimated. At the same time, for railway projects the excess is 45% [1]. ...
... Considering the cost structure related to appreciation of actual costs against estimated ones, ac-cording to Sibgiprotrans data it is the following: provision of new railway lines with high carrying capacity -30%; difficult accessibility and uninhabited regions of development -27%; unfavorable topographic, climatic, engineering and geological conditions -22%; permafrost and high seismicity -21% [14, p. 558]. However, the authors of the monograph [1] list seven more significant reasons for failed forecasts: inadequacy of the effectiveness assessment methodologies used; lack of accumulated data on similar projects; inconsistent model of human behavior and, as a consequence, demand and supply; changes in external influencing factors; changes in the political situation; subjectivity of those interested in implementing the project. All these factors in one way or another represent the game of a person with the external environment. ...
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... These principles include risk, leadership, stakeholders, team, quality, and complexity. Project risk and complexity are among the main principles receiving significant attention in the project management literature (Doskočil and Lacko 2018;Flyvbjerg and Bruzelius 2003;Williams 2017;Winch and Maytorena 2011). It is worth noting that the lack of information (visibility and data transparency) is among the main reasons for increased risks in managing complex projects (Costantino et al. 2015). ...
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... From a scientific point of view, this creates uncertainties that cause uncertainty about how to evaluate and select the most suitable project alternative [1]. Unfortunately, neither the researchers of operations in the past nor the current generation of authors of econometric methods and models have so far proposed constructive approaches to solving this problem in the general case. ...
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... During the land acquisition phase, the projects are vulnerable to cost and time overruns due to lengthy and protracted land acquisition processes, particularly when the land acquisitions are carried out simultaneously with construction activities (Bagui and Ghosh, 2013;Babatunde, Adeniyi, and Awodele, 2017;Le et al., 2019). During the design and construction phases, there are many construction-related risk events, including unclear output specifications (Akintoye and Beck, 2009;Javed, Lam, and Chan, 2014); increase in construction costs (Flyvbjerg, Bruzelius, and Rothengatter, 2003;Bain, 2007); and changes in the scope of work after the contract is signed (Tan, 2009;Walker and Jacobsson, 2014;Permatasari, Hardjosoekarto, and Salomo, 2020). ...
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... During the land acquisition phase, the projects are vulnerable to cost and time overruns due to lengthy and protracted land acquisition processes, particularly when the land acquisitions are carried out simultaneously with construction activities (Bagui and Ghosh, 2013;Babatunde, Adeniyi, and Awodele, 2017;Le et al., 2019). During the design and construction phases, there are many construction-related risk events, including unclear output specifications (Akintoye and Beck, 2009;Javed, Lam, and Chan, 2014); increase in construction costs (Flyvbjerg, Bruzelius, and Rothengatter, 2003;Bain, 2007); and changes in the scope of work after the contract is signed (Tan, 2009;Walker and Jacobsson, 2014;Permatasari, Hardjosoekarto, and Salomo, 2020). ...
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... Secondly, the benefit of investment is positively correlated with economic growth. This means that if the growth is promising, the project will go well; if the growth is low, the project will perform poorly [7] . ...
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