Leland Teschler, Executive Editor
On Twitter @ DW—LeeTeschler
Governments today struggle with budgetary overruns and deficits, and the resultant wrangling has put what might be called megaprojects in the spotlight: Big bridges, high-speed rail lines, and new fighter jets that are all large-scale, complicated undertakings typically having price tags in the billions.
Of course, when a megaproject runs into trouble, the true price tag can exceed the total gross domestic product of some countries. For example, consider San Francisco’s new Bay Bridge. Originally estimated to cost $1 billion, it came in at $6.4 billion, a little less than the GDP of Kosovo. The total cost of the Joint Strike Fighter program has been estimated at $388 billion, 50% more than the initial projections and a bit more than the GDP of Austria.
The culprits usually fingered for massive cost overruns include multiple design changes, politics, and too little consideration of changing market conditions. But one interesting facet of megaprojects is that a high percentage of them are engineering efforts involving hundreds of not thousands of engineers. And engineers have a reputation for being both conservative and pragmatic – not the sort to underestimate obstacles. So it is worth pondering whether the engineers in these projects are victims of their circumstances or share some of the blame for mushrooming costs.
Insights on this subject come from University of Oxford business school professor Bent Flyvbjerg who has analyzed data on huge projects spanning 70 years. If nothing else, Flyvberg’s work shows that underestimates of problems in big projects are nothing new. He says several realities get glossed over or ignored in the execution of these boondoggles, and many of them have roots in engineering. For one thing, the technology and designs underlying megaprojects are often nonstandard or one-of-a-kind. That tends to make participants see their project as unique, so they think the lessons-learned from other projects don’t apply. Similarly, planners sometimes over-commit to specific project concepts at an early stage. The analysis of alternatives tends to be given short shrift or not done at all.
And despite engineers’ fondness for citing Murphy’s Law, evidence indicates they don’t account for Murphy in their planning. Flyvbjerg says statistical evidence shows that managers tend to ignore the unpredictable nature of big undertakings and often treat projects “as if they exist largely in a deterministic, Newtonian world of cause, effect, and control.”
All these difficulties compound, leading to misinformation about price tags, schedules, benefits. and risks. The result is a mixture of cost overruns, delays, and shortfalls in the benefits the project is supposed to deliver.
Flyvbjerg estimates that about one in ten megaprojects comes in on budget, one in ten is on schedule, and one in ten delivers promised benefits. Of course, the joint probability of a megaproject delivering on all three works out to about one in a thousand. “Even if the numbers were wrong by a factor of two, the success rate would still be dismal,” he says.
You might conclude from all this that though the engineers involved in big projects that go off the rails aren’t guiltless; there is plenty of blame to go around. The net result is that the megaprojects that get built aren’t really the most promising, but rather the ones that look best on paper. And the projects that look good on paper are those that grossly underestimate costs, overstate benefits, and don’t mention that the whole idea might be flawed.
As Flyvbjerg puts it, “They have been designed….as disasters waiting to happen.”
Filed Under: Commentary • expert insight, Hose • wraps + sleeves
James Finkel says
No matter what happens, engineers get blamed. As a newly minted mechanical engineer, I was hired to help test large centrifugal compressors. This biggest had a rated capacity of 350,000 inlet cubic feet per minute with a 17 ton rotor. With such high velocity, the exposed bead thermocouples were failing because the shaking caused the wires to fracture. In current dollars, each failure cost about $5K (test time, repair time, facilities usage, stabilization time). In a memo I suggested using a more expensive jacketed thermocouple ($25 vs. $5). Called into a meeting with the test group, the shop, and R&D, the shop supervisor was furious to have been invited about a $5K charge. He felt he was too important to waste his time on such a small cost. When asked if he read the entire memo, he said NO! I then explained that by saving $20 per thermocouple, the result was 200 failures at $5K each — netting out to $1,000,000 per year. Yes, “cheaping out” cost the firm a million dollars. I never went to another meeting.
In a day of thermal imaging and spot bolometers i don’t see a reason for using a thermocouple in such a harsh environment…
The one i used in some projects: https://www.melexis.com/en/product/MLX90614/Digital-Plug-Play-Infrared-Thermometer-TO-Can
Frankly don’t know the details of your project but there is many solutions that can mitigate those kind of problems…
Dennis Schmitz says
The tight economy is to blame – causing intense competition.
Now a days you only get one shot at a design working – you have to ship your prototypes.
Thus the pressure mounts and the errors go on.
Everyone in the chain gets rushed from sales to inspection.
As a result – companies loose money – then the layoffs go on.
It truly is a management issue – as they take on the tight schedules and cause the pressure in the first place
Howard Howell says
In my experience, the people quoting projects never listen to the engineers. Regardless of the engineers background or experience. Invariably the person quoting the job will cut the time estimate by 50% or more due to the belief that “the other guys will quote that time”. Also the managers letting the contract will put up with the well known short time quote because they know up front that the time will increase, and the costs can be exponentially accounted for. The company quotiing the project will increase the costs exponentially due to the fact that the delays over task their engineers, and the engineers get to work tons of overtime, get cursed by all involved and all because the top cats didn’t listen in the first place. Additionally engineering decisions made will often be overridden by others in the supply chain. These changes are only occasionally notified to the engineers who later discover substandard or underspecified components have found their way into the work. Add the fact that NO ONE wants to do reviews, including new engineers who just having graduated from college believe they already have all the answers and don’t need some graybeard’s disapproving comments on their excellent work.
It is a dystopian system, but no one wants or even knows how to fix it.
Jon Russell says
I have concur with what James is implying above. I deal with much smaller (2-100mil) municipal projects as a supplier (control systems) my take is that the engineers are fully responsible about 99% of the time but accountable about 5 to 10% of the time. The customer usually takes the beating both in poor product performance/longevity and higher cost as well as delays.
The problem frequently is that the project is budgeted before design is complete. One can certainly give “blue sky” estimates without a complete formal design, but that is exactly what they are blue sky guesses, without rainy day fudge factors for things going wrong. Unfortunately blue sky numbers are often required to obtain funding approvals for the project.
In addition, budgeting is based on “budgetary price estimates” subject to market price changes when the materials/services/labor is finally actually purchased/delivered. When there is 1-5 years between budget and construction, the market cost will vary, and normally up.
Not everyone’s productivity is uniform, but can/will actually vary by a factor of 3-5. For large projects this might average out, or worst case may skew the schedule out if the best teams are assigned another project before this is funded, or if another bid project with higher risk/visibility/skills requires the originally bid high productivity team first.
Ideally one would like to defer budgeting as late as possible, preferably by project phases, rather than well before project start, and well before assignment of actual core resources/teams to the project.
William K. says
Not only all of the above answers, but in addition engineers get all sorts of blame when we say that the project simply can’t be done adequately in the allotted time for the low price. And then we have somebody else doing the quoting who is quite detached from reality and decides that they are far smarter than the engineers. Of course, in a small organization that can be quite fatal. The other and even more deadly error is letting sales decide to have an outside consultant do the design and then have the in-house engineers try to make it actually meet the specifications. Meanwhile the budget is spent on the consultant and there is nothing left to pay for making things work.
The good situation was one employer that insisted that the engineers who would do the work also would do the quotes. That team made lots of profit and never had to go and “do a fix” after the fact. We made our mistakes, and fixed them, all on the scratch pads before the designs were made final. We were a good team!!
Sandy Vasser says
At the very core level, projects continue to follow the very same procedures that were created decades ago when projects were much smaller, significantly less complicated, not schedule constrained with fewer participants and more local. Those basic procedures which include significant discipline and schedule dependencies actually cause most of the problems that projects have been suffering for decades. The entire project industries must challenge every historical practice and procedure and eliminate what is not necessary, automate or simplify those procedures that are necessary. Incremental improvements are no longer sufficient. Transformational changes in the way projects are executed must be developed and implemented.
James Finkel says
ASME PTC10 was most explicit in defining allowable probes used to determine actual machine perfomance. You had upstream temps and pressures, precision orifice (a well specified distance from any bends), then downstream temperature and pressure for both inlet and output (and side flows if they existed). This was in the mid 70’s.
Sandy Vasser says
There are many examples of historical practices and procedures that Project Teams continue to follow that consume thousands of man-hours and months of time that could be greatly simplified and in some cases completely eliminated. One prime example of an activity that could be greatly simplified is the procurement of all tagged equipment. Current practices include the development of detailed project specifications that cover every aspect of the design and delivery for every piece of equipment, the creation of expansive inquiry packages, the development of project specific supplier proposals, the review and clarification of every proposal, selection of the suppliers and negotiations on the terms of the orders, development of new supplier designs to cover non-standard requirements, submittal and review of all drawings, revision of project specifications to reflect the agreed design, the modification of supplier manufacturing processes to incorporate non-standard requirements, manufacturing hold points to insure non-standard requirements are incorporated properly, pre-FAT by the supplier and then full witnessed FAT by the owner/EPC. These steps are followed on every project even though the basically same equipment is ordered for every project. These activities consume hundreds of resources between the owners, EPCs and suppliers and they consume months or even years of project time. For those owners who execute projects routinely, these steps should be almost completely unnecessary. By working with each of their key suppliers, there should be agreements on what is necessary and every requirement should become a standard feature. For every project, tagged equipment should be ordered with either a very detailed part number or completed set of data sheets. If packages ordered are completely standard, must of the inspection and testing could be the normal supplier QA/QC with minimal involvement by the owner/EPC. There are many examples where projects waste resources and project time following historical procedures that have not been challenged and eliminated, simplified or automated. Every historical practice or procedure must be challenged.