INTERNET2

Factor C1 - Lack of Execution Input to FEP

Most interviewees felt that planning is done with haste and fails to comprehensively consider all of the complexities of execution, procurement, and start-up. Favorable business conditions and the urgency to get to the market often influenced owners to skip key aspects of planning. When project risks and challenges are not effectively defined, the outcome can be serious cost and schedule overruns. Haste and urgency can result in inadequate representation and input of key functions during planning. Missing input from the execution side often led to late changes that made projects more susceptible to failure. Interviewees felt that mega-projects are unique in characteristics and require planning considerations specific to project characteristics. Planning done only from business perspective while failing to effectively consider complexity around execution, procurement, and logistics suffer from poor performance. Some interviewees felt that the company procedures did not allow for early involvement of the constructor, which led to late construction input. Having experienced full-time execution personnel as part of the core front-end planning was key to have a comprehensive complete front-end definition.

Factor C2 - Optimism Bias

When probed about unrealistic estimates on mega-projects, most interviewees felt that sanctioned estimates were often unrealistic and were based on optimistic assumptions about

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project conditions. Planning teams are usually under business pressure to reduce cost and schedule numbers to make mega-projects more financially feasible. There were many cases where estimates were arbitrarily cut down by higher management for business reasons, but scope was never reduced in proportion, which led to unfeasible sanctioned cost and schedule estimates on the project.

Reverse cases also existed, where scope and production capacity was increased for more financial feasibility without rigorous assessment that lead to serious complications later on the project.

Another aspect of unfeasible cost and schedule estimates were optimistic and aggressive bids from the main contractors. In many cases, especially on lump-sum contracts, the main contractor knowingly underbid the job to get established in the market. Project teams were never able to meet the aggressive bids agreed by sales teams. Eventually, contractors started seeking change orders that had huge negative effect on overall project progress. Optimistic assumptions, brought on by lack of front-end planning, combined with business pressure to lower costs and schedule numbers that make mega-projects appear more financially feasible are additional reasons for unrealistic estimates.

Factor C3 - Inadequate FEP Resources

All interviewees felt that effective front-end planning is one of the most important steps for success. Most mega-projects studied suffered from inadequate project scope definition or from inaccurate or incomplete basic technical data. Most of the mega-projects failed to completely assess the complexities attached with the mega-project. The lack of definition of basic data on the project led to serious consequences during the project, eventually leading to failure.

It was evident from case studies that mega-project planning require large investments both money and time. In some cases, inexperienced owners were not inclined to invest adequately on

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the initial planning of mega-projects. The lack of in-house resources and the high cost of accruing accurate basic data lead to inappropriate definition of project process and plans eventually leading to poor performance on mega-projects.

Factor C6 - Lack of Execution Plan Alignment

Interviewees felt that execution plans often lack adequate input from all stakeholders. On mega-projects, execution plans lay the foundation for future collaboration. Planning teams often failed to include input from contractors, key subcontractors, and suppliers while framing execution plans. This arose mostly due to ineffective communication, improper implementation of alignment best practices, and inadequate updating of the execution plan. A lack of alignment on the execution plans eventually led to changes on projects eventually leading to disruptive disagreements, unaligned or conflicting team objectives, resource imbalance due to inadequate definition of project execution plan or out of sequence milestone completion.

Factor C7 - Inadequate Integrated Schedule

Interviews felt that, with mega-projects divided into multiple scopes and packages, an integrated schedule is often missing. An integrated master schedule is key for establishing a strong baseline and for effective cost and time control. On mega-projects, project teams often fail to assess impact or delay in one scope to overall project. Because individual packages are strongly interlinked, a delay in one effects all. A major cause of this was the tendency to work in silos with a lack of “birds eye view” planning. Often there is no one party responsible for integrating the whole project and interface deliverables. Are poorly defined The lack of an integrated schedule on mega-projects leads to differing objectives and delaying interfaces, lack of understanding of the project milestone requirements, resource imbalance and a lack of accountability because there is no strong baseline the project management can use to measure progress.

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Many mega-projects studied faced delays in getting required permits, which sometimes led to a complete halt in execution. Some mega-projects teams failed to understand the environmentally sensitive nature of mega-projects and the constant public attention to their development and execution. Mega-projects teams often failed to identify environmentally sensitive areas within project limits or identify all the required regulatory execution permits. which led to throwing schedules out of sequence. Another key reason cited by interviewees was that permit application are often improperly filled out, which led to application rejection. Project execution suffered as time was lost while re-applying for permits. There were also instances when changes to projects that were not communicated back to the permit agency led to the project begin halted by local regulatory bodies. These delays not only generate huge losses, in terms of loss of direct man-hours, but it is difficult to ramp down and ramp up progress after temporary halts.

Factor C9 - Baseline Schedule Acceleration

Urgency to get to the market or pressure to recover a lost schedule are two reasons for baseline schedule acceleration after approval of mega-projects studies. According to interviewees, project teams failed to realize that accelerating or compressing the schedule for a mega-project Execution Phase (Post-Approval) can cause a significant ripple effect through the existing engineering, procurement, construction, and start-up schedules. The complexities involved on the mega-projects made it extremely difficult to regain control of the overall project schedule.