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How to fix a failed megaproject in 90 days _ Saïd Business School
How to fix a failed megaproject in 90 days _ Saïd Business School
EXPERT COMMENT
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29 October 2020 | 6 min read
EXPERT COMMENT
After years of construction delays and safety problems, the Berlin Brandenburg Airport (BER) will finally
open its doors on 31 October 2020.
It will be nine years late and nearly £4 billion over budget. Locals have called the project a national
embarrassment, as it took decades to complete and drained public money while damaging Germany’s RESEARCH
BER is hardly an isolated instance. Each year, we spend US$6-9 trillion globally (more than 8% of global GDP)
on megaprojects such as railways, airports, bridges, wastewater projects and nuclear power plants. More than
99% of those projects fail to deliver on budget, on time and with their promised benefits. EXPERT COMMENT
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on budget, none of its past projects had been close to the scale and
challenge of XRL.
In the case of Hong Kong’s high-speed railway, leaders at MTR attributed project setbacks to unexpectedly
difficult ground conditions and flooding that damaged the tunnel-boring machine. The project had fallen into a
vicious cycle of slipping, playing catch up, then slipping again. These setbacks brought more pressure and
penalties, while the project’s goals looked less and less achievable.
However, we discovered the root causes of these problems went deeper. MTR had set unrealistic milestones
and budgets due to its inexperience with the project’s size and scope. While the company had a 100% track
record of delivering on time and budget, none of its past projects had been close to the scale and challenge of
XRL.
Using the largest existing high-quality dataset on global project performance, we benchmarked XRL against
other high-speed rail projects around the world. It quickly became evident that pressure and over-ambition had
squeezed what should have been a six-year project into a four-year timeline.
Reference class forecasting helped bring objectivity and precision to the budget, which was essential for
raising the additional funds needed to complete the project in the wake of mounting public pressure. It also
gave MTR the justification and confidence to set a new completion date in 2018 and stick to it.
In addition, it informed the inchstones critical to keeping the project on track. For example, when excavations
slowed, MTR was able to intervene early. Essential specialists and resources, which were in short supply, could
be reallocated between different work sites.
The leaders behind Hong Kong’s railway took this responsibility seriously. Hong Kong’s Secretary of State for
Transport issued a public apology that offered reassurances about the railway project’s future. MTR also made
personnel changes to rebuild faith in the organisation. A new CEO and new projects director oversaw the
project's turnaround. The new leadership made significant changes to the governance, reporting policies and
incentives of the project.
Finally, MTR took the critical step of recognising achievements in the process. We helped the company build a
practice of celebrating progress against inchstones and recognising personal and team accomplishments. The
iterative nature of the revised plan also improved transparency and encouraged regular dialogue with
stakeholders.
The outcome
XRL, initially scheduled for completion in 2015, officially opened to the public on 22 September 2018. The
megaproject's final cost was HK$84.7 billion, more than double the original budget of HK$39.5 billion. The high-
speed railway now links Hong Kong to China's 25,000km rail network.
From start to finish, it only took 90 days to get this derailed megaproject back on track. The reason it was so
fast? The client got on board with this three-step process from the very beginning. They recognised the pitfalls
in their initial plans. They took the process of developing inchstones seriously. They accepted that their original
budget wasn’t feasible. And they had the courage to own their mistakes publicly. However, if you have a client
who doesn’t accept this process, turning around a megaproject can take forever - many, many years - as we
saw with BER. Don’t let this happen to you.
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