The art and science of decision-making in the delivery of mega-projects – by Hugo Priemus and Bert van Wee

Millau Viaduct, France

photo credit: Sébastien Bertrand via Flickr cc

The deliverance of ‘mega-projects’ – large infrastructure projects for the transportation of people and/or goods – requires strategic and collaborative decision-making. Crucial aspects of the decision-making process include uncertainties, risks, redundancy and adaptive capacity. Two leading academics in the field of transport infrastructure, Hugo Priemus and Bert van Wee, have recently pulled together a selection of state-of-the-art research from expert contributors in the form of a new Handbook. Here they explore the key to successful management of complex mega-projects.


Politicians in different parts of the world like mega-projects. Very often they give priority to quick, linear procedures, a determination of the preferred infrastructure alternative and a limitation of objections and legal procedures. They want to erect a monument which will strengthen the image of the politician for centuries. This is not the approach followed in our International Handbook on Mega-Projects.

The way academics think about the decision-making processes related to mega-projects has evolved over time. Nowadays there is much greater emphasis on topics like flexibility, adaptability, uncertainties, resilience and option values. The tendency to split large infrastructure projects into smaller projects where possible is gaining ground, which is creating opportunities for adaptive process management and no-regret policies.

A democratic society

The interrelationship between the dynamics (and uncertainties) of a democratic society and decision-making on a mega-project is also becoming an increasingly relevant topic. Some traditional planners seem to consider the volatility of political governance in a democracy to be an impediment for an appropriate decision-making process on mega-projects, while others are aware of the conditions which a vital democracy places on such a process.

Who are the stakeholders?

In the decision-making process on mega-projects, many stakeholders can be identified who (want to) play a role in developing mega-projects. These stakeholders may be public, representing different levels of government – local, regional, national and international – as a result of which decision-making on mega-projects is mostly a case of multilevel governance. These stakeholders may also be private, opening up opportunities for public-private partnerships. That raises questions about who is going to gain from the realisation of a mega-project, who the losers will be, to what extent these losses will be compensated, who will take on the risks in each stage of the decision-making process and who will decide what and when in the decision-making process.

Uncertainties and risks

Uncertainties and risks play an important role in mega-projects. This makes risk management an important component in the decision-making process.

Risk management – the way managers deal with risks and uncertainties – should be applied from the earliest stages of the decision-making. Even though its importance is mostly recognized, it is not yet widely applied. Ideally, risk management entails constant monitoring of uncertainties and new circumstances and their potential effects on the decision-making process. More and more we see that a competent official is appointed who reports directly to the management and the supervisory board and who provides a periodic overview (e.g. once a quarter) of the current risks. In the early phases it might prove worthwhile to determine the relation between risks and to divide these risks into system risks (relating to the mega-project as a whole) and component risks (relating to specific components, such as foundation techniques, management of the environment and logistics, e.g. the removal of earth). Particular attention is paid more and more to the risks related to the interfaces between different building components or subsystems.

Each risk can be concretely defined in terms of its nature and background, its probability (in percentages), the costs if it does materialise, and the name of the person or department responsible for managing it, i.e. the person who must take steps to minimise the probability of the risk and limit the damage if it occurs. The risk manager challenges managers and staff in regular meetings. This broadens the scope for detecting emerging risks and for containing existing risks.

Redundancy

Effective feedback mechanisms reduce the chance of an unbalanced result. However, it is also important to still have a choice when tensions arise. The generation of knowledge about alternative development paths is crucial. Not just at the start of the project, but indeed throughout the whole decision-making process, there needs to be a redundancy, for instance in the form of information about possible alternatives. Such knowledge can be generated by a project organisation, but it is just as important to receive knowledge from external sources. Thus the concept of redundancy must be introduced with regard to the organisation of knowledge and to the constellation of players.

In practice, the tendency when faced with a complex project is to reduce the number of participants in decision-making and to pursue efficiency in the organisation of project information. Still, the feedback of redundant organisation and information is needed for deliberation and adaptation at strategic intervals. Otherwise there are high risks of deadlock and groupthink.

Adaptive capacity

The crucial way to cope with changes, risks and uncertainties, is to mobilize ‘adaptive capacity’; i.e. the ability to adapt and respond to contextual changes. It is similar to the definition used in ecology: “Systems with a high adaptive capacity are able to reconfigure themselves when subject to change without significant declines in crucial functions”. It is crucial for ecological systems to be able to adapt to changes in their environment. Similarly the adaptive capacity of the planning and decision-making process is crucial to the long-term sustainability of a mega-project.

Conclusions

The trends in project management call for a more serious inclusion of the context in project management considerations. Complexity of mega-projects is enlarged by market dynamics and political discontinuity in a changing environment. It goes together with uncertainties and risks. Keeping alternative options open is essential in dealing with complexity. This makes redundancy and resilience crucial. In more general terms, adaptive capacity is the key to the management of complex mega-projects.

Bert van Wee is professor in Transport Policy at Delft University of Technology, faculty Technology, Policy and Management. In addition he is scientific director of TRAIL research school. His main interests are in long-term developments in transport, in particular in the areas of accessibility, land-use transport interaction, (evaluation of) large infrastructure projects, the environment, safety, policy analyses and ethics. He is a member of the editorial boards of JAPA, Transport Reviews, Transport Policy and the European Journal of Transport and Infrastructure Research, and a member of several international networks (NECTAR, WCTR, BIVEC). Besides he has several academic positions related to, among others, research coordination, education, and advising policy makers and interest groups.

Hugo Priemus (1942) was professor of housing at Delft University of Technology from 1977 to 2003. Since 2003 his chair is ‘System Innovation in Spatial Development’. In 2004 he was Research Coordinator of the Dutch Parliamentary Committee on Infrastructure Projects. He is Honorary Doctor at the University of Uppsala Sweden, and he was visiting professor at Leicester, Strasbourg and Glasgow. He is Knight in the Order of the Netherlands Lion (1989), holds the Golden Medal of Delft University of Technology and the Dutch Hundig Medal (2010). He studied Architecture (Delft University of Technology) and Economics (Erasmus University Rotterdam).

'International Handbook On Mega-Projects' book coverAlso available as an eBook for subscribing libraries on 

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