Megaprojects are the titans of the project world. They are massive undertakings that push the boundaries of engineering, management, and human collaboration. They promise transformative impact, but they also carry outsized risks. With budgets often exceeding US$1 billion and timelines stretching across years, these projects are not just technical challenges but also being complex systems with too many stakeholders and objectives.
This article explores the realities of leading megaprojects, drawing on two major case studies. Let us call them: the USA Project (UP) and the Asian Project (AP). These projects, similar in scope and ambition, diverged sharply in execution and outcomes. Their stories offer a masterclass in what works, what fails, and what leaders must do differently.
Understanding Megaprojects: Scale, Complexity, and
Consequence
Megaprojects are defined not just by their size, but by their complexity. They involve:
- Multiple stakeholders with competing interests
- High levels of uncertainty and risk
- Long timelines with shifting political, economic, and environmental contexts
- Interdisciplinary coordination across engineering, procurement, construction, and operations
Both UP and AP were greenfield facilities valued at around US$2 billion in today’s money. They were executed as joint ventures and part of larger programs. Despite these similarities, their outcomes were dramatically different, offering a rare opportunity to dissect the anatomy of
success and failure.
Comparing the Foundations: Structure vs. Execution
While UP and AP shared many structural elements, their execution strategies diverged:
| Factor | USA Project (UP) | Asian Project (AP) |
|---|---|---|
| Contracting Model | Fixed price (initially open book) | Reimbursable cost-plus with incentives |
| Execution Approach | EPCM* with a single general contractor | EPCM* with multiple construction contracts |
| Site Conditions | Inland, spacious, near engineering offices | Reclaimed island, logistical constraints, and engineering on a different continent |
| Team Composition | Small, inexperienced client team | Extensive, integrated, experienced team |
EPCM*: Engineering, Procurement, and Construction Management
These differences shaped everything, from how risks were managed to how teams collaborated. Execution and maturity, not structure, became the decisive factor.
The USA Project: A Case Study in Avoidable Failure
The UP started with a promise but quickly unraveled. The issues were not isolated; they were systemic:
1. Undersized and Underprepared Team
The client’s project management team was critically small, just seven people during engineering. Project controls were mobilized late, at 35% engineering completion, leaving the team without visibility into cost or schedule performance. This lack of early oversight created blind spots that would prove costly.
2. Scope Volatility and Poor Change Management
Major scope changes, including the addition of a cogeneration plant and the removal of an entire process unit, were introduced after the start of engineering. These changes were not well integrated into the planning process, leading to confusion, rework, and delays.
3. Contractor Silos and Lack of Transparency
The contractor operated in functional silos, withholding critical information. For example, valve manufacturing delays were hidden until they became urgent. Schedule updates were manipulated rather than naturally integrated. The fixed-price model discouraged open communication, incentivizing the contractor to protect margins rather than solve problems collaboratively.
4. Cultural and Organizational Gaps
The project suffered from low project management maturity. There were no effective early warning systems, and the team operated reactively. Recovery planning became a recurring ritual, with temporary fixes masking deeper issues.
The Fallout
The consequences were severe:
- 110% over budget
- 9-month delay (with a massive opportunity cost)
- Painful claims and strained relationships
Ironically, the same contractor was awarded a follow-up project—highlighting a troubling pattern in how organizations evaluate performance and accountability.
The Asian Project: A Model of Strategic Excellence
In contrast, the AP demonstrated how thoughtful planning, stakeholder alignment, and cultural integration can lead to exceptional outcomes.
1. Collaborative Contracting and Trust
The reimbursable cost-plus model created a foundation of trust. Incentives for cost, safety, and schedule aligned interests. Teams “lived together,” fostering relationships that transcended contractual boundaries. This intimacy enabled faster decision-making and problem-solving.
2. Best Practices Embedded Early
The AP team conducted extensive constructability reviews, modularization studies, and pre-project planning. Safety was prioritized from day one, and the project achieved an excellent safety performance. These practices weren’t just checkboxes; they were embedded into the culture and practiced daily by the management team.
3. Stakeholder Engagement and Transparency
Plant managers were involved from the start. Monthly reports and quarterly reviews ensured transparency. The client, contractor, and operations teams were aligned in vision and execution.
4. Robust Change Management
A two-step approval process and a dedicated Change Control Board helped manage scope evolution. Changes were evaluated holistically, ensuring they didn’t derail progress.
The Results
The consequences were severe:
- Completed at ~98% of the budget
- Only a 1-month delay, which is considered minimal for a project of this size and complexity
- The EPCM contractor earned full incentives and was awarded a replicate project
The AP wasn’t just a success—it was a blueprint for how megaprojects should be led.
Organizational Competence: The Hidden Driver of Success
The divergent outcomes of UP and AP reveal a deeper truth: project success is often determined long before execution begins. Organizational competence, especially project management maturity, is the hidden driver.
PM Maturity Matters
Studies from the University of California, Berkeley, Independent Project Analysis (IPA), and others show a direct correlation between PM maturity and cost/schedule performance. AP benefited from a mature system with integrated processes. UP did not—and paid the price.
Front-End Planning Is Crucial
Most overruns occur later, but due to factors from the early stages. Without formal project management, scope clarity suffers, leading to cascading issues. Organizations often underestimate the importance of front-end loading, treating it as a formality rather than a strategic imperative.
Culture vs. System
In the absence of effective systems, culture takes over. Unfortunately, this often means:
- Blame games
- Poor leadership
- Fragmented teams
- Reactive decision-making
Systems create clarity, accountability, and resilience. Culture alone cannot compensate for their absence.
The Cycle of Doom: A Pattern of Dysfunction
A recurring theme in troubled megaprojects is the “Cycle of Doom”:
- Delays occur
- Root causes are misunderstood
- Recovery planning is initiated
- Temporary progress is made
- The cycle repeats
This pattern reflects deeper organizational flaws:
- Overdependence on outsourcing
- Declining technical capacity
- Lack of integration between business, technical, and project teams
Breaking this cycle requires more than tactical fixes—it demands strategic transformation.
A Call to Action: Reclaiming Project Leadership
To lead megaprojects successfully (or, for that matter, all types of projects), organizations must:
1. Rebuild Competence and Capacity
Invest in internal capabilities. Train project leaders. Build multidisciplinary teams that understand both technical and business dimensions.
2. Treat Projects as Strategic Assets
Projects are not isolated events; they are part of asset management. Integrate project thinking into long-term business strategy.
3. Adopt and Integrate Best Practices
Don’t just benchmark, embed best practices into the project lifecycle. Use the stage-gate method to ensure clarity and control.
4. Reduce Over-Reliance on PMCs
Project Management Consultants (PMCs) are companies that are responsible for leading a project on behalf of or in support of a client. PMCs can add value, but they should not replace internal leadership. Reclaim ownership of project strategy, execution, and accountability.
Final Thoughts: Disrupting the Status Quo
Megaprojects are too important to be left to chance. They shape industries, economies, and communities. Yet we still live in a world with gaps between what we say and what we do.
“Isn’t it time to disrupt the current state of practice and build for a great future?”
The answer is yes. And the time is now.
