Engineers urge vigilance in roll out of megaprojects

Jun 14, 2022 News

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– say govt. must be wary of benefit shortfalls, cost overruns

Kaieteur News – As Guyana races towards the production of oil and gas, its revenue is likely to encourage mega projects to either support the sector or encourage more local development.

Against this backdrop the decades old Guyana Association of Professional Engineers (GAPE) has urged government to be wary of the fact that such ventures under-deliver and over promise.
This recommendation is included in the Association’s quarterly report, recently shared with this newspaper. The Engineers’ Quarterly (EQ) features an article by Professor Bent Flyvbjerg, on megaprojects, who has found that only one out of every thousand megaprojects meets the major indicators of megaprojects success; these are time, cost, and anticipated benefits.
To this end, GAPE said “This is a sobering figure, and as we attempt to undertake megaprojects now and in the future, we must exercise caution and do our due diligence so we avoid the many pitfalls which have ruined scores of megaprojects around the world. In the context of our own dearth of expertise, our inexperience with megaprojects, and a dismal record of failed large-scaled projects, we should be even more cautious. Our approach so far appears over optimistic, but it is not too late to learn the lessons and recalibrate.”
Megaprojects are defined as complex projects costing US$ 1 billion or more which attract significant public attention due to their outsized socio-economic impact.
In Guyana, the association reminded that we are on the cusp of undertaking at least two notable megaprojects which are within this range; namely the gas-to-energy project at Wales and the Amaila Falls Hydropower project.
“Megaprojects are new to Guyana, and in many respects they are a consequence of our recent economic good fortune, a factor which will spawn many more megaprojects in the coming years. Considering their complexity and their troubling rate of failure, it would be wise for us to learn the lessons from megaprojects implementation worldwide to reduce the likelihood of encountering the same problems,” GAPE says in its report.
It quotes the “guru” of megaprojects, Oxford professor Bent Flyvbjerg, who has conducted many years of research on megaprojects and has written extensively about such projects.
According to Flyvberg “performance data for megaprojects speak their own language. Nine out of ten such projects have cost overruns. Overruns of up to 50 percent in real terms are common, over 50 percent not uncommon. Cost overrun for the Channel tunnel, the longest underwater rail tunnel in Europe, connecting the UK and France, was 80 percent in real terms; for Denver International Airport, 200 percent; Boston’s Big Dig, 220 percent; the Canadian firearms registry, 590 percent.”
Similarly, benefit shortfalls of up to 50 percent are also common, and above 50 percent not uncommon, again with no signs of improvements over time and geography, the Oxford Professor notes.
“Delays are a separate problem for megaprojects and delays cause both cost overruns and benefit shortfalls. For instance, results from a study undertaken at Oxford University, based on the largest database of its kind, show that delays on dams are 44 percent on average. Thus if a dam was planned to take 10 years to execute, from the decision to build until the dam became operational, then it actually took 14.4 years on average. My colleagues and I modeled the relationship between cost overrun and length of implementation phase based on a large data set for major construction projects. We found that on average a one-year delay or other extension of the implementation phase correlates with an increase in percentage cost overrun of 4.64 percent,” he continues.
However, Flyvberg said this should not be seen as an excuse for fast tracking projects, that is, rushing them through decision making for early construction start. According to him, front-end planning needs to be thorough before deciding whether to give the green light to a project or stopping it. But often the situation is the exact opposite. Front-end planning is scant, bad projects are not stopped, implementation phases and delays are long, costs soar, and benefits and revenue realization recedes into the future.
In this regard, the Guyana Association of Professional Engineers noted that these circumstances sound familiar to the troubling history of some of our own large-scale projects here in Guyana. GAPE cited the Cheddi Jagan International Airport (CJIA) expansion project as an example as well as the Sheriff/ Mandela upgrade where though they are not on a mega scale, have faced similar encounters. As a consequence, the engineering body said government should be “super cautious” as it ventures into bigger projects such as the Amaila Hydropower facility and the Gas to Energy scheme.
According to the engineers’ association, “The so-called “iron law” of megaprojects is that they are over budget, over time, under benefits, over and over again…the lessons from megaprojects implementation should be keenly heeded by policymakers and engineers who are involved in the conception and implementation of the gas-to-energy, the Amaila Falls Hydroelectric, and other large projects such as the new Demerara River Bridge project. These projects have already attracted controversy for reasons similar to those which led to failure of other megaprojects…”

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