In this episode of Cleaning Up, host Michael Liebreich interviews the Danish economic geographer Bent Flyvbjerg on the implications of the net-zero transition of Flyvbjerg’s research into megaproject management. Their conversation covers the challenges of managing large, complex projects, heuristics for reducing risk, and insights into the plausibility of specific renewable energy technologies.
Large projects go over budget and over schedule approximately 90% of the time.
The vast majority of large projects exceed their time and budget estimates while also under-delivering on benefits – this is the “iron law” of project management. Based on a database of over 16,000 large projects, only 9% come in on budget and schedule. If you add the criteria for meeting promised benefits, the percentage drops to 0.5% – one in 200.
Many projects even become “black swans,” performing not merely poorly but exceptionally poorly. For these projects, the actual costs can reach multiples of their anticipated budgets. They can experience high levels of delays and significant benefit shortfalls.
The root causes of poor project outcomes lie in psychology and power dynamics.
The underlying reasons for the iron law stem from human psychology – specifically, cognitive biases – and the jockeying for power related to large project funding and positioning. Cognitive biases include overconfidence...
Bent Flyvbjerg, a Danish economic geographer, is the author of numerous volumes on megaproject management, including How Big Things Get Done. Michael Liebreich has served for decades in the area of energy and climate finance as venture capitalist, entrepreneur and executive.
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