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International Construction Law Review

WHAT HAVE WE LEARNED FROM MEGAPROJECTS?

Bruce E. Hallock

President of ICI, Inc (Integrity Consulting International) 
Longmont, Colorado

James G. Zack, Jr.

Principal, James Zack Consulting, LLC

ABSTRACT

The construction project delivery environment has undergone dramatic changes due to globalisation and growth in both project size and complexity. In the past three decades we have seen the rise of the megaproject, large-scale, complex ventures that typically cost a billion dollars; take many years to develop and construct; and involve multiple public and private stakeholders. Megaprojects are not just magnified versions of smaller projects. Megaprojects are a completely different breed of project in terms of their level of aspiration, lead times, complexity, and stakeholder involvement. Consequently, they are also a very different type of project to manage. As a result, these projects are taxing the ability of contractors to deliver these behemoths with a high standard of quality and safety, as well as on time and within budget. They are equally a challenge to the owners’ level of sophistication in contract management, which exposes the project to increased risk for massive delays and cost overruns as well as numerous contractor claims. In addition, these projects often put a strain on the countries’ infrastructure, which often do not have the capacity or resources that can deal with such massive logistics.
But megaprojects are not only large and growing constantly larger, they are also being built in ever greater numbers at ever greater value. Spending on megaprojects spending is estimated to be US$3.4 trillion per year for the period of 2013 to 2030. This is approximately 4 per cent of total global gross domestic product. Never before in the history of this planet has infrastructure spending been this high measured as a share of world GDP. And this is just infrastructure.
While megaprojects were once thought to be reserved for rich, developed nations, they have recently been transformed into a global multi-trillion-dollar business. With so many resources tied up in ever larger and greater number of megaprojects, at no time has the management of such projects been more important.
In assessing cost overruns and delays in transportation infrastructure projects The Economist coined the expression “the iron law of infrastructure projects” to describe the near-certainty of large cost overruns and delays in infrastructure projects. The iron

Pt 2] What Have We Learned from Megaprojects?

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