Wht re the Mst Significant Reasns fr Meg-Prject Filure - Literature review Example

WHАT АRЕ THЕ MОST SIGNIFIСАNT RЕАSОNS FОR МЕGА-РRОJЕСT FАILURЕ АND MIGHT SUСH FАILURЕS BЕ АVОIDЕD? By (Name) Presented to (Name of Professor) (Name of Institution, City, Sate) (Date) Executive Summary In spite of the huge amounts of money going into mega projects, surprisingly, nominal systematic knowledge is available on the reasons why most of these projects fail. The available literature offers valid explanations as to why these projects fail to perform as anticipated. However, massive research has been done to determine the rationale behind failure of the mega projects. The superconducting super collider provides an example of a failed mega projects. A combination of numerous factors is said to propel the failure. These factors are analyzed across the project lifecycle, which comprises of four phases namely inception phase, development phase, implementation phase, and closeout phase. Being a perpetually complex project, the SSC project displayed massive difficulty in dealing with the increasing complexity. Additionally, the projects failed due to lack of effectual project management. It lacked realization of specifications to cost, quality, and time, failed to deploy competent staff, and as well proved incapable of defining project objective. Ultimately, mega projects fail owing to cost underestimation. There tends to emerge incongruities amid projections at the preliminary phases and the final overrun costs. Introduction The industrializing and industrialized nations are making massive progress toward initiation of mega projects. These projects are a principal way in which the contemporary societies are generating novel value through creation of physical assets, which are exploited to realize economic and social ends. Mega projects, described as large, complex projects within the minerals, petroleum, power, and chemical industries remain massively challenging with a startling high rate of failure. Mega projects are employed within the private as well as public sectors (Altshuler and Luberoff 2003, p. 56), for instance in the sector of merger and acquisition (Weston, Mitchell and Mulherin 2003, p. 147). In spite of the increasing proportion, mega projects are portraying meager performance record in regard to environment, public endorsement, and economy (Flyvbjerg and Rothengatter 2003, p. 143). According to the recent CHAOS results, success rates of projects has portrayed significant decrease, with merely 32 percent of projects being completed on budget, on time, and with the required features (The Standish Group International 2010, p. 3). The failed mega projects led to massive losses, inefficient resource use, and company bankruptcy. The superconducting super collider represents one of the failed mega projects (Willard 1994, p. 2). This entry endeavors at providing a comprehensive analysis of the failure of the superconducting super collider project, while laying special focus across the project lifecycle. Statement of Problem Mega projects, which are large and complex, fail much often. More than half of the large-scale projects have portrayed poor results. The present track record on mega projects failure is unacceptable. Interestingly, the project management experts are not solely the actual sources of failures. However, numerous factors characterize the mega project failure. Even though the construction industry handling the SSC project has proven its capacity in handling mega projects, the SSC project has portrayed several failures. The failures may have resulted from both management systems and organizational structures. How the superconducting super collider is a mega project The superconducting super collider is considered a mega project owing to various reasons. To begin with, mega projects are prominent, multi-billion undertakings, usually working within the atom. The SSC project was a unique, gargantuan, 11 billion dollar subatomic atom smasher that was designed to obtain answers to critical queries pertaining to the universe formation (Dinsmore 1999, p. 199). The project was projected to being the most dominant scientific instrument within the world (Dinsmore and Rocha 2012, p. 164). The anticipated output was a high-tech facility for use in research in physics, together with the pursuit to uncover the genesis of the universe. The SSC project entailed a large-scale engineering, construction, and procurement project. It is comparable in technical complexity and scope to industrial, nuclear plants, and transit systems complexes. The SSC project encompassed a high scale of complexity as well as numerous scientific, governmental, and private stakeholders. Origin of the SSC project The SSC project originated with the dawning of the Big Science epoch (Khan 2012, p. 7). President Reagan was the original champion of SSC project when he pronounced that the US commit to designing and constructing the globe’s largest and most dominant scientific instrument. In view of that, later, the physics community of elementary particle within the United States did propose the construction of the SSC. Within the preceding two decades, scientists had infiltrated into deeper knowledge levels pertaining to the basic nature of force and matter. The investigation on elementary particles had resulted in discovery and classification of elementary particles families. However, the comprehension of what lay behind the particle arrangements remained limited. Accordingly, the SSC project was established to fill these large knowledge gaps. The principal sponsor of the SSC project was the government. The US Energy Department assumed the total sponsorship of the project. The Congress assumed the responsibility to decide the SSC project’s fate. Among the key benefits of the SSC project is conformance or rebuttal of the ordinary model of the contemporary physics. Proponents of the project had averred that SSC could yield significant technological benefits, such as designing next generation PCs. In addition, proponents emphasized that the SSC would deem essential in maintaining the preeminence of the US as a scientific nation. Besides, the SSC project was anticipated toward producing economic benefits as well as international prestige to the US. Ultimately, the project was projected toward building the globe’s greatest scientific instrument (Anbari, Gaimmalvo and Jaffe n.d. p. 3). Life cycle model The developers of the SSC project assumed the waterfall or classical life-cycle development plan, embodying the design using information flow diagrams. Failure of the superconducting super collider project The failure of mega projects is realized at all project phases, which comprise of inception stage, development stage, implementation stage, and closeout stage (Anbari n.d. p. 4). The inception phase The SSC project is said to have been a massive venture from diverse perspectives. Owing to the great magnitude of the project, it required huge sums of finances as well as a large and knowledgeable project management team. At the inception stage, various aspects channeled the failure of the SSC project. Upon the publishing of 121 RFPs (request for proposal) for the construction and post-construction of the project, merely a single response had been received by the deadline, which was November 1988. The response emerged from the URP (Universities Research Association), whose chief experience was in the sector of technology, predominantly within high-energy physics. On the contrary, the inception phase of the project demanded construction expertise. Accordingly, poor scope management remained manifest at this stage. The project manager of URA explained that the project was massively larger than other projects he had supervised previously. Consequently, the project came with novel problems, which seemed new to the group. Moreover, owing to the sheer size of the SSC project, it became extremely hard for anyone to forecast the complications allied to the project. It deemed quite hard to recognize the project complexity (Anbari n.d., p. 5), which is a vital aspect in any mega project. As Baccarini (1996, p. 201) explicates, organizations are displaying massive difficulty in dealing with the increasing complexity of mega projects. According to the complexity theory, projects tend to be complex, thus translating into intricate adaptive systems (Remington, Zolin and Turner 2009, p. 4). In this context, project complexity bases on project budget and project size. Owing to the project manager’s lack of comprehension of the complexity of the SSC project, the project realized a rise in both duration and cost. This is in accordance with Cantarelli, Flyvbjerg and Bert van Wee (2010, p. 9) who explain that lack of contingency in time and budget implies that any unplanned event is likely to derail the overall project. In the context of integration management, SSC project failed to incorporate diverse expertise. For instance, Anbari (n.d. p. 8) asserts that there was a need to incorporate people who could carry out the scheduling and accounting activities better. According to the complexity theory, complex projects refer to those projects consisting of numerous assorted interrelated parts, which may operationalized in based on interdependency and differentiation (Baccarini 1996, p. 202). In reference to project complexity, differentiation would refer to the proportion of hierarchical levels, division of project tasks, and proportion of units. Cost management proved detrimental to the SSC project. Mega projects have had an account of cost escalation with the regular under-estimation of cost in the projects budgeting raising the query of the existing incongruities amid projections at the preliminary phases and the final overrun costs. As Shane, Molenaar, Anderson and Schexnayder (2009, p. 221) have found out, approximately 50 percent of mega projects within the United States have failed due to overrun in the initial budgets. In their studies, Stannard (1990, p. 50) and Domondon (2009, p. 303) state the Channel Tunnel and the Superconducting Supercollider respectively as examples of mega projects that have failed owing to cost underestimation. As Anbari (n.d. p. 5) highlights, in the context of the SSC project, the original project was estimated in 1986, while the project commenced in 1988. While the initial construction and design cost estimate range between 3.9 and 4.2 billion dollars, the amount had risen to 4.4 billion dollars by 1988. Moreover, the project had realized a 40 percent increase in cost by 1989 when the contract was being awarded to URA (Anbari n.d. p. 5). Various factors are accountable to cost underestimation of mega projects, which eventually leads to failure of these projects (Greiman 2013, p. 22). Among these features are project complexity, stretching of the available resources, such as material, labor, information systems, and management skill to the limits. Anbari (n.d. p. 5) states that the failure of the SSC project resulted from the project scope. A project of a similar magnitude had never been attempted before. Besides, political pressures may have influenced cost estimations. The human resource management in the SSC project appeared ineffectual. As Anbari (n.d. p. 6) establishes, there lacked commitment on part of the management staff as well as the director of the project. Tae-In (2005, 36) and Mann and Johnson (n.d. p. 544) have found that when commitment lacks in a project, there is a likelihood of the project partners becoming unreceptive. Consequently, the projects derail in effort and time, leading to an overall failure in the project. Furthermore, the project management team lacked in experience with managing projects the size of SSC. In fact, the project manager admitted that the SSC project posed copious novel problems. Hence, it is apparent that the team lacked the experienced need in managing such efforts. Equally, the URA project team portrayed experience in managing the technical facets of a project but not the construction aspects. However, the inception phase of the project stipulated experience in the sector of construction. Additionally, the physics professor assumed the role of the director in the project, thus being responsible for instigating the program scheduling activities. The schedule planning was a difficult task requiring much expertise, which the professor lacked. A vast majority of mega projects fail to deliver full potential in spite of the efforts of the project partners. The International Centre for Complex Project Management conducted a study aimed at determining the reasons behind mega projects failure (Remington n.d., p. 2). The principal key findings indicated that project managers of complex projects are not equipped as leaders of program delivery and that the modern tools are inadequate for management of complex projects. The challenge lays in steering the ambiguity and uncertainty inherent in hastening the technological, organizational, and social change. In reference to the SSC project, there emerged complications in development of project schedule as well as in dealing with the surfacing technological issues. Since the project team had never attempted most of the technological concerns, it was not proficient enough in accurate planning. The SSC project did encounter major communication breakdown, which eventually led to the demise of the project. Owing to lack of formal communication, it became hard to determine the project status (Anbari (n.d. p. 8). Consequently, confusion emerged both externally and internally, with most outside viewers questioning numerous project aspects, such as progress and cost reports. Likewise, the communication that was necessary to maintain external project support seemed to decline subsequent to the initial funding. Communication breakdown is highly allied to lack of teamwork among the stakeholders. As The Standish Group International (2010, p. 4) clarifies, to curtail the problems arising from poor communication in mega projects, there is a need for the project team to endorse user feedback, prototyping, basic research, requirements review, and auxiliary events endeavored at consensus building. In their case study involving IT projects, The Standish Group International (2010, p. 4) found that the facet optimizer within the OptiMix offers a communication platform via aiding project teams and users concentrate on the critical functions and requirements. In the case of SSC project, a minimum of three premises were greatly responsible for the massive communication breakdowns. To begin with, there were allegations that those scientists who had proven efficient in managing similar but smaller projects would be proficient to handle successfully the challenges posed by the mega project. Nevertheless, the collaboration between the Energy Department and scientists overseers proved incompetent in handling both political pressures and project management concerns. In addition, there were suppositions that the public would support the SSC project. However, the public was indifferent and perplexed by ambiguity of the objective of the project. Besides, the behavioral and team building issues were not relatable to the science project. It was merely in 1992, just one year before the commencement of the project, that the SSC started to diffidently contract team integration seminars, which never involved the higher management teams (Dinsmore 1999, p. 199). Unearthing the assertions behind decisions remains principal to effectual communication. An awareness of the premise necessitates detective work aimed at uncovering the assumptions that govern decisions. The SSC project encountered numerous risks, including financial, political, and technological risks. However, most of the risks were ignored. With most focus on the technological and scientific aspects of the project, these risks were not accorded the appropriate attention. In the context of procurement management, the SSC project failed whereby maintenance and construction negotiations were started with the only responding party. Contrary, a project of such magnitude requires a cost-plus deal. Even though URA got the contract, there lacked a methodology for ensuring that the contract terms were met. In this context, there was a need for an effectual monitoring system. The quality of the SSC project seemed to dwindle whereby the project relied on untested technologies. Most of the project activities took place in the laboratory. Moreover, most of the components for use in the project were built for the initial time in the project’s due course. Hence, there was a lot of testing as opposed to making the final project. The problems underlying the SSC project at the inception stage required recognition of the project complexity as well as the project size. Problems allied to scope management would have been evaded by selecting a contractor experienced within the field of large-scale projects in addition to having construction experience. There is an increasing requirement for project managers to understand complexity in projects owing to the difficulties allied to goal attainment and decision-making, aspects that are associated with complexity. A lucid comprehension of the sources of complexities in projects aids in selecting the apt approaches and tools to manage mega projects. In this context, appropriate leadership in complex projects remains critical in managing a project such as the SSC. Project leaders ought to recognize the present day’s transformational change from the information age of interconnected systems to knowledge age of interrelated capabilities. Hence, project leaders should have the capacity to continually nurture and enhance the skills of the project team to develop a comprehensive approach to the complex challenges. Appropriate leadership ought to be goal-driven if it has to curtail mega projects failure. The project leaders should make the project team understand how the project goal looks, feels, and sounds. Further efforts ought to enhance commitment of the project team to ensure attainment of project goals. In the context of integration management, submission of distinct RFPs for diverse needs of the SSC project, such as construction versus technical, would have delivered a successful and more manageable project. Moreover, integration of people with experience in large projects would have enhanced the effectiveness of the SSC. Besides, there was a prime need to finalize the project scope to avoid increases in project duration and cost. Ultimately, the team involved in managing the SSC project needed to nurture a network for user groups, which would have facilitated effectual communication. The development phase While development of the SSC project’s scope statement was a massive an iterative task requiring input from numerous sources, it seemed to be concentrated among the few influential persons. The decision to carry on with the project was made merely by the US president. Besides, the formation of the international advisory committee, which was an early event, involved several engineers and scientists. As a result, the SSC project assumed a limitation in scope. It was concentrated within a political context whereby academicians and scientists served as project managers. One of the major reasons why mega projects fail is lack of user involvement. It deems vital for all stakeholders to assume project ownership. User involvement plays a key role in both development and maintenance of projects. The nonexistence of user involvement is a major cause of failure of mega projects. According to The Standish Group International (2010, p. 4), user involvement is vital in project success because users are both the company’s worst foe and best ally. Failure to incorporate users within a project implies that the project manager is assuming that whatever the project is delivering is what the users want as well as assuming that the users will buy into the project idea. Even if delivered on budget and on time, projects fail if they do not meet the needs of the users (Attarzadeh and Ow 2008, p. 235). When a project is delivered successfully, the users determine the product and the usability. Just as other projects lacking user involvement, the SSC project was inclined toward performing poorly because it failed to foster close cooperation and collaboration. In this milieu, the team responsible for managing the SSC project did encounter challenges in communicating, documenting, and attaining consent of the scope of the project to the level that the project necessitated. The principal cause of the failure of the SSC project was linked to cost management. This comprised of cost budgeting, cost estimating, and resource planning. Because the project team failed to control the cost, schedule, and scope of the project, the resources needs of the project seemed to change incessantly. Mega projects have portrayed an account of cost escalation. Just like the SSC project, mega projects, characterized by long epochs between the planning stage and the inception stage, are frequently underestimated in terms of cost. As Atkinson, Crawford and Ward (2006, p. 689) affirm the SSC project was estimated at a cost of 6 billion dollars during the Reagan administration in 1985. However, in 1988 when George Bush succeeded President Reagan, criticism of the project lay on its ballooning cost. The under-estimation of the cost of SSC project owed to the complexity of the project. Large and complex projects have deemed quite challenging to approximate, and thus managers ought to be capable of evaluating cost assumptions (Shoemaker 2004, p. 124). In regard to the SSC project, the managerial team failed to control the project’s scope, which deemed it hard to estimate the project cost. As a result, the estimated costs continued to fluctuate wildly throughout the project’s life. The human resource team seemed incompetent to handle some aspects of complex mega projects. For instance, the SSC project lacked schedule control as the project manager neither documented nor demonstrated whether the SSC project was running according to plan. This owes to the verity that the management team failed to implement formal schedule management strategies. Most mega projects fail due to deployment of non-expertise personnel. Pulse of the Profession has found that many organizations tend to underestimate project management and lay inadequate concentration on developing project expertise (Project Management Institute 2013, p. 4). In this milieu, the project manager appointed by DOE proved competent merely in high-energy research as opposed to project management. Hence, the URA team assumed the responsibility of managing the project. Hence, the failure of the SSC project is highly linked to lack of expertise project management. Indeed, this incompetency led to poor quality management. The management team neither developed a quality management plan nor established a scheme for reporting on the quality of the SSC project. The managerial team failed massively in integrating the suitable category of personnel within the SSC project. The people managing the project were knowledgeable in the sector of high-energy physics. However, they lacked knowledge in the construction sector. Within the context of procurement management, the team did not realize clear lapses of contracts. The managerial team did not embark on any efforts to formulate procurement within the controls or guidelines of the operating company. The project managers of SSC project failed to address fully risk management. There was no incorporation of communication planning and risk planning strategies. Likewise, the team failed to put into account the political, funding, and organizational risks associated with the project. Political risks materialized whereby the project operated within highly charged political settings. Consequently, many proponents of the project merited it as opposed to critiquing it. Thus, the managerial team did not anticipate or respond to probable project risks. The communication management strategies proved ineffectual. Project communication proves vital in the success of any project. Given that the SSC project was a complex project comprising of numerous stakeholders, communication was critical at every organizational level. However, informational needs of the various stakeholders were never considered during the development phase. The project manager, lacking experience in managing projects, lay focus on producing a scientific product as opposed to practicing effectual project management. Additionally, the SSC director reported directly to DOE secretary, evading the informational and organizational communication processes of DOE. In managing the problem of cost underestimation, there is a need to develop a procedure for actions when the cost is exceeded at milestone. The actions ought to incorporate justification for the modifications as well as endorsement of an amended budget. Moreover, there is a prime need to deal with scope uncertainty. In this context, initiate a mechanism clearly describing what is within the project schedule and scope as well as what has not been incorporates, predominantly with respect to projected project cost. In a vast majority of mega projects, project budgets are prepared without considering the future escalations in the economy, which result in an increase in the project cost. As a result, these projects are inclined toward failure owing to a dearth in material, finance, and human resources. Other aspects allied to project overestimation, as in the case of SCC, include schedule delays and cost escalation (Cantarelli, Flyvbjerg and Bert van Wee 2010, p. 9). Besides, to solve the problems encountered in schedule planning, a blend of milestone charts, routine progress reporting, and activity management plan would have been effectual. The Implementation phase At the implementation stage, the principal difficulties experienced in scope management emerged from the development and inception phases. The key complexity owed to the verity that the anticipated outputs had not been defined explicitly during the preceding stages. The source of problems in the project scope is manifest in the RFP. Given that merely one company presented its proposal, it is likely that the RFP was poorly prepared. Hence, the incompetent RFP was a major deficiency hampering the scope of the SSC project since the preliminary stage. Owing to the ambiguous scope specification during the development and inception phases, it deemed intricate to make any changes within the project scope as the project progressed. This translated into more difficulties in project cost management. The SSC project did not turn out to be only ineffective but also costly. As Greiman (2013, p. 22) makes clear, large and complex projects are quite challenging to approximate, thus making it hard to evaluate cost assumptions. The major facets characterizing these challenges are stretching of the available resources, such as material, labor, information systems, and management skill to the limits. In this context, the SSC project realized a stretch in material resources, thus becoming quite expensive. With the postponement of integration of some of these materials in the project, the SSC project became susceptible to failure. The scope and cost management are highly linked to integration management. With an original cost estimate of 4.4 billion dollars, various partners were responsible to sponsoring the SSC project. However, owing to the changes in project scope, most of the international sponsors withdrew their support. Consequently, the US taxpayer bore the entire burden of funding the project. Nevertheless, the finances proved insufficient, thus the SSC managerial team could not rely on them. Lack of proper project objectives made it difficult to communicate the output and status of the SSC project. Given that no lucid objective had been stated, it deemed hard to assume an appropriate control system. Any conclusion drawn from the project appeared correct. Hence, it was difficult for the URA team to shield its standpoint as the managerial personnel of the project. The complexity of the SSC project deemed it intricate to manage risks. As a new and huge project that demanded novel technology, SSC posed major uncertainties. Although the URA team was able to identify some of the project risks, they were quite incompetent in dealing with them. This is because they were either disorganized or lacked the competence to deal with the risks. To counter the problems encountered at the implementation stage, there was a need to define the scope of work effectively. This would have enabled the project managerial team to be capable of better controlling the implementation processes as well as defending the stability of the project. Adoption of effective communication measures would have been vital during the implementation phase. Communication enables reporting of the progress of a project on top of helping determine whether the project is achieving the anticipated objectives. Moreover, early adoption of risks was vital in taking corrective actions to deal with the identified risks. The closeout phase The SSC project never came to completion as the US Congress did terminate it prior to completion. Nevertheless, termination of a mega project is not a simple task. Scope management stipulated closing the project through a strategy that would minimize extra expenses as well as save a few positive results. From its assessments, the SSC project portrayed excellent scope management in the scientific sector. However, the project management sector proved to be a failure. As Bertelsen (2004, p. 1) clarifies, the failure of most mega projects is associated with poor project management. In this perspective, effective management of projects is allied to removing implementation barriers and enabling innovation (Project Management Institute 2013, p. 3). The principal rationale behind terminating the SSC project was the rising project costs. Cost management had proven detrimental within the preceding project phases. Hence, during the closeout phase, both external and internal organizations performed cost analysis. During cost analysis, it became manifest that the preliminary cost estimations had been underestimated. As Shane, Molenaar, Anderson and Schexnayder (2009, p. 221) have found out, a great percent of mega projects within the United States have failed due to overrun in the initial budgets. The SSC project is not an exception. During the closeout phase, there was identification of the projects risks, a majority of which was technical. The project team did handle appropriately the categorized risks. However, the team considered the technical risks while overlooking the political and cost risks. Given that the SSC project was terminated prior to completion, teamwork proved difficult during the closeout phase. While some team members stayed behind to wind down the projects, most of them had moved to novel projects. Owing to disappointments, most team members portrayed minimal skills in project management at this stage. The members taking up the termination responsibilities did assume tasks like sale of project assets, conveying the acquired knowledge, and outplacement assistance. Unfortunately, termination of SSC project resulted in communication breakdown. The resultant trauma deemed it hard to communicate effectively. Accordingly, most of the info pertaining to the project life was not conveyed, as merely minimal official records were available. The closeout phase of the SSC project provided a learning arena for future projects. As Anbari (n.d. p. 22) avers, SSC project’s failure was partially responsible for reformation of the scientific policy of the US that took place later in 1993. Hence, during this phase, it is vital to explore and consider all the risks to the project. Conclusion The mega projects executed around the globe portray a significant percent of failure as compared to smaller projects. The more projects achieve the mega project status, the more they attain the risk of failure. Despite of this failure, many nations, industries, and businesses have embarked on mega projects owing to the increasing economic development. Researchers are engaging in expansive studies to provide a lucid understanding of the reason why mega projects get in trouble as well as how these costly and hazardous errors can be curtailed. The superconducting super collider provides an archetype of a mega project that has failed. Major delays, poor project management strategies, cost overruns, project complexity, delusion of control, and represent the major reasons why such projects fail. Large and complex projects prove quite hard to manage on almost every aspect. Given that these projects are fragile and demand wide-ranging cross-functional cooperation, the project team ought to be more knowledgeable in the field of project management. References Altshuler, A. and Luberoff, D. 2003. Mega projects: the changing politics of urban public investment. Brookings Institution, Washington, DC. 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In Koehler, D. and Harvey N. ed. 2004. Blackwell handbook of judgment and decision-making. Blackwell Publishing, New York. Chapter 14. Stannard, C.J. 1990. ‘Managing a mega project- The Channel Tunnel.’ Long Range Planning, Vol. 23, No. 5, Pp. 49-62. Tae-In, M. 2005. ‘Impact of project leadership on user participation and the user involvement: the consequences for user satisfaction and systems usage.’ Journal of Management Systems, vol. 17, No. 1, pp. 35-43. The Standish Group International 2010. ‘Chaos summary for 2010.’ The Standish Group International, Inc, Boston, MA. Weston, J., Mitchell, M., and Mulherin, J. 2003. Takeovers, restructuring, and corporate governance. Prentice Hall, New York. Willard, E.P. 1994. ‘The demise of the superconducting super collider: strong politics or weak management.’ Canada Proceedings, pp. 1-7. Read More