Global economy faces $1.5 trillion hit due to mega projects delay
LONDON, 20 days ago
Global economy is at risk of missing out on more than $1.5 trillion of economic growth by 2030 due to late delivery of mega projects, said an industry expert.
Despite the backdrop of record levels of investment, the ability to deliver on time, on budget and with the promised economic and societal benefits remains exceptional, stated delivery consultants and construction experts Mace in its report titled 'The Future of Major Programme Delivery.'
The new report, which analysed over 5,000 mega and giga-projects and programmes from countries around the globe, has revealed for the first time that 11% are at risk of significant delay or cancellation.
Mace, in the report, looks at different approaches to delivery and suggests actionable solutions centring around more collaborative models, including being more outcomes focused, having a ‘one team’ approach and sharing risk and reward.
It also suggests taking more time up-front to ensure readiness, defining and agreeing good governance, having a clear scope definition and cost realism.
Mace pointed out that the commissioning of major programmes, whether for energy, high-speed rail, hospitals or homes, schools or flood defences, as the climate changes and as urbanisation continues, has resulted in the number increasing by 280% since 2010, a trend set to continue.
Dominated by the US, with 1,663 projects announced since 2010, and driven by countries such as India (729), Saudi Arabia (577) and the UK (484), data from the report shows programmes are becoming larger, more complex and more expensive.
Driven in part by political support and public investment, the top 10 live global projects looked at have a combined total value of $685 billion.
Mace Consult CEO Davendra Dabasia said: "When large-scale programmes are significantly delayed and go over budget, the focus on the positive impact they have is diluted. When major programmes exist to deliver beneficial outcomes for society, it’s a factor that needs to be addressed."
"Many of the issues are systemic, often driven by national politics and policies, and reflect the challenging ecosystem that delivery takes place in," noted Dabasia.
"As major projects and programmes become larger and more complex, delivery models need to be agile to tackle challenges and capitalise on any new opportunities. The solution must rest with more collaborative delivery approaches that prioritise the creation of integrated teams aligned to common goals that seek the same positive outcomes," he added.
Christopher Seymour, Managing Director for Middle East and Africa at Mace Consult, said: "This report arrives at a pivotal moment, with the Middle East and Africa region – particularly the UAE and Saudi Arabia - at the epicentre of a global construction boom."
"Saudi Arabia alone has seen a 643% increase in the number of active megaprojects since 2010, driven by Vision 2030 and landmark programmes like Diriyah, Qiddiya, and King Salman International Airport," stated Seymour.
"The scale and complexity of major programmes like these demands a delivery approach that is collaborative, integrated, and focused on outcomes. It is about building trust, aligning incentives, and creating a one-team culture that empowers people to make the right decisions for the programme or project, not just their organisation," he added.
The Mace report highlights that as projects grow in size and scope so does the risk of delay. With longer timeframes, there is a higher chance of encountering significant external events such as a price shock, war or political upheaval.
This is notwithstanding new digital tools, including AI systems that integrate cost and time overlays, and automation of processes designed to help boost productivity and enhance human capability, it added.
The paper is clear that the challenges faced in delivery are not a reflection of a lack of capability within the supply chain, but issues such high levels of bureaucracy, protracted consents processes and changes in scope and funding that industry must overcome.
This is compounded by optimism bias, incomplete designs and pressure to ‘get spades in the ground’ without proper planning.
The focus on tackling these challenges and the subsequent impact on cost and schedule continues to detract from the beneficial outcomes of these programmes.
The report highlights that collaborative approaches result in a 4%-13% reduction in cost and a 50% reduction in the risk of projects being delivered late.
With more than 11,000 live mega-programmes and 250 giga-programmes and projects currently in delivery around the globe, and the number growing, proponents of the report hope the focus on these will rest with the value they bring rather than on how they are delivered.-TradeArabia News Service
