innovation in megaprojects
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Innovation in megaprojects. Andrew Davies* PhD Course Part 1: Innovation in Projects Norwegian Business School 28-31 October 2013 *Professor Management of Projects, The Bartlett Faculty of the Built Environment School of Construction and Project Management - PowerPoint PPT PresentationTRANSCRIPT
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Innovation in megaprojects
Andrew Davies*PhD Course
Part 1: Innovation in Projects
Norwegian Business School
28-31 October 2013
*Professor Management of Projects, The Bartlett Faculty of the Built Environment
School of Construction and Project Management
Adjunct Professor, Department of Leadership and Organizational Behaviour, BI
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• Megaprojects
• Megaprojects: complex and uncertain
• Group work: innovation in megaprojects
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What are megaprojects?
• Large-scale infrastructure is designed and delivered as megaprojects of $1bn or more (Flyvbjerg et al, 2003)– “Productivity paradox”: despite growth in
number and opportunities to learn, projects often fail
• Megaproject organisation:– Large temporary coalition of suppliers– Led by large client, prime contractor or joint venture
– Process tailored to the requirements of the project
• Opportunity to find new ways to improve performance– Success depends on new and innovative ways to manage uncertainty and
complexity
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Megaprojects: poor performers
• RAND study of 52 major projects: average cost overrun 88%, only 50% performing as expected
• Channel Tunnel– Construction completed in 1994, £4.9bn,
80% over budget
• Boston “Big Dig”– Scheduled for completion in 1998 at $2.8bn
– Opened in 2007 at a cost of over $14.6bn
• Denver’s $5bn international airport– Nearly 200% cost overrun
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Megaprojects – poorly understood phenomenon
• Infrastructure delivery, operation and finance is becoming a “business”– Private sector involvement UK privatisation of utilities, airports,
ports and railways since 1979– Private Finance Initiative (PFI) Public Private Partnerships (PPP)– Contracting out and outsourcing of public sector tasks
• “Surprisingly, however, infrastructure has still received limited attention in management studies” (Gil & Beckman CMR 2009)
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• Megaprojects
• Megaprojects: complex and uncertain
• Group work: innovation in megaprojects
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Using Shenhar and Dvir’s (2007) model to understand megaprojects
• Megaproject is a case of a complex and uncertain project• Contingency theory: critique of “one size fits all thinking”• 1 dimension
– Shenhar (1993) 4 types of technological uncertainty
• 2 dimensions– Shenhar (1996, 2001) tech uncertainty and 3 levels of complexity
• 4 dimensional construct– Shenhar and Dvir (2007)
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Complex project(e.g. Apollo Moon
landing; Challenger Space Shuttle)
Simple project(e.g. implement
existing radio base station; IT system)
Technology
Novelty
Pace
ComplexityArray System Assembly
Derivative
Platform
Breakthrough
Super-high-tech
Medium-tech
High-tech
Low-tech
Regular
Blitz
Fast/competitive
Time-critical
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3 levels of complexity
Array project
• ‘System of systems’• systems with independent functions, but each with common goal
Airport• Channel Tunnel• New nationwide mobile communications system
System project
• single system - a common goal• platform with subsystems
• Aircraft• Air traffic control system• Building
Assembly project
• self-contained component• perform a function in a larger system
• Modular components and subassemblies• Computer stations
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Complexity and organisation
• Assembly projects • Single organisation (often one functional group), with the help from other
functions
• Small team working in one location
• System projects• Main contractor responsible for deliver of product
• Tasks divided among several subcontractors, in-house or external
• Array projects• Central umbrella organisation – often separate entity or company and formally
coordinates programme and subprojects
• Deals with financial, logistical, legal and political issues
• Projects often spread over wide geographical area
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Systems integration
Systems integrator
Parts suppliers
Subsystem suppliers
Operator and users
Component suppliers
Design and integrate hardware, software and services into functioning system
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Systems integrator
• Organisation with the capabilities to coordinate the design, integration of components and subsystems– Client – involved in several projects– Prime contractor– Joint venture
• Creates a process to coordinate a large network of suppliers
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Uncertainty and contractual approach
Cost-plus contract
• Risk and opportunity shared by client & contractor
• Client bears the cost of development and seeks to avoid less than optimal solutions
• Contractor has an incentive to produce best result and maintain profits
High Low
Fixed-price contract
• Contractor takes on all the risk
• Does not work well for high-tech uncertainty – creates risk for client & contractor
• Contractor loses money due to unexpected events
• Client gets inadequate product when contractor stays within the price range
Relative uncertainty
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• Megaprojects
• Megaprojects: complex and uncertain
• Group work: innovation in megaprojects
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Group work: innovation in megaprojects
Each group examines the three cases: Heathrow Terminal 5, London Olympics and Crossrail
Each group answers the following questions:
1.Describe the main characteristics of the megaproject (e.g. systems integrator, organisation, etc)
2.What are the main innovation challenges?
3.What are the main similarities and differences across the projects?
Literature:– 2.2 Project-based production: complex products and systems
– 3.3 Megaprojects
– 5.1. Systems integration
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Heathrow Terminal 5
London Olympics Crossrail
1. What are the main characteristics of the megaproject?
2. What are the main innovation challenges?