Customer Reviews

Megaprojects and Risk: An Anatomy of Ambition

5 star:		(3)
4 star:		(2)
3 star:		(0)
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1 star:		(1)

 

 

I am the first amazon.com reviewer of this short, but important book. It concerns me that this might reflect a diminished U.S. readership. That would be unfortunate. Professor Bent Flyvbjerg and his colleagues have written a book of significance to taxpayers everywhere. It's apparent that they have written this book largely for the policy-maker; yet, make no mistake about it: the ordinary taxpayer has a major stake in this book's message. The central characters in Megaprojects and Risk are three large-scale, European transportation projects: the Chunnel, the Great Belt and the Oresund. American readers unfamilar with these names (the chunnel connecting London and Paris is perhaps the most recognizable to American readers) will nonetheless recognize familiar features. Specifically, they will find project costs that exceed estimates, and revenue inflows that are below projections. The traits are not unique to these projects. In fact, cost over-runs and revenue disappointments are a familiar global refrain, according to these authors. In spite of this, the number and scale of infrastructure projects continues to grow, forming what they call the megaproject paradox. The book is stronger on documenting problems, including the lack of project post-audits, than on providing solutions. I think they have correctly identified the problem -- the lack of accountability throughout the project life-cycle -- but their solution, which largely involves ensuring a healthy segment of private capital not supported by state guarantees, together with more attention to genuine risk assessment, falls short of the mark. The risk assessment tools are firmly established and largely well-understood (Monte Carlo simulation packages are increasingly available). So is the "moral hazard" problem that rears its ugly head when projects (in this case) are "over-insured." The difficulty, which they acknowledge, is that the political interplay between state, private interests and NGOs are decisive in determining whether and to what extent the appropriate risk assessment and risk management tools are used.

This problem is inherent in the beast. Policy-makers would love for the private sector to shoulder the risk, but may not be willing to permit a commensurate return. Private players, just as understandably, are apt to seek insurance of one kind or another on the downside. The best medicine, and one that this book delivers admirably, is simply to raise our awareness of the track record from the start.

This short book has the look and feel of an academic work. It would, however, be unfortunate if it languished at the university bookstore. Global demographics dictate that larger-scale infrastructure investments are in our future. No one should pay for, promote or plan for such projects before they have digested the lessons in Megaprojects and Risk.

Every once in a while a little book comes along that, while small in size, carries sufficient intellectual weight to strike the body politic between the eyes, thereby getting its collective attention. This may be one such book. It offers a realistic look at megaprojects - those major infrastructure endeavors that span vast bodies of water, dam natural resources to generate energy and extend rail lines to previously unreachable regions - and compares the promises of these projects to what they actually deliver. The report card isn't very good. Cost overruns are typically 25% to 100%, and sometimes 200% or more. Worse yet, studies show that the public tends to use megaprojects - be they airports or subway systems - only a fraction of the amount predicted. We strongly recommends this book to politicians, legislators and anyone who wants to know the truth behind these huge infrastructure projects, as well as to CEOs, CFOs, project managers and risk officers in the private sector - this applies to your projects, even if there is a difference of scale.

Megaprojects and Risk: An Anatomy of Ambition

It is not an accident that your local megaproject is running at least 50% over budget or, more likely, 100% (plus) over budget. It is so much of a problem in megaprojects that the only reasonable conclusion is to assume all announced megaproject budgets are low by multiple factors. The numbers are produced by experienced consulting professionals under the direction of government planning agencies. Both groups should know better. We are therefore forced to conclude that the numbers are not off by accident.

This book is an easy read with a recurring theme. By the time the book is finished the point is pounded home. Until the trend is corrected, which is until people and organizations are rewarded or penalized based on the accuracy of their numbers, all megaprojects everywhere are highly suspect - if not already convicted of deliberate deceit of the public.

I ordered the book for one of managers and he was happy to receive it. So yes a happy costumer!
Thank you, Jacqueline

This is the best source of information I have found about mega-projects.

I fully disagree with one of the reviewers who says that the book is negative. On one side, it is true that the book explains the likely reasons for the projects to fail. On the other hand, there is no way to escape from these explanations when you talk about risk. In any case, the authors emphasize the idea that some of the projects are worth the money, however the project goals, cost, and impacts should be evaluated and discussed by all the relevant stakeholders (not just by some of them).

The book has also a very good basis of empirical evidence which is the main reason why I rate it with 5 stars.

In an ideal world, I would like to see the same analysis extended to any kind of mega-project...

Poorly written "shot" at large projects based on weak analysis and "leaps in logic". Presumes all megaprojects are bad based on very small sample and some high-profile failures.