Technology Challenges

One of the key challenges for decision-makers concerns what has been referred to as the "dilemma of control," but is now extended to refer to the promotion of large-scale, or controversial, technology projects.

"What I mean by dilemma of control is that we tend to look for these projects to deliver great benefits to the companies that are involved, and more broadly to society at large. On the other side of the coin are the costs, time, and sometimes the lives that are lost in bringing these projects to fruition. So, on the one hand, we try to pursue the benefits of these projects, whilst on the other hand trying to control—minimize or mitigate—the costs of development," Genus says.

It may be tempting to see control as an attempt to rein in projects and the impacts of technology only once key commitments have been made. However, recent approaches to the topic emphasize the need to draw upon the diverse assessments of risks taken by various stakeholders, routinely and throughout the life of large-scale or controversial technology projects as the risks emerge, to enable the promotion of more robust innovations. These assessments may be cast in terms of the indicators cited in the following paragraphs.

For example, Genus considers that "early assessments regarding the flexibility or inflexibility of the technology involved with these large projects can have tremendous significance for both project management and project performance."

Indicators of Technical Inflexibility

Long lead times

Large capital projects tend to be marked by long lead times, and the length of that lead time can have a significant impact on project performance over the life of the project.

Where there is a long lead time—four to eight years in the case of first generation UK North Sea oil fields, more than double that for some nuclear power plants—investment decisions are vulnerable to changes in the forecasts of factors such as demand, prices, and costs made at the outset. The problem is that long lead times make it more difficult to apply what is learned late in the life of project; to a venture which may have changed out of all recognition compared with the situation prevailing some years earlier. Thus are lost "opportunities to absorb that learning into project development in a way that will have a beneficial effect on cash flow," says Genus.

High capital intensity

Large projects also generally involve heavy capital front-loading. High-profile "mega projects" can be affected by high capital intensities, in which lifetime capital expenditure constitutes about 50 to 80 percent of total expenditure, much of it in 'sunk' costs. This means that even when there are savings resulting from lessons learned on start-up of operation, it often means little in terms of lifetime project cash flows, particularly since high discount rates are often applied to such risky ventures.

The prevalence or likelihood of high capital intensity should sound a warning to decision-makers, being an indicator of the 'lumpiness' of technology involved in a project. When combined with other indicators, such as large unit size and long lead time, this may be accompanied by slowed learning about innovations for which there is little operating information to draw upon.

Genus believes that mistakes are inevitable on large projects. The key lies in finding ways to keep the cost of those mistakes relatively low, and the chances of doing so successfully should increase with the flexibility of the technology that is chosen.

Dependence on specialized infrastructure

Large capital projects often depend on highly specialized infrastructure, frequently requiring creative application of existing state-of-the-art technology as well as the development of new technologies that are specific to that project. They also often require a degree of technological invention: For the Channel Tunnel project, new tunnel boring machines had to be invented to accomplish the project when it became apparent that conditions under the English Channel didn't permit the existing design of tunnel borers to be used. This dependence on specialized infrastructure normally means significant front-end development just to create the means to carry out the project. Another consequence is that one is often left with equipment which is difficult to resell or put to any kind of secondary use.

"The technology [used to carry out large capital projects] often has basically one use: for this project. If you are lucky you can get some overspill onto subsequent projects, but at the time of the initial project it is quite a vulnerable place to be," says Genus.

Large unit size

Many large projects involve large unit size, which can further exacerbate problems of resale or reuse if and when that becomes desirable. As an extreme case, Genus points out that the "unit" for the Channel Tunnel is basically a 34-mile-long tube: not exactly an item for which there is a robust used market.

"In any case where you can do things more modularly, you increase options for redesign or reassembly if problems arise, or if you find better alternative approaches than those originally envisioned," he says.

Governance Challenges

Unclear leadership / disagreement over goals

Large projects can present unique challenges for governance, due to the sometimes unusual contractual arrangements and modalities required to implement them.

According to Genus, much of the project management literature doesn't deal adequately with the politics of contracts, the politics of client-contractor relations, or the behavioral issues which affect project management at the local level. As an example of challenges regarding leadership, Genus cites the Channel Tunnel project as "the archetypal project for looking at certain problems of leadership and clarity of objectives:"

"The Channel Tunnel project is nominally owned by EuroTunnel. The contractor on the Channel Tunnel project was a firm called TransManche Link (TML). In the mid-1980s, TML in association with 220-plus financing banks was able to draw up a construction contract which basically set up the contractual arrangements for the projects. What is interesting about that is that the 'owner' had no part in setting up the contract, so the project leader in this case was initially the contractor. As a result, TML felt that 'EuroTunnel's role should be to pay TML's monthly bills, give the nod on design development, and no more than that.' Anything more was seen as interference (by the owner). And there you have an amazing scene set for many, many legal contests to come," he says.

Lack of partnering approach

"In my field, we tend to look at airing values, surfacing values, and finding points or zones of indifference. We tend to talk about the benefits of the partnering approach and how important it is to have trust, collaboration, and mutual learning when it comes to controversial projects. In the real world it may not be so. We have to find some way to manage bad relations," says Genus, and this often applies as much to relations between firms and other stakeholders in society as it does among corporations.

Citing James Brian Quinn's work on incrementalism and regarding "zones of indifference," Genus advises first finding areas where the various parties are willing to concede a little, or can agree on broad points of principle, as a starting point for building trust and eventually resolving deeper disputes.

Attachment to the big idea and the grand design

Governance issues are often affected adversely due to the attachment that people may have to large projects. Over-identification with a particular high-profile project often means it is very difficult to change course even when the necessity of doing so should be obvious.

"People can develop an emotional attachment to big projects. Reputations and careers may be on the line, and one of the implications is that alternative options are marginalized, including the option to stop investment in a failing project. In the kinds of cases we have looked at, alternative possibilities for design are often overlooked. You get, for example, overemphasis on nuclear power to the exclusion or underemphasis of alternative or renewable forms of energy."

One key to dealing with such challenges is to identify which parties or which views and options are or could be neglected in a project, and then to develop a strategy for eliciting their inclusion at points or at a time when it could benefit the overall management of the project in question.

Missing actors

Decision making for large projects often tends to be dominated by a few big and quite important players. What this means is that some sources of expertise aren't given a seat at the table, and some actors' voices aren't heard.

"This kind of myopia means a loss of opportunity for learning. In the UK, we saw projects in the 1960s and 1970s to develop high rise apartments called system-built high rise tower blocks. Those kinds of projects tended to be alliances of local government and big building firms, but they tended not to consult with possible tenants, who might live in the tower blocks, resulting in disastrous social consequences" says Genus.

Excluding key stakeholders in this way can have serious consequences for project performance, in the form of cost overruns and slippage of development timetables, but also for society more broadly.

Conclusion

According to Genus, most conventional research on management of large-scale or controversial technology projects fails to address the peculiar challenges they face. Although he sees some progress recently, he notes that research in the area still tends to take what he regards as a simplistic or narrow approach, focusing on risk and contingency, but neglecting uncertainty and the wider social and political context of projects.

"I wouldn't focus merely on what can go wrong within projects, but on why projects come into being in the first place and how to improve project selection. I would focus on how to deal with uncertainties, how to recognize them and understand where they come from, and how to manage for them," he says.

By John Treat