Getting to know the World of Megaprojects: The Big Challenges - Part 1 of 3

In this podcast, Ricardo starts a series of podcasts about the world of mega projects. What makes a project a megaproject? Ricardo talks about the characteristics, risks, and impacts of the failure or success of a megaproject. He also begins to introduce the concept of FEL (Front-end Loading), which will be discussed in the next podcasts.

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Episode transcript

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Hello everybody welcome to the first five minutes BM podcast today. I like to discuss with you about Megaprojects. This is the first Podcast offer series that I wanted to cover in and trying to understand Megaprojects I know that most of you that are listening are not handling with this kind of Megaprojects, but most of the concepts that we can face on the Megaprojects environment, it's really, really very interesting that we can translate an, understand some aspects too, our life and to our projects.

So, first we need to understand what is a megaproject. Of course, there is no spreadsheet to clear state that this is a megaproject are not a megaproject, but really met a project is a project that is developed under a very complex environment. And its the most important project in any industry or company or government. The success off a mega project creates a huge impact in the companies and government. And now also in the society in the failure creates a massive amount of a stakeholder wealth that can evaporate.

So it's everything it's very extreme in a megaproject environment. The success grades are a huge in a long term impact, but the failure create a catastrophic environment. Usually if you want to have a number, a magic number, usually a megaproject requires above 1 billion bar often and right now it's sometimes it's far bigger than that we are facing right now. All your development projects and airports and this kind of huge big infrastructure projects that are far above and beyond $1 billion and why we should study because first this kind of project is increasing.

It creates a high impact in the society. We are talking about extremely transformational projects and it's highly problematic. We're not talking about simple things because we don't have information. Most of the time, this projects are in the cutting edge of the technology, very complex environment, very complex countries, very complex environmental challenges. So we're not talking about business as usual in why does is very difficult to manage because it's very hard to work at nice everything.

It's a huge physical and financial infrastructure. We are talking about specific and funding processes, major contractors. We're not talking about just one contract or we are talking about a pool of contractor from different countries, different backgrounds, working together, higher frequency of turnover because of this complexity. When the problems start to arise, people just leave. So it's very important that this creates a high complexity environment, very complex.

And it's usually in a week institutional framework. So you don't have community support to do the project. You don't have enough funds, you don't have enough qualified people. So those are the sets of difficult that we need to manage. An also megaproject. It's not a problem. Why? Because Prada, each piece I can leave alone. And we are just putting them together to create an economy of scale, to save money, to save time.

But in the megaproject, if you do one piece, there is no evident benefit on that. Let's suppose that you were doing an inducer or a mining company and you need also to Butte a railway. And now So a port. The port doesn't make any sense alone. The port only exists because you have the mining operation. So it's very important that you understand that the megaproject one piece can not usually survive or find a return on investment reliable for that.

And now also on the risk management risk, it's not just the risks. You face it on the risk register. It's far above and beyond that. It's exactly all the residual risks, the risks that you cannot meet a gate due to this complexity. So it's a very different environment from a normal project environment. So if you think in a normal project environment, you see a lot of challenge. But when you think about megaproject, we are talking about the different level because of this, that most of this project, they use the concept of the front and that Loading, it's a methodology and a process to do that.

And why this, because you don't have all the answers up to the front. In a lot of times, you need to have a gait where you decide to move forward or not because you don't have all the information. So this kind of project went, links become problematically. They just fall apart. They don't just go wrong. An understanding this fragility is a key to manage these kind of thing. So you need to understand that you have in your hand is a huge animal that is extremely fragile.

And now also you need to understand which kind of approach are you thinking about taking on this. And it's very important also to understand that it's speed as a very key factor. If you do things very slow, the prices are going sharply up, but a speed for the sake of a speed. It's an extremely dangerous process. So you need to understand how you can time in the project to raise the benefits. So it's very important that

Speaker 1 (6m 2s): You are not driven just by the calendar, but by the time

Speaker 0 (6m 5s): And asks that you need to do. And this is the topic of that we'll be covering in next week when I be starting talking about the Front ended Loading process. So see you next week with the second podcast of this series about Megaprojects.

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Getting to know the World of Megaprojects: The Big Challenges - Part 1 of 3

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