|Mike Dariano||Sep 10, 2019|
You don't know Bent Flyvbjerg but you know his work. You've risked peril on one of his bridges, roads, or airports. Flyvbjerg isn't an architect, he's an economist at Oxford University and he looks at megaprojects and the lack of the outside view.
Megaprojects are a useful example because they have good data and clear changes. Measurability is important for the outside view. Megaprojects also introduce the antagonist. We’ll get to him in a moment.
In a talk at the Harvard Graduate School of Design, Flyvbjerg shows the cover the New York Review of Books and Time magazine. Alongside cover models is covered bridges, kinda. Infrastructure a big deal-so, Flyvbjerg reasoned, let's treat it like one.
If we're going to talk about, think about, and boast about our Olympic stadiums, public buildings, damns, railroads, airports, and highways let's really talk about them.
Flyvbjerg wants to know this, when someone (governments, businesses, non-profits) proposes a megaproject, how often does it work out as planned.
He found the answer is ‘rarely’.
Rail projects run 44% over budget. Bridges 33% over. The Channel Tunnel was 2X. Ninety percent of projects don't finish on budget, on time, and as promised. That's the outside view and it's been the view for seventy years.
Well, project planners say, every project is unique with it’s own challenges, obstacles, and surprises.
Well, Flyvbjerg replies…
“You hear this when you talk to project planners like I do in my research. You will hear them say you cannot compare projects, it’s impossible, each project is unique. Our statistician laughs when he hears this because he says the curves of cost overruns and benefit shortfalls are so similar that it’s ridiculous to talk about the projects as being unique.”
What gives? If the outside view is helpful to make better decisions then why is the outside view neglected?
Our villain is Sweet-Talk.
Megaprojects don’t use base rates because they use stories instead. The most outlandish articulate the benefits and hide the costs. People are terrible at seeing what isn’t in front of them.
In one college class students were asked, when they bought an iPod if they would choose the 64gb version or the 32gb version. Two to one they chose the larger size.
When the professor asked a different but similar group of students if they would buy a 64gb version or a 32gb version and use their $100 in savings for music, accessories, and other purchases the ratio flipped. Two to one the students chose the smaller size and the cash.
The kids knew the prices, knew the benefits, and knew everything except the obvious. They needed a story. The same for megaprojects. Good (in the sense of buy-in) megaprojects get built with compelling stories first and the outside view not at all.
Tomorrow we head back to the world of sports, and temper our attitude towards Sweet-Talk.
*Both Flyvbjerg and fellow Scandinavian Hans Rosling talk about uneven distributions that should be.