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Federal Highway Administration Research and Technology
Coordinating, Developing, and Delivering Highway Transportation Innovations
This magazine is an archived publication and may contain dated technical, contact, and link information.
|Publication Number: Date: July/August 2004|
Issue No: Vol. 68 No. 1
Date: July/August 2004
Successful megaprojects start with an appreciation of the "mega" task at hand.
More than ever before, the Nation requires the transportation community to tackle some very tough and demanding challenges. These challenges are multi-faceted: a demand for safer systems, greater transportation capacity, complex multimodal solutions, environmentally enhancing context-sensitive designs, and an urgent requirement to renew or replace an aging and over-stressed transportation infrastructure. The solutions are difficult and complex.
To address the Nation's transportation challenges successfully when megaprojects are the solutions, agencies must be able to plan, program, design, and deliver projects of immense size and complexity effectively. Not only are the resulting projects necessarily large, complex, and costly, but also they attract intense pressure to minimize, if not to avoid completely, their adverse construction and postconstruction impacts on daily commerce, quality of life, and the environment. Additionally, some of the toughest transportation challenges tend to be centered in some of the Nation's oldest and most congested urban areas. The combined effect of these factors is what makes a megaproject a megachallenge.
To be successful it is vital that an agency is able not only to anticipate the complexity of the task at hand before embarking on the mission, but also to realize that megaproject management is more than just managing "a lot" of construction. Megaprojects require the management of a complex and sometimes difficult-to-understand set of public dynamics. Doing so is vital to preserve the public's trust and confidence in the transportation community's ability to invest valuable resources wisely. Without public trust and confidence, the resources will not be made available to address the immense challenges that face us [the transportation community] today and will continue to face us in the future.
Approaching a megaproject for the first time can be likened to the situation in which Police Chief Martin Brody (played by actor Roy Scheider) found himself in the movie, "Jaws." The chief, like those responsible for delivering a megaproject, was presented with a tough mission. He had to capture or kill a Great White Shark that had been terrorizing his community; the community was depending upon his leadership skills and talents to accomplish the mission. Although he had yet to see the shark, he readily realized that he had a tough and complex challenge ahead. He assembled his expert team — a seasoned but cantankerous shark hunter and a world-renowned shark scientist. Collectively, they loaded the boat with the best equipment, the best intentions, a whole lot of confidence, and the highest of expectations. It was not until later, after they were well out to sea, that Chief Brody suddenly and unexpectedly came face-to-face with the "mega" shark for the first time. Shocked, and absolutely stunned at the size of the actual "megatask" at hand, he succinctly articulated his reassessed situation with the now famous and often quoted line, "We're going to need a bigger boat!"
Discussing project cost overruns on a specific megaproject, former U.S. Department of Transportation (USDOT) Deputy Secretary Mortimer L. Downey said, "I wish we could have learned them [the lessons] a little cheaper . . . On any project there may be problems, but there should never be surprises."1
Finding out that the magnitude of the megaproject challenge has been underestimated after the "boat has set sail" is the wrong time to make the discovery. Yet based on the cost estimate overruns and the levels of negative press associated with several megaprojects, underestimating the challenge appears often to be the case.
Legislators and agencies that oversee highway programs suggest that the transportation community needs to do something to better size up our megaproject "boats" before we set sail. As U.S. Senator John McCain commented at an oversight hearing on a specific megaproject to the U.S. Committee on Commerce, Science, and Transportation, "This committee needs to know what assurances we have that the Federal and State highway officials responsible for overseeing this project finally have had their wake-up call." He continued, "We must ensure that [project] mismanagement and oversight neglect is a thing of the past."
U.S. General Accounting Office (GAO) Director for Physical Infrastructure JayEtta Hecker observed in her May 8, 2003, testimony before the House Appropriations Subcommittee on Transportation, Treasury, and Independent Agencies that "reviews by State audit and evaluation agencies have also highlighted concerns about the cost and management of major highway and bridge programs."
USDOT Inspector General Kenneth M. Mead agrees, "Since 1998, [the Office of the Inspector General] has reviewed numerous major projects throughout the country. Based on our body of work, we believe that better oversight of these projects is necessary. With budget deficits and transportation needs increasing at both the Federal and State levels, it is imperative that we squeeze the maximum amount of value out of each taxpayer dollar spent, while working to get the project completed in the most efficient and effective manner." Delivering projects on time and within budget also is highlighted in the USDOT's Top Management Challenges report.
Senator Fred Thompson's report, Government at the Brink, highlights the impact on the public. "These management problems exact a terrible toll on public trust and confidence in the Federal Government. A degree of public skepticism toward our government is a healthy thing. Rampant cynicism is not." He concludes that the combined effect of this cynicism and indifference creates a vicious cycle, "Our leaders can't really be effective if the public feels it can't trust them."
From these comments and other project experience, it is clear that before we [transportation agencies] start one we need to better understand what makes the megaprojects different!
Current Major Highway Infrastructure Projects
The Federal Highway Administration (FHWA) defines megaprojects as major infrastructure projects that cost more than $1 billion, or projects of a significant cost that attract a high level of public attention or political interest because of substantial direct and indirect impacts on the community, environment, and State budgets. "Mega" also connotes the skill level and attention required to manage the project successfully.
Seventeen projects are on FHWA's active megaprojects list (see "Current Major Highway Infrastructure Projects" at left), and the number is expected to double in the next 5 years.
Transportation megaprojects are a different breed and should not be viewed as simply more expensive versions of normal transportation projects. The planning for a megaproject must be different if a highway agency expects to achieve success. Project leaders and the management team must do more than just manage a project; they must manage a "public journey." They also must synchronize diverse interests and perspectives, communicate effectively and educate, and keep attention focused on the "big picture." Planning must reflect the extraordinary challenge ahead for the transportation agency and its partners.
Many of the challenges that make megaprojects unique appear obvious, such as the requirement to manage numerous, concurrent, and complex activities while maintaining tough schedules and tight budgets. Other challenges are not so apparent or at least do not initially present themselves as challenging. Yet these other challenges are seemingly not knowable in the early planning stages of the project. However, we [the transportation community] must be able to account accurately for all of these challenges if we are to be successful. An understanding of the dynamics of megaprojects will help project managers and planners foresee and account for challenges in the management preparation process. The following represent some of the megaproject characteristics that are worth considering.
Size.Megaprojects are huge undertakings. Not only do they require vast quantities of financial, human, and material resources (asphalt, concrete, and steel), but also their impacts on the human and physical environments can be enormous. Individually, each impact is of significant interest to a stakeholder group—an environmental organization, a neighborhood group, the business community, or the motorists who drive by every day—so collectively the impacts are sure to attract public attention and involvement.
Some megaprojects are so large that they create their own economic environments. When construction is at its peak, a megaproject can fuel a local economic boom. As the project reaches completion and construction activity subsides, the local or regional economy may weaken. Megaprojects also can tax the capacity of a region's construction industry, affecting the bidding climate and cost of other projects.
Financially, the numbers involved in megaprojects are large to start with, so any subsequent change in project cost often can have significant direct and collateral impacts. Even a small percentage increase in the cost can have a substantial impact on a State's overall budget and look alarming on the front page of a newspaper. A project's funding requirements also can affect a State's bond rating and thus the State's cost of borrowing.
Finally, a megaproject's size creates a perceived, if not real, momentum that is unstoppable. Once a large project is underway, decision makers have found themselves in situations where changing course is not an option no matter how different reality may be from earlier expectations. Because of the investment the project requires and the attention it generates, it is hard to walk away from the project or delay its progress once it is underway. Any cost increases must be covered quickly, most likely at the expense of other State priorities.
Complexity. Complexity takes more than one form on megaprojects. Most highway agencies recognize that these super-large projects are technically complex undertakings requiring cutting-edge engineering and construction techniques. The management skills required to lead these large undertakings often require an effective combination of the best and most talented of both the public and private sectors. Assembling such a public-private sector management team poses significant challenges in itself and requires exceptional experience and foresight.
As public undertakings, however, these projects also require the cooperation of stakeholders representing a variety of interests, opinions, and agendas. Achieving and maintaining stakeholder and public support throughout the project's life can be exceptionally difficult and perhaps the most complex challenge for project managers.
Finally, these large projects often span two or more governing or political jurisdictions, thus complicating the decisionmaking process. For example, large bridge projects often require two partnering States to synchronize independent budget, legal, and decisionmaking processes in order to facilitate effective program and project execution.
As an example, the governors and highway agency heads of Kentucky and Indiana established a bistate agreement and management team to coordinate a $2.5 billion project to build two new bridges across the Ohio River between Louisville, KY, and southern Indiana. The management team includes the project managers from the Kentucky Transportation Cabinet, Indiana Department of Transportation (DOT), and FHWA.
|The planned Ohio River Bridges megaproject, which will take 15 years or longer to complete, will include a redesigned interchange and new bridges like the one shown in the background of this artist's rendering (above). Existing river crossings in the area (below).|
"The bistate agreement sets ground rules on how the project will be managed and vests decisionmaking authority in the management team," says Bill Gulick, project manager and assistant State highway engineer for Kentucky. "Without the management team and the agreement to back them up, the project would be unworkable."
Complex Procurement Contracting. Megaprojects require innovative approaches to fashioning the contracts that will be used to engage the construction industry. The desire to have one prime contractor responsible for the entire project most likely will not be achievable for any number of good reasons. The mere size of such contracts would significantly limit those who could bid, thus producing a poor bidding climate. Waiting for the design to be 100 percent complete might have an unacceptable impact on overall project schedule and cost, thus requiring a staging of contracts to begin construction early. In any event, multiple contracts may require the owner—the State—to accept the responsibility and risks associated with the management of the complex construction contract interfaces, and any design-related changes that might arise after construction begins. These risks must be carefully identified, evaluated, and accounted for in the deliberations that precede procurement decisions.
Controversy. An undertaking that requires such a significant investment of resources inherently creates controversy among various stakeholders over how resources should be invested, how impacts on the human and physical environment should be mitigated, and how success should be defined.
Because of their visibility, megaprojects often become targets for political debate. Naturally, anything that captures public attention is important to elected officials. Election outcomes, personal reputations, and successful public careers often can hang in the balance with the success or failure of a megaproject.
Time. One often-overlooked aspect of megaprojects is the impact of a protracted lifespan. Although some projects take a few years to finish, others go on for 15 or more years. In 2003, for example, FHWA signed a record of decision on the Louisville-Southern Indiana Ohio River Bridges project, but construction is not expected to be completed until 2020.
It is important to consider the changes that could occur during a project's lifespan. How often will change occur in the economy, political landscape, laws and regulations, technology, and composition of the project management team? How could these changes affect the project? How will the public's support and patience be maintained over the long term? The project management team must account for all of the uncertainty associated with the element of time.
The Indiana DOT realized that assigning only one manager to a complex, long-term megaproject was not enough when a staff change earlier this year left the agency without a project manager on the Ohio River Bridges job. "We plan to assign a deputy project manager to help maintain continuity and handle the workload," says Chris Baynes, acting manager for the Ohio River Bridges project and head of project management for the Indiana DOT.
Maintaining public support through ongoing outreach efforts is also critical to the success of a long-term project, Baynes says. "The more information we share on what we do and how we do it, the more people understand why it seems to take so long to complete a project like this," she says.
Scope Creep. A major source of cost increases on megaprojects is additional scope (or an increase in project size, breadth, or complexity), which can come about in several ways. Some stakeholders believe a megaproject's size enables it to absorb additions without visible impact. Others see it as a cash cow with sufficient resources to handle collateral interests. Still others try to leverage it as a vehicle to get "pet" projects underway without having to deal with otherwise seemingly overly bureaucratic project approval and funding requirements.
Regardless of the reason for scope creep, it can be a challenge for the managers charged with maintaining the project's budget. The USDOT Office of Inspector General (OIG) cited scope creep as a key reason that cost estimates for a major interstate interchange project jumped 180 percent, from $241 million in 1994 to $676.5 million in 2002.
|Maintaining public trust can be a challenge on large-scale, long-term projects like the Central Artery/Tunnel Project ("the Big Dig") in Boston. The project will replace the elevated highway shown in this aerial shot with an underground tunnel.|
"As the project was defined and input was received from stakeholders, the project's scope was expanded to encompass $140 million of secondary road improvements and design enhancements," the OIG wrote in a 2002 audit of the project." Scope creep remains a significant issue in major project "cost growth."
Urban Setting. Most megaprojects are designed to enhance the existing infrastructure in urban areas. Community life cannot be put on hold while a project is underway, so it is important to carry out construction in a way that diminishes neither the capacity of the existing infrastructure nor the vibrancy of the local economy and quality of life.
One of the most significant—and expensive challenges—of the Central Artery and Tunnel Project ("Big Dig") in Boston was to construct the tunnel under the footprint of the existing elevated highway, under Amtrak rail lines, and over and under the city's subway transit system without diverting or interfering with the 190,000 vehicles per day on the existing elevated Central Artery and the approximately 800,000 trips per day on the commuter rail and transit systems. Life and commerce in Boston could not be interrupted.
Similar requirements exist for the $2.43 billion Woodrow Wilson Bridge Project near Washington, DC, that is designed to unclog a significant traffic bottleneck in the I-95 corridor. Construction must accommodate more than 195,000 vehicles a day that includes more than 1.3 percent of the gross domestic product that is carried by truck. A detailed congestion management plan had to be developed to keep traffic safely moving during its construction phase.
"The goals of the congestion management plan are to keep traffic moving and maintain the preconstruction incident response and clearance time," says Jitesh Parikh, FHWA oversight manager for the Woodrow Wilson Bridge Project. "This project will have an impact on traffic, but it is important that we maintain public safety and mitigate any adverse impact on travelers."
Human and Environmental Impacts. Because megaprojects affect various communities differently, they present challenges for the project team to work with stakeholders to develop solutions that address their specific needs. At the same time, it is easy to underestimate the impact of environmental protection on project success. Knowledge of environmental issues and the laws governing them can evolve, making environmental mitigation a complicated process requiring significant planning and resources.
Public involvement in community and environmental issues is an important aspect of the Woodrow Wilson Bridge Project. "We try to avoid impacts on the project's neighbors and the environment," says Parikh. "But in cases where that's not possible, we try to minimize and then mitigate impacts on the natural and human environments."
Managers for the Woodrow Wilson Bridge Project, as part of their ongoing communications efforts, have held biannual meetings with resource agencies, monthly meetings with the officials from the city of Alexandria, and public meetings with various stakeholder groups, sponsored forums for property owners, and made presentations to professional groups. Other communication methods include a Web site, newsletters, and media outreach.
Risk and Uncertainty.Tied to other factors that make megaprojects challenging is preparation for the unexpected. Although predicting everything that the project will encounter is impossible, expecting all to go as originally planned is not realistic, given the complexity of these projects.
The solution is to develop a disciplined risk management process that assesses exposure and builds analysis-based contingencies into areas of the project that demonstrate uncertainty. Effectively managed and not overstated, a contingency can help to ensure that costs adjustments associated with risk can be covered without having to seek additional or new funding. The use of risk-based contingencies will also provide decisionmakers with a more accurate assessment of what the ultimate project cost will be. (See "Reducing Uncertainty".)
|Public involvement has been important during construction of the Woodrow Wilson Bridge Project, shown here in an artist's rendering.|
In the words of Abraham Lincoln, "With public sentiment, nothing can fail. Without it, nothing can succeed."
Because of their size, complexity, and juxtaposition to existing infrastructure, megaprojects affect large numbers of people on a day-to-day basis. Construction activity on transportation megaprojects is necessarily centered in the public's "backyard." And the media will keep the project's progress—good and bad—in newspapers and on the air.
As a result, the project's ultimate owners—the taxpaying public—are in a position to regularly observe and continually evaluate the project. The public's support, patience, and tolerance for inconveniences are vital for the success of the project. Depending on what they perceive and how they react, they can either extend or withdraw their support for the project. That support is crucial and special attention is required to maintain it.
Requirement for Project Proponents.These projects are tough undertakings and absolutely require solid project proponents—project champions—who have the capacity and leadership stature to ensure that the project retains the required support throughout its life. It is one accomplishment to move a project to construction contract award. It is another to champion a project through to completion. As with other key players, time may see key "faces" change. Yet it is crucial that the project retain individuals or groups who are capable of maintaining the requisite support.
Managing in a Fishbowl.Central to maintaining megaproject public support is clearly demonstrating that the project is being managed appropriately. The public must be satisfied that public funds are being invested wisely, without waste, fraud, or abuse. The public also must believe that the integrity of the project's management is beyond reproach. And as far as the public is concerned, "perception equals reality."
The high visibility of megaprojects heightens the importance of public support. Key to success is an open management style that yields no surprises or hidden issues. Openness requires frequent reporting of all news, good and bad. It also requires establishing a means for the public to interact with the project's management. This interaction is important and can be carefully crafted to remain comfortably separated from "management by public committee."
|This aerial photograph shows ongoing work on the Springfield Interchange megaproject near Washington, DC, where the project team is trying to avoid increasing congestion during construction.|
Managing Public Expectations. The complicated management strategies and progress metrics required by megaprojects are difficult to communicate in an era of short sound bites, quick conclusions, and snap decisions. The impact of risks and technical challenges are hard to define and comprehend, and care must be taken to ensure that these issues are understood. Caveats that qualify statements made about the project are either difficult to follow or are forgotten by those who do not deal with project issues on a regular basis. Cost estimating qualifiers are confusing, so estimates must account for risk and be designed to best predict the "final delivered cost." Costs must be made in terms of figures that the public and decisionmakers can readily understand. This requires the use of "year-of-expenditure dollars" rather than uninflated or otherwise indexed figures. Overoptimistic or unclear forecasts of project challenges and costs, plus a lack of consistent, well-defined goals, can either confuse the public or, much worse, leave the public with the impression that it has been misled.
Megaproject planning should begin with a special appreciation for the importance of accurate public expectations, and the project should be managed throughout its lifespan to ensure that public expectations keep up with reality. (See "Building Public Trust".)
Potential for Waste, Fraud, and Abuse. As with any other large public undertaking, misuse of public resources on a megaproject can quickly erode public confidence in management's vital stewardship abilities. The mere size of megaprojects makes them obvious targets for such abuse, and careful and constant vigilance is mandatory.
A final comment in the discussion of megaprojects needs to center on the importance of defining "success" and keeping the eye on the larger picture. Consider the following from an article, "Transportation: Public Trust Is Key," by Paul Schlienz and Scott Carlson for the Association of Washington Business [for the State of Washington]. Governmental Affairs Director Tom Dooley says, "There's a lot of concentration right now on the legislative side to try and build back the trust and faith of the public. We have to show them we can better utilize the resources we have and that we can put forth options that will show that we can complete transportation projects that are of greatest importance, on time and on budget." He continues, "One of the things the Washington State Department of Transportation learned from the failure of Referendum 51 [a 2002 voter referendum designed to raise funding for key transportation infrastructure] is that they have to concentrate on efficiency and accountability before they can start talking about revenue issues."
Earning public trust and confidence is basic to any public agency's purpose and existence. Agencies are charged with ensuring that the programs they oversee are conducted in a manner that best meets the public interest. The public expects agencies to maintain the highest standards of integrity, demonstrate competence, make wise decisions, communicate openly and clearly, and meet commitments. By meeting those expectations, the agency earns the public's trust and confidence. As evidenced by Washington State's experience, the public's willingness to invest resources in any undertaking is directly linked to the quality of that earned trust and confidence.
Megaprojects are no different with respect to public agency responsibility, yet they are different and there is "a lot on the line." They provide a unique and exceptional opportunity for members of the public to focus attention on the transportation community and draw conclusions, deserved or undeserved, about its competence. Based upon the perception of the project's success, public trust and confidence in the transportation sector as a whole often lies in the balance.
A successful megaproject should not just deliver a significant improvement to our transportation infrastructure. Experience in the transportation community at the Federal, State, and local levels has demonstrated that a successful megaproject requires more than being successful in the traditional and vital objectives associated with quality, cost, schedule, and safety. A successful project needs to leave behind a sense of public pride in both the accomplishment and the manner of accomplishment. The public leadership, the project delivery process, and the project management team should have earned the public's trust and confidence as a result of the undertaking. The public should conclude that the project was a necessary and wise expenditure of taxpayers' resources and a worthwhile demand upon the public's patience.
The management team that understands what makes megaprojects different, incorporates lessons learned, establishes clear goals, and uses clearly understood metrics to measure success will have set the stage for success. Additionally, maintaining effective contact with both the public and the public leadership and keeping the "larger" picture of success in focus over the project's lifespan will preserve the public's trust and confidence. And when the project is complete, that team will have achieved success by every definition.
As the need for megaprojects grows—and with public support—highway agencies will have opportunities to demonstrate a convincing capability to tackle tough problems and construct much-needed improvements in the Nation's transportation infrastructure. In the National Academies' 2002 report, Completing the "Big Dig": Managing the Final Stages of Boston's Central Artery/Tunnel Project (2003), the Committee for Review of the Project Management Practices Employed on the Boston Central Artery/Tunnel ("Big Dig") Project recommends that other megaprojects "could benefit from the lessons learned from the Big Dig—the causes of the many problems...as well as the solutions developed by the management team, design engineers, and construction contractors. Participants in these new projects will need to learn how to develop realistic expectations and manage efforts to achieve them."
As daunting as the megaprojects might seem, the transportation community has stepped up to the challenge on numerous occasions and has shown clearly that it can achieve success. The Olympic-supporting I-15 project in Utah and the Alameda Corridor project in Los Angeles, CA, are excellent examples. The key to success is to realize and understand the challenges early in the planning process, to develop strategies to address them, and to establish accurate and achievable expectations. Most important is to recognize that these projects cannot and should not be shielded from public scrutiny. They cannot be successfully accomplished without the public's support. They must maintain public trust and confidence.
A different breed, megaprojects present a unique challenge for the transportation community. However, through both the development of sound financial and project management plans and the integration of best practices and lessons learned from other projects, the transportation community can ensure that these projects will capture the requisite and more broadly perceived public trust and confidence that is so vital to our transportation community. We may need a "bigger boat" to handle these megaprojects, but that "bigger boat" is readily accessible.
FHWA Deputy Administrator J. Richard Capka is responsible for shaping the management of highway megaprojects across the country and developing other FHWA programs and initiatives. Before joining FHWA, Capka was executive director and chief executive officer of the Massachusetts Turnpike Authority, where he directed oversight of the Central Artery/Tunnel ("Big Dig") project. He spent three decades in the U.S. Army Corps of Engineers and retired as a Brigadier General after serving as commander of the Corps' activities in the West/Southwest region of the United States, and southeastern U.S., including the Caribbean, and Central/South America regions.
1. Frank Micciche, "Black Hole," Government Executive, April 2001.