Optimism bias is a major factor in overspends and delayed project delivery. Leila Behzadi-Spencer looks at what future infrastructure leaders might do differently.
With the government proposing to spend £600bn on infrastructure over the next five years, the potential for the industry is rapidly expanding. Yet, several projects are delivered late or overspent, with 69% of construction projects between 2012-2015 exceeding budgets and 60% missing deadlines.
One of the biggest causes of this is Optimism Bias: the tendency to be overly optimistic about project cost, timeframes and benefits. Arcadis wanted to understand the views of Gen Z on the topic, a group that will make up a third of the workforce in 10 years’ time.
We identified three main factors contributing to project cost and time overruns.
Firstly, optimism bias in the form of inaccurate forecasting at planning stages is a significant factor. With pressures from numerous channels, this is a frequent occurrence at multiple stages in the project lifecycle. Should it be tackled, recent PMI research has suggested there is a potential for a 13% improvement on programme cost efficiency through effective planning.
Secondly, behavioural factors such as internal politics, poor communication and stakeholder management were raised. These lead to confusion and a lack of common purpose on projects.
Finally, the importance of strong leadership was recognised to drive clarity around project vision and greater diversity within teams. The quality and capacity of leadership is not always consistent in the industry with many leaders juggling multiple tasks and the increased complexity of projects meaning that skillsets are likely to be disaggregated throughout industry.
By combining these views with the experience and technical knowledge of current generation leaders, we identified six areas for opportunity:
Focus on project outcomes: Adopt procurement models that do not promote aggressive behaviours between clients and contractors and the potential adoption of Project 13 recommendations, providing more incentives to deliver on time, consider long-term value and create more collaborative relationships.
Strengthen the role of the Infrastructure and Projects authority and the use of NIP: This will provide benchmarks, guidance and lessons learnt, enabling efficient delivery, and increasing demand certainty, unlocking private investment.
Invest in skills: There is a need to identify new models to grow skills such as training apprentices as well as shifting the training focus to look at leadership and technical skills equally. This will provide the necessary skills to deliver projects whilst equipping leaders to make strategic decisions.
Enhance collaboration: This will enable a two-way culture allowing for regular communication and the ability to work together to identify solutions. The pressure to hide risks and failures will be reduced, lessening the likelihood to under-value or miss risks.
Better use of technology: Technology such as 6D BIM and blockchain combined with better collaboration with infrastructure-focused tech start-ups will enable faster project delivery, cost-effectiveness, increased productivity and improved user experience.
Increase the use of data: By using data throughout projects, particularly benchmarks and evidence-driven scheduling and cost planning, we will see early identification of issues and more exact project planning.
These ideas may not all be new, but they have not all necessarily been used to their full potential. My hope is that these recommendations can unlock the full value of the public investment, restore public trust and confidence, leverage further private investment and improve quality of life.
Leila Behzadi-Spencer is a junior consultant at Arcadis.