Why Do So Many Projects Fail and Go Over Budget, and How Can You Avoid It?

What Can Frank Gehry’s Guggenheim Teach You About Planning Your Next Big Project?

Uncover the hidden reasons why projects fail with How Big Things Get Done. From home renovations to megaprojects, learn how to beat cost overruns, master the “Think Slow, Act Fast” method, and apply the success secrets of the Guggenheim Bilbao to your own work.

Stop wasting time and money on failed plans. Read the full summary now to discover the proven “Think Slow, Act Fast” blueprint that ensures your next project finishes on time and under budget.

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In this fascinating tour of flops and triumphs, megaproject expert Bent Flyvbjerg and journalist Dan Gardner delve into what went wrong — and right — in the planning and execution of a variety of projects. They lay out why the Guggenheim Bilbao came off flawlessly while the Sydney Opera House and California’s high-speed rail faced cost overruns. The book expands into other types of projects, too. Why did author Robert Caro take seven times as long as he expected to complete The Power Broker? And how on earth did Jimi Hendrix’s studio in Greenwich Village get built with no plan or budget?

Take-Aways

• Megaprojects happen more quickly if everyone slows down during the planning process.
• Several forces doom big projects to failure.
• Flawed thinking can curse small projects, too.
• The Guggenheim Bilbao is a rare example of a major project that came in under budget.
• Experience is crucial, but it’s too often overlooked.
• Sometimes, blown deadlines are the result of faulty forecasting.
• Jimi Hendrix broke all the rules of project planning with his Electric Lady Studios, but the finished project was a success.
• Lego blocks and wedding cakes provide a model for turning small steps into big projects.

Summary

Megaprojects happen more quickly if everyone slows down during the planning process.

Big infrastructure projects are nearly synonymous with cost overruns and construction delays. Whether the project is the Holland Tunnel in New York City, the Channel Tunnel connecting France and the UK or the Great Belt bridges and tunnel in Denmark, costly mishaps abound. The Great Belt project went sideways in the late 1980s when workers building a suspension bridge unwittingly breached the undersea rail tunnel, causing a devastating flood. Flyvbjerg’s yearslong research project found that hundreds of megaprojects completed from 1910 to 1998 underestimated costs by an average of 28%. Even megaprojects in Germany and Switzerland — nations lauded for their precision and organization — failed to finish on schedule or within budget.

“Projects that fail tend to drag on, while those that succeed zip along and finish.”

Hasty construction work mars nearly all failed megaprojects. The scenario is familiar: The project grabs headlines, and those leading the way do not want to be embarrassed by missing the deadline. So, they push workers to move quickly. The Copenhagen Opera House offers one such example – the architect, Henning Larsen, was so upset by the building’s final form that he felt compelled to write a book about how the demand for speed compromised the building process. A more tragic example occurred in Mexico City, where a shoddily constructed train tunnel collapsed.

Too many projects follow the mantra, “Think fast, act slow.” In other words, not enough time and effort are devoted to planning. The proper procedure for any project — whether you’re building a dam or a new tech gadget — is to “Think slow, act fast.” You must engage in in-depth research, analysis, testing and consideration of all the details involved before trying to deliver the project. As Pixar co-founder Ed Catmull notes, “The costs of [planning stage] iterations are relatively low,” and all that brainstorming, problem-solving and testing allows the actual production phase — where costs truly mount up — to unfold quickly and smoothly.

Several forces doom big projects to failure.

One force that leads to project failures is “strategic misrepresentation.” Contractors bidding on large projects fret that they’ll never win the bid if they come in with a high budget and a long timeline. So, they perform perfunctory planning and cursory research. This approach might win the contract, but a light touch when it comes to due diligence nearly always backfires. Another reality is that humans tend to be optimistic. This is a necessary trait for daily life. If humans were primarily pessimistic in their outlook, they’d never get out of bed, let alone start families or embark on ambitious projects. But when people apply overly sunny views to large, complicated projects, their overconfidence comes home to roost in costly ways.

“We are a deeply optimistic species. That makes us an overconfident species.”

Humans sometimes miscalculate on purpose; other times, they do so without intending to do so. You routinely expect to reach a destination in 20 minutes, even though the trip always requires twice that amount of time. You expect your toddler to doze off after 15 minutes of bedtime reading, but the process inevitably takes longer. When the task at hand isn’t just getting to a restaurant on time but building a significant project, overly optimistic assumptions quickly spiral out of control.

“Problems and challenges overlooked are problems and challenges that won’t increase the estimate.”

Another common issue seen in the world of megaprojects is that governments everywhere engage in “strategic misrepresentation.” Officials intentionally mislead the public about the actual cost of any given project. Prominent French architect Jean Nouvel, in a 2009 interview, acknowledged that the stated initial cost of any large project is a fantasy.

Willie Brown, the former mayor of San Francisco and California legislator, expressed similar sentiments in a 2013 guest column for the San Francisco Chronicle. “In the world of civic projects, the first budget is really just a down payment,” Brown wrote. “If people knew the real cost from the start, nothing would ever be approved.” In other words, large projects are essentially designed to blow through their budgets to the tune of hundreds of millions of dollars. Flyvbjerg once proposed an article about strategic misrepresentation to a major architecture magazine. The editor rejected the piece on the grounds that everyone lies about the cost of their projects.

Flawed thinking can curse small projects, too.

David and Deborah, a couple living in New York City, decided to renovate their 1,200-square-foot apartment. The home dated to the 1800s, and the initial estimate wasn’t cheap — about $170,000 to redo the kitchen. Once work began on the seemingly quick project, structural issues emerged. The owners decided that since they were out of the house anyway, why not also redo the bathroom, the living room and the basement? Costs ballooned, soaring to $400,000, then $600,000, then $800,000. And the project dragged on for a year and a half.

“The cause of good planning is the range and depth of the questions it asks and the imagination and the rigor of the answers it delivers.”

When the work was finally done, the apartment had indeed been upgraded. But in terms of time and money spent, the project was an abject failure. David, Deborah, and their architect seemingly followed the mandate to think slowly. They didn’t rush into the project; the architect’s drawings were detailed and painstaking. But planning meticulously isn’t the same as planning well. In fact, a detail-oriented plan can disguise the fact that those planning have failed to understand the true goals of the project. The best plans ask and answer a wide range of probing questions, starting with, “Why are you doing this project?” and consider what could go wrong.

The Guggenheim Bilbao is a rare example of a major project that came in under budget.

The Spanish landmark is considered one of the most important architectural achievements in recent decades. It also came in 3% under budget — an accomplishment that launched Frank Gehry into the upper echelon of architects. Gehry achieved success with the Guggenheim Bilbao project through meticulous planning. He started with the most basic materials — sketches on paper, then models made of wooden blocks and cardboard. Later, Gehry moved on to hyperrealistic virtual models.

“Planning is doing: Try something, see if it works, and try something else in light of what you’ve learned.”

Gehry credited his approach in part to his Talmudic studies. “Jews question everything,” Gehry said — a brand of curiosity that pays dividends when tackling complicated tasks. Gehry’s ability to iterate was smoothed by technology. He used the software CATIA, which was created for airplane design, to create virtual three-dimensional models of buildings. Gehry deployed the software to design the Olympic Fish for the 1992 games in Barcelona, and he used it again for the Guggenheim Bilbao, which opened in 1997. CATIA allowed for supercharged planning. Gehry and his team could tweak a detail here or there and then see how the change would affect everything from the building’s structural integrity to the functionality of the plumbing, heating and electrical systems. Technology allowed Gehry and his team to perfect the building in the virtual world before beginning construction in the physical world.

Experience is crucial, but it’s too often overlooked.

Like the Guggenheim Bilbao, the Sydney Opera House is an architectural marvel. However, unlike Gehry’s project in Spain, the Australian landmark suffered long delays and cost overruns. Construction began in 1959, even though plans had yet to be completed. The lead designer, Jorn Utzon, lacked Gehry’s experience. Utzon was just 38 and had built no portfolio before he landed the Sydney Opera House project. Gehry was 62 and boasted a long résumé when he was chosen to create the Guggenheim Bilbao.

“We do not make the most of experience because we do not appreciate how deeply experience can enrich judgment and improve project planning and leadership.”

Beyond the artistic merits of his vision, Gehry had spent his career proving he could bring construction projects to a successful conclusion. Alas, that sort of useful experience takes a back seat to politically motivated appointments in too many megaprojects. Consider the case of California’s high-speed rail project. No such projects exist in the United States, so no American contractors have experience building high-speed rail. But instead of hiring experienced foreign operators, California officials hired American contractors. It was a politically popular move — and one that all but guaranteed the project would soon turn into a mess.

Sometimes, blown deadlines are the result of faulty forecasting.

When journalist Robert Caro began working on his biography of Robert Moses, he expected to complete the project in nine to 12 months. Caro based his estimate, in part, on his finances. He and his wife had little savings, and the publisher paid him an advance of just $2,500.

“Use a good anchor, and you greatly improve your chance of making a good forecast; use a bad anchor, get a bad forecast.”

Caro also based his forecast on his experience working as an investigative reporter at Newsday: He was accustomed to cranking out articles in weeks or months. Caro figured each chapter was similar to an in-depth newspaper story, so he’d be done in a year if he spent three weeks per chapter and wrote 17 chapters. Then Caro met two authors whose historical biographies he admired. They cheerfully informed him that they each devoted the better part of a decade to a single book.

Five years into work on The Power Broker, Caro realized just how right these experienced biographers had been. Thus, he unwittingly learned the importance of anchoring: Neither Caro’s bank balance nor his experience writing newspaper articles were meaningful in forecasting the time required to complete a book. A more helpful anchor would have come from polling book authors, which Caro eventually did.

Caro finally completed The Power Broker after seven years — selling his home to pay the bills along the way. The book became a bestseller and won the Pulitzer Prize. But Caro was haunted by the sense that he had failed. A project he expected to take just one year had dragged on for seven times that long.

Jimi Hendrix broke all the rules of project planning with his Electric Lady Studios, but the finished project was a success.

In the late 1960s, Jimi Hendrix took over the lease of a Greenwich Village club. Ever spontaneous, Hendrix wanted to turn the space into a recording studio. Instead of hiring an experienced professional to design the space, Hendrix hired a 22-year-old architect to do the job and gave him laughably vague instructions: “I want some round windows.”

Predictably, problems arose. Hendrix’s team learned an underground river ran beneath the building during construction. To keep the space dry, they needed to install sump pumps. However, the noise from the pumps interfered with the acoustics of the recording studio. To fix that problem, Hendrix’s architect and sound engineer soundproofed the studio by coating it with plaster that they first whipped with commercial eggbeaters — a way to build more air pockets into the walls.

“So yes, it is possible to take a leap in the dark and land gracefully. If it happens, it will make for a wonderful story.”

Meanwhile, Hendrix’s cash flow was inconsistent. He’d run out of money, and work would halt. Then, he’d play a concert, collect his payment in cash, deliver the funds to his construction team, and work would recommence.

Electric Lady had all the hallmarks of a boondoggle, and in some ways, it was a flop. Hendrix spent the inflation-adjusted equivalent of $7.5 million to build the studio and died soon after it was completed. But in other ways, the project was a success. Hendrix reveled in the finished project. The acoustics were top-notch — the eggbeaten plaster functioned better than anyone could have expected. Decades later, Hendrix’s studio has hosted Led Zeppelin, the Rolling Stones, the Clash, U2 and Jay-Z. The tale of Electric Lady Studios remains charming and inspiring, but serendipity is no way to run a project. Simply diving in without a plan dramatically reduces the odds of success.

Lego blocks and wedding cakes provide a model for turning small steps into big projects.

Modularity is a way to break big projects into small, manageable steps. Building a 9,000-piece Lego replica of the Colosseum sounds daunting. Modularity allows anyone to complete the task simply by beginning to snap blocks into place. Wedding cakes are another example of modularity. Even the largest, most impressive wedding cake is built by stacking smaller cakes. A novice can’t pull off the feat, but modularity allows for repetition, which fosters learning.

“The core of modularity is repetition. Put down one Lego block. Snap on another.”

Norway has applied the Lego strategy to hydroelectricity. Rather than build massive dams, Norway has pioneered small-scale dams — just some of a river’s flow is diverted to generate power. By duplicating this concept, the country produces power without the environmental damage or massive project risks accompanying large-scale dams.

Elon Musk used the modularity approach to scale Tesla. He started by building one small factory in Nevada. Once that facility was up and running, he built a second factory, combined the two, and then did it again. In this way, Tesla could begin generating revenue even as its next manufacturing facility was under construction. Musk has applied a similar ethos to SpaceX — it’s a very different company than Tesla, but the underlying engineering concept can be replicated.

About the Authors

Bent Flyvbjerg is a professor at the University of Oxford and at the IT University of Copenhagen. He has been called “the world’s leading megaproject expert.” Dan Gardner is a journalist and the best-selling author of Risk and Future Babble.