The Interstate Highway System

Complex projects and Megaprojects have for a long time fascinated human beings with an increasing desire to build bigger and better structures. The advancement in technology is one driving factor in the pursuit of such desires. Technology has advanced the construction criteria that give individuals a wider range of measures that can be used to try out newer projects.

Complex projects and mega structures are high-risk controversial projects that are disruptive and expensive. Over the years, there have been successful megaprojects established and running to date. Some of the mega projects include the International Space Station that cost $150 billion of 2010, Al Maktoum Internation Airport in Dubai that cost $82 billion dollars as of 2018, and South-to-North Water Transfer project that cost $78 billion as of 2014 (Newcomb, 2018). Further, there is the Shanghai Disneyland which cost more than 5 billion dollars in construction (Now This World, 2015). There is also the Saudi Arabia’s Kingdom Tower that is underway and built by the Gulf State. The mega project cost 1.2 billion dollars. Another costly project underway is the King Abdullah Economic City in Saudi Arabia that is estimated to cost 100 billion dollars. The mega project is 70 square miles. Given the rising number of complex projects, it is critical to analyze and understand mega projects. For this case, the Interstate Highway system in the United States will be analyzed in-depth.

Interstate Highway Systems

The Interstate Highways system was implemented on June 29, 1956, by President Dwight D. Eisenhower and has then expanded to about 50,000 miles. The mega project is seen in America spent more than half a trillion dollars on the American roads. According to Now This Word (2015), there is no other nation with an expensive highway system across the world as the United States. China has a longer highways system, but the cost of construction is only half the price used in the US mega project. The Megaproject fueled economic development in the United States. For instance, the per capita GDP of the country, when adjusted for inflation, doubled from 1960 to 2010. With the economic boom, the country also enjoyed a strong period of market stock.

Expansion of public infrastructure

The worldwide landscape did change drastically in the 1950s after the end of the First World War. There was an increased demand for industrial areas, postal services, railway lines, telephone lines, and tarred roads. The emergence of new technology and the desire to spread it as widely as possible necessitating projects that facilitated progress. Unfortunately, the United States, just like many other countries around the world, did not have a comprehensive tax system that would facilitate mega projects. Megaprojects at this age were thus mainly funded by the private sector and the government was mainly a minor partner. Importantly, governments saw that there were benefits to the construction of roads as it would increase the development of cities and increase economic growth. Interestingly, such projects would not be fully supported and steered by the private sector. As such, the American Highway system was implemented and it is the world’s largest project.

Megaproject Paradox

Evidently, there is an uncountable number of benefits that result from the construction of mega projects. Over the years, however, it has been a challenge to construct the mega projects on time and within the specified budget. As such, it can be true to say that mega projects are affected by poor planning and budgeting as well as inaccurate forecasting.

When the Federal-Aid Road Highway Act was passed, the American first major road building started and by the time President Dwight predecessor took over, $500000 had been used to complete a 13 mile of nation’s roads. Even with the completion of 400,000 paved miles, it took two weeks to drive across the country. in 1952, President Harry Truman passed a law to spend $25 million on funding the project which made improved and increased roads by about 6,400 miles. Still, only a third of the roads in the country were believed capable of handling the foreseen traffic that would occur in the 1970s.

The mega project was proclaimed to be complete in 1992; therefore, progress was made slowly covering 47,000 miles. Initially, it was estimated that the project would be completed in 12 years and that it would cost $25 billion. Unfortunately, it took 35 years to complete the project 114 billion dollars of 2016 (425 billion dollars when adjusted for inflation). However, the project has further been improved over the years so that by its 50th anniversary, it had completed nearly $500 billion. Even after completion, several expansions and discontinuities have been made to further make the project efficient.

The Interstate Highway project was funded by a partnership between private and public sectors.

Evidently, there were setbacks to timely completion of the project and with use of allocated funds. The Interstate Highways System can be classified as a failed project even though Stevens (2018), says that there are six economic benefits for every one construction expense in the mega project. The analysis is thus critical to understanding the failures and successes involved in Megaprojects. In particular, the paper will examine the reasons for the high escalation of costs and the reason that increasingly motivated individuals to continuously support and fund the project despite the high costs. Assessment of performance success in public, environment, and economic situations will help in determining whether the project was a failure or not.

The framework for the analysis of the project can be done by evaluating the underestimated costs and overestimated benefits.

Underestimating Costs

Usually, megaprojects are large and very expensive; as such, it becomes challenging for the quantity surveyors and construction economists to extrapolate the project accurately. Additionally, the mega projects take time to be completed increasing the possibility of encountering further challenges that were not foreseen as the design and planning face. According to Bruzelius et al. (2003), there are smaller projects within the mega projects which came up to counter the environment and social concerns relating to mega projects. Such small projects increase the cost of completing a mega project. For example, the construction of the Interstate Highway System led to the demolition and interruption of many homes. As such, there were compensation costs that may have been overlooked during the planning process. Importantly, the technology in use by the time the mega project was signed in was not adequate to identify all the individuals that will be affected and need compensation.

When overestimated costs are done, there are possibilities diminishing cost increase; however, Flyvbjerg, Holm, and Buhl (2002), says that such cases are rare. In as much as the authors agree that the construction of fixed links and rail projects are more likely to run over budget compared to road projects, the estimates are only 20% less over budget.

Another critical aspect of such projects is that promoters of such projects usually want their projects to be accepted by the political committees. For this reason, most of them would rather make cost overruns to ensure that the project is accepted by the legislature.  Clearly, planners of the mega projects get less accountable as they make underestimation that leads to cost overruns of the mega projects as the projects take time to complete. Also, the political leaders that fuel such projects are sure that they will not be available to answer for a question for the failure of projects as they will be out of office by the time the project is completed.

Usually, cost estimates are deceptive and it is more common and desired (Bruzelius et al. 2003). Worse are facilitators of the mega project usually do not describe the costs in terms understood well by the imperfect world. These promoters assume that all resources, time, and products needed will be available and are not affected by external factors. In other words, the mega-project is affected negatively by strategic misinformation.

Strategic misinformation misleads decision makers into believing that mega projects such as the United States Highways Systems will happen within the stipulated time and budget without effects from the negative environment. According to Bruzelius et al (2003), strategic misinformation is detrimental to the success of industries pursuing mega projects. The kinds of misinformation extensively affect the perception of the public leading to the much opposition for mega-projects that do not happen within budget and time frame.

Overestimating Benefits

Overestimated benefits are another critical factor that affects the evaluation of a mega project. The lack of precision and objectivity in the forecasting techniques affects the estimation of revenues. According to Flyvbjerg, Holm, and Buhl (2005 p. 136), it is devastating to have mega projects whose costs are way above the benefits. Thus, individuals that are working to ensure the implementation of a project would always overestimate the benefits to make individuals and funders motivated towards the given project. Additionally, there are more benefits for sponsors when estimates are margins of a project are estimated incorrectly.

Further, the political leaders are less accountable and due to strategic misinformation and longer time needed to complete a project, overestimated benefits occur. Importantly, government projects are usually numerous and before one is completed, others come up. As a result, the facilitators do make high estimates of the benefits so as to make the projects more appealing and acceptable compared to other projects.

Political activities like a change of the political leaders and arising controversial ideas sent to the public also affect the cost the revenue estimate4 of a project before it is implemented. Such changes always send negative perceptions to the public which in turn affect the success of the implementation of a project. Massive upgrades are also affected by the technology in use. For instance, the proposed interstate highway system saw many benefits for all people commuting from one place to the other. Fortunately, air travel and use of trains reduced the value of such roads even though to a small extent. Therefore, such uncertainties in the technology development lead to overestimation of benefits.

By the time the interstate highway system was passed, the government did not have sufficient data to investigate the demands of the project. As a matter of fact, Dwight was only motivated by the problems that he encountered in the Army. Some of these problems were time taken to travel from one place to the other and the damages to the vehicles that were used to transport people and cargo. Thus, there were chances that the demands resulting from the construction of the project were looked into thoroughly. With lower demands identification, benefits of constructions will be overestimated.

Conventional Megaprojects Development

Despite the paradox limitation that results from the Interstate Highway Megaproject as well as other well-known and established projects; they are still attractive to decision makers. One of the drives for the conventional development of mega projects is the technology drive in the culture (Altshuler and Luberoff, 2004). The technologists and engineers today have desires to establish large and innovative projects with high opportunities and push technological boundaries. These motives include the establishment of the largest wind turbine, longest bridge, and fastest aircraft among others. Additionally, politics, economics, and pleasure from designers are all factors that contribute to the increased development of megaprojects (Flyvbjerg, 2014). Politically, mega projects help individuals to garner attention and pro-activeness to their promoters. Additionally, media help increases the visibility of such mega projects. The delight of trade unions and business people in mega project benefits increases the need for their establishment.

When mega projects are done right, the investments are coveted as they create and sustain employment and increases domestic inputs compared to imports. Additionally, they lower production costs thereby increasing competitiveness. Megaprojects like the interstate Highway system provides consumers with higher quality of service and makes the environment more appealing as it replaces obsolete roads with sound projects.

Causes and Cures of Megaprojects Paradox

The Megaprojects paradoxes are caused by a number of factors. The risk factors are mainly lined towards the institutions. In particular, Flyvbjerg, Bruzelius, and Rothengatter (2003, p. 145) say that the private sector must be willing to pay for the government mega projects as they mainly constitute public goods. The risks causing the paradox in mega projects results from the costs, demand for the project, finances, and the political factors. As states are usually reluctant to take projects with cost and demand risk, the financial factor is usually a major problem.

The time frames that are involved with mega projects are usually too long making politicians involved to over-optimistically project the viability of projects so that they can be approved (Altshuler and Luberoff, 2004). For special interest groups, the mega projects are usually estimated highly as funders usually come from outside the project. In this case, the special interest groups are encouraged to have rent-seeking behaviors. Finally, contractors in special interest groups are usually eager to have their projects accepted. For this reason, they underestimate the costs and risks involved in mega projects.

Usually, mega projects face risks from conflicts, uncertainty, and poor cooperation between partners. Van Marrewijk, (2007, p. 591) says that mega projects are characterized by uncertain, complex, politically sensitive environment that involves a large number of partners. Additionally, the complexity in the construction and engineering projects in terms of design, skill, organization, and constructions also affect the mega projects (He, Luo, Hu, and Chan, 2015, p. 553). Usually, stakeholders in a mega project overlook the impact of such factors when making a cost estimate o a project. Megaprojects risk failure because designs and project specifications are not accounted for accurately when assessing the feasibility of a project. Further, undervaluing of prices and technology change increases the inability to adequately account for an initial cost estimate.

To solve for the risks of conflict and Poor Corporation between partners, project culture needs to be put into consideration. This would mean that internal factors that are contextually grounded should be analyzed in-depth to ensure that a safe and conducive environment for the success of the project is created. An increase in project culture is critical to ensuring the partners collaborate in complex projects (Van Marrewijk, (2007, p. 592).

Mega Challenges: Looking Into Future Megaprojects

Megaproject has challenges in planning, construction, and operations. These challenges affect the ability to complete a project on time and within budget. The problems that were made as the Interstate Highway System was planned have been identified. The identification of these challenges has facilitated the establishment of guidelines to guide future mega projects. The key issues were cost underestimate and benefit overestimation. Additionally, the facilitators of the project did not consult experts and the public extensively before implementing the project. The best thing with the project is that it had economic benefits, and was supported by the public. Unfortunately, many other projects usually fail, not only in terms of budget and time but also in reaction from the public and economic gains. Therefore, measures need to be taken to evaluate the feasibility of mega projects before their implementation.

Megaprojects consistently show benefits and importance in the social, economic and political environment. Unfortunately, the inability to complete them within the stipulated time and within the budget increases the challenge of working with such complex projects. Owing to their benefits, there is a need to look critically into the future of this project and make an adjustment that will facilitate accurate estimate ion of time and budget.

The main challenges with the implementation of mega projects are with forecasting. The paradox has seen to have affected a number of mega projects whether in the public or private sector. As a result, there is a need to take up measures that will help in ensuring accuracy in the mega projects in terms of time frame and budget allocation. The decisions to promote the mega projects need to forecast accurately and the assessment is done consistently so that risks are sensibly done.

First, future projects need to have advanced techniques that facilitate the forecasting of social economic development. These models should be able to include the activities such as logistics and mobility in the environment. Additionally, proper analysis of mega projects will require systems with improved cost analysis and considers that network effects as well as the external factors that would alter the completion of projects in a timely manner and within the budget.

According to Flyvbjerg, Bruzelius, and Rothengatter, (2003, p. 9), there is a need for practical policies to deal with risk in public deliberation and decision making. For this, it would be prudent for public policies to have long terms planning for uncertainties. These planning policies need to support flexible and devolved decision making. For this to happen, promoters of a project would need to engage experts and the general public and gather as much information that would facilitate the analysis of a proposed project (Grabher and Thiel, 2015, p. 232). The mega project development would thus function well in a very democratic society.

Importantly, Van Marrewijk, (2007, p. 598) states that managerial rationalities are limited to understanding the realities within their complex projects. Further, these irrationalities happen to al strategies and governance structures. Power relations and lack of balance between players resulting from unfavorable culture affect the appropriateness of mega project completion. Thus, there is a need for managers to set up a governance mechanism with risk-reward schemes to ensure that projects successes are smooth. Van Marrewijk (2007, p. 297), says that a fighting spirit in the Environ mega project that resulted from a positive project culture facilitate good decision make amidst the political changes, turbulence, and ambiguities. Additionally, the project culture will reduce the effects of external friction to costs that contrast the budget allocation. As such, political leaders, and managers in the private sector need to consider having long-term traditional culture systems the promote rationality in decision making.

Shareholders of given projects hold the highest responsibility for the success of the mega projects. The behavior, norms, and customs employed in a particular mega project heavily rely on the corporate social responsibility. In their ambitions to make a profit and increase value, investors can fund projects that attract negative energy and opposition from the public. Therefore, there is a need for stakeholders to fully engage the communities with endeavors to establish mega projects to reduce the possibilities of negative energy. Oppositions normally bring negative perceptions and extensively affect the possibility to complete a project in a timely manner.

References

Altshuler, A.A. and Luberoff, D.E., 2004. Mega-projects: The changing politics of urban public investment. Brookings Institution Press.

Bruzelius, N., Flyvbjerg, B. and Rothengatter, W., 2002. Big decisions, big risks. Improving accountability in mega projects. Transport Policy, 9(2), pp.143-154.

Flyvbjerg, B., 2014. What you should know about megaprojects and why: An overview. Project management journal, 45(2), pp.6-19.

Flyvbjerg, B., Bruzelius, N. and Rothengatter, W., 2003. Megaprojects and risk: An anatomy of ambition. Cambridge University Press.

Grabher, G. and Thiel, J., 2015. Projects, people, professions: Trajectories of learning through a mega-event (the London 2012 case). Geoforum, 65, pp.328-337.

He, Q., Luo, L., Hu, Y. and Chan, A.P., 2015. Measuring the complexity of mega construction projects in China—A fuzzy analytic network process analysis. International Journal of Project Management, 33(3), pp.549-563.

Now This World. 2015. What Are the Most Expensive Megaprojects Ever. https://www.youtube.com/watch?v=hdnU8BSb0Lc

Newcomb, T. 2018. The World’s 30 Most Impressive Megaprojects. Popular mechanics.

Van Marrewijk, A., Clegg, S.R., Pitsis, T.S. and Veenswijk, M., 2008. Managing public–private megaprojects: Paradoxes, complexity, and project design. International journal of project management, 26(6), pp.591-600.

Van Marrewijk, A., 2007. Managing project culture: The case of Environ Megaproject. International Journal of project management, 25(3), pp.290-299.

Stevens, J.B., 2018. The economics of collective choice. Routledge.