The Front-end of Large Public Projects

Paradoxes and Ways Ahead

Terry M. Williams, Knut Samset, Gro Holst Volden, Terry M. Williams, Knut Samset, Gro Holst Volden

• Publisher: Taylor & Francis
• Year: 2022
• Print ISBN:
  9781032189727
• Edition: 1
• eBook ISBN:
  9781000609561
• Topic: Business
• Subtopic: Business General
• Index: Business

Large public projects represent major complex investment and whilst there has been much written about how to develop, manage and deliver such projects, practice still does not match up with expectations. In this book, researchers from the Norwegian Concept Research Programme explore the paradoxes between theory and practice in collaboration with experts in the field of project governance.

This book delves into the reality of large public projects, to show how they can be managed effectively and efficiently, recognising the realities of their context. It offers a range of practical conclusions as to the paradoxes of the governance and management of public projects. The international spectrum of authors draw their examples from the UK, Norway, Canada, France, Australia and the Netherlands.

Bridging the gap between research, theory and practice, this book will benefit academics and researchers in the field of project management and corporate governance as well as those in the practice of public project governance, civil servants and industry practitioners.

1 Introduction

Gro Holst Volden and Knut Samset

DOI: 10.4324/9781003257172-1

1.1 Paradoxes in front-end management

The traditional focus of the project management community has, by and large, been restricted to what is termed ‘the iron triangle’ of cost, time and scope (Morris 2013). The iron triangle is an example of reductionist thinking where project performance is reduced to the ‘simple’ measures related to project implementation only. In recent years, many authors have argued the need for a wider, strategic view on projects, as the purpose of projects is essentially to deliver benefits and create value for the funding entity, for users and/or for society at large (Morris 2013; Samset & Volden 2016; Williams & Samset 2010; Zwikael & Smyrk 2012). The focus of this book is on large public projects, where a broad societal perspective on project outcome is particularly relevant – large public projects being tools for policy development.

In line with such a broad interpretation of project success, there is an increasing recognition of the strategic role of the front-end phase in shaping the success of projects. The front-end phase is here defined as the period from when the initial idea is conceived to when the final implementation decision is made, during which it is still possible to make major changes or terminate the initiative at an affordable cost. Williams et al. (2019) refer to a number of studies which argue the case for using more resources in the front-end phase in order to improve project and portfolio success.

It is a paradox in itself that this crucial phase of the project lifecycle is not better understood. An extensive literature review on the front-end phase of projects found that the literature on front-end management is fairly sparse, and that this phase is still not well understood (Williams et al. 2019). For example, it is not clear who the key players are at this stage, and how management competencies should be improved. There is not even consensus as to whether the front end is part of the project lifecycle, or a separate undertaking that precedes the project. What seems clear, though, is that those who initiate the project are most likely from outside the project management community. Initiators of public investment projects might be politicians, the responsible ministry or agency (governing organisation), user groups or other stakeholders at local level.

There is clearly a need to understand how projects materialise from some initial conceptual idea or consideration. Whether actively encouraged or unexpectedly apparent, all projects are the result of some form of ambition and consideration. The front-end phase can be seen as the result of two processes that run in parallel: the analytic and decision-making processes. Williams et al. (2019) note that two key terms in this phase are ‘strategy’ and ‘context’. They suggest that the greater the maturity of the governing organisation in dealing with projects, the more structured and well-defined the management of the front end is likely to be. But there is still a gap in the literature. Much work has been done regarding project management, as well as on strategy formation at the organisational level, but little on how these two come together – which is, obviously, during the front-end phase.

Samset and Volden (2016) presented research findings based on longitudinal research on the front-end management of major public investment projects in Norway. The authors argued that many challenges and weaknesses need to be overcome to achieve project success such as the absence of a realistic goal or purpose, lack of competence among planners, hidden agendas, processes driven by needs other than those of society at large, unrealistic and inconsistent assumptions and how to secure essential planning data and adequate contract regimes. More importantly, there was a tendency to ignore the crucial assessment of problems, needs, opportunity space and the choice of conceptual solution to the problem at hand, and instead jump directly to more detailed, and often quantitative and data-intensive, analyses of only one specific preconceived or preferred conceptual solution.

These challenges and weaknesses were framed by the authors as ten paradoxes that overlap to a varying extent. Paradoxes are here understood as situations with a counter-intuitive result, at least in the broad societal perspective. This paper was what initiated the collective work on this book. It is referred to as the ‘paradoxes paper’ throughout the book. The full paper is included as an appendix at the end of the book.

In short, the paradoxes are:

1. The success paradox: success is measured in operational terms only, rather than the wider, strategic perspective. Projects that are completed with considerable cost overrun and behind schedule generate negative media attention and even public inquiries, irrespective of whether they are relevant and good value for money. By contrast, projects may avoid negative attention if completed on budget, regardless of their strategic success.
2. The paradox of the significance of front-end management: less resources are used up front to identify the best conceptual solution (project governance) than to improve performance during implementation (project management). The choice of conceptual solution often originates in the mind of an individual, based on intuition and experience, rather than systematic analysis of problems, needs, requirements, etc. By contrast, comprehensive planning and analysis is associated with the project once the choice of concept is made.
3. The paradox of early information overflow: decisions are confounded by masses of detailed information rather than carefully selected facts and judgments to highlight the essential issues. The priority should be to establish an overall perspective based on a targeted search for information. Experience shows that large amounts of detailed data at an early stage may result in what is referred to as ‘analysis paralysis’. Instead of opening up the opportunity space, it may, in fact, lock decisions into an initially preferred concept.
4. The paradox of the unexplored opportunity space: the choice of conceptual solution is made without systematically scrutinising the opportunity space up front. There is much evidence to suggest that in many cases the chosen concept is not necessarily the most effective solution to the initiating problem. In many cases, the process started out with a predetermined solution, without exploring other options. This is referred to as path dependency.
5. The paradox of strategic alignment: strategy and alignment of objectives are highlighted as essential, but in many cases the internal logic of causality and probability of realisation are erroneous. Alignment of objectives is the exercise of defining the causal link from the project outputs to outcome and long-term benefits of the project. Unfortunately, this is not always done. Objectives are missing or unclear, and there may be design faults at different levels, such as too many, overly ambitious and even conflicting goals.
6. The cost estimation paradox: effort is made to get the final cost estimate (the budget) right, while early cost estimates are treated superficially. The ‘real decision’ is made at an early stage, based on initial estimates that are often substantially underestimated. There is much to suggest that this may result in the approval of projects that otherwise should have been rejected at an early stage.
7. The paradox of disregarded analyses of costs and benefits: detailed estimation of cost and benefits is commonly done up front, but disregarded by decision-makers. Substantial amounts of resources are devoted to cost-benefit analyses, especially for transport projects. However, the estimated value for money had no significant impact on the selection of projects in Norway. On the contrary, many unprofitable projects were realised. Obviously, decision-makers emphasise other aspects, but these are not included in the analyses.
8. The paradox of ‘predict and provide’: the tendency is to choose a ‘predict-and-provide’ strategy rather than explore alternative solutions. A variant of Paradox 4 (‘opportunity space’) is that in the case of congestion problems, need is often defined narrowly as the need to increase capacity. While excess demand for public services and infrastructure is to be expected when offered free-of-charge to citizens, in some cases, there may be goals for a different development. Project owners need to clarify the needs and goals that should apply to the project.
9. The paradox of perverse incentives: availability of public funding with no financial obligations for the beneficiaries may cause perverse incentives and result in counter-productive projects. Different actors may have vested interest in certain projects being chosen, with no incentive to opt for the most socially beneficial or cost-effective alternative. This may result, inter alia, in supersized projects, positively biased business cases and the selection of projects that turn out to be complete failures.
10. The paradox of myopic decisions: long-term viability is the intention, but the planning horizon is too short, resulting in sub-optimal choices. The study of project appraisals shows that needs and benefits are often assessed in a short-sighted and static perspective; trends are extrapolated without discussing alternative scenarios; and significant risk factors, such as political risk, are not identified and discussed. Such practice may lead to decisions that society will regret in the future.

The overall picture is that there are certain recurring deficiencies in analytic as well as decision-making processes, and that the potential for improvement is considerable. In fact, the ‘paradoxes paper’ found that flaws in both processes may be correlated, and further that projects with many such deficiencies in the front-end phase tend to end up being less relevant to society.

In a subsequent doctoral thesis, Volden (2019) discussed possible explanations for the observed paradoxes. Planners and analysts, who are often engineers and economists, may be hesitant to question fundamental issues that can be considered part of what is conceived as the political sphere. We have all heard analysts say, “We produce analyses, not guesswork”, implying that they are more comfortable working with tangible measures and clearly defined tools and methods than with multidimensional and qualitative assessments of success criteria that may be unclear and even disputed. There may also be cognitive shortcomings to innovative thinking, to applying long-term perspectives and to planners’ understanding of fundamental uncertainties. Another quite likely explanation is that project initiators (who often commission the analyses) see it in their interest to explore only one specific conceptual alternative, and restrict the terms of reference accordingly. Or even worse, they do not endorse an early project appraisal at all.

Perverse incentives can be found at different administrative levels in society, and may cause other paradoxes discussed in this book. We have seen this in Norway, in the case of roads, hospitals, universities, sporting events, etc., where the local administrative level has been a key promoter, often in collaboration with other stakeholder groups and even members of parliament. This is a country where the local democracy stands strong, while at the same time local government is financially weak and dependent on the national government to finance local infrastructure. This may have given rise to serious problems with adverse incentives on the part of local initiators.

From this previous work, some key improvement measures are highlighted:

• The business case should be presented to decision-makers early enough to prevent premature lock-in to an unjustified concept.
• Incentives for project initiators ought to be brought in line with society’s interests as much as possible. Adverse incentives relating to discretionary assessment and approval processes need to be dealt with.
• Analyses should be transparent and overseen by independent experts.

The funding entity (which, in the case of state-funded projects, is the government on behalf of all tax payers) should put in place a set of processes, systems and regulations up front, in order to ensure project success, strategically as well as tactically. This is referred to as project governance (Williams & Samset 2012), and is closely related to the topic of the present book. In fact, front-end paradoxes and project governance need to be understood and discussed together. Project governance should potentially be essential to overcome the front-end paradoxes. However, in order for the project governance framework to be effective, we first need to fully understand the paradoxes and how they work in different contexts.

1.2 Aim of the book and introduction to each chapter

The ‘paradoxes pa...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of contributors
• 1 Introduction
• 2 Project success
• 3 The logic of the project front-end
• 4 Undertaking the project front-end
• 5 Estimation
• 6 Incentives and politics: the perverse incentives paradox: root cause of many other paradoxes; the case of the Dutch Betuweroute
• 7 Closing the loop: ex ante and ex post evaluation in order to learn from mistakes and successes
• 8 Conclusions
• Appendix
• Index