Photo of Heathrow Terminal 5 by Nick Fewings on Unsplash

How can innovation improve the performance of megaprojects?

This was the question posed by Professor Andrew Davies, RM Phillips Chair at the Science Policy Research Unit, University of Sussex Business School, to delegates attending the Innovation in London’s Megaproject Ecology lecture, part of the University of Sydney, Faculty of Engineering’s Distinguished Lecture Series.

Professor Davies’ research over the last 15 years shows that large high value megaprojects, such as Heathrow, London Olympics, and Crossrail in London, are difficult to manage due to exceptionally complex, uncertain, and rapidly changing conditions, particularly in dense urban areas where there are many external stakeholders.

His research provides managers working in other project ecologies with guidance on when, how, and why they should innovate to improve performance and raises questions about how to address the future challenge of achieving Net Zero. 

Research on megaprojects (worth over $1 billion) finds that 90% were over budget or late in completing. In the UK, innovation was seen a key to address poor performance. Although few studies have examined innovation in megaprojects, innovation could be applied to products, process, service delivery, and in project ecosystems.

Professor Davies used the Jubilee Line extension of the London Underground as an example of a traditional model of megaproject delivery using fixed price, risk transfer and low-cost tendering, where innovation was seen as a risk. The project was finally delivered £1.4 billion over budget and two years late. However, he said that the successful Heathrow Terminal 5 was a megaproject with a radically new delivery strategy that incorporated a collaborative, risk bearing contract with integrated project teams and the flexibility to deal with risk and innovative opportunities and solutions.

Professor Davies said:

“Projects often fail at late stages of delivery because of inadequate systems integration. Components and subsystems may function perfectly and meet technical specifications but when they are pulled together for the first time, they rarely work as a system. Mutual interdependencies, interface problems and unexpected factors cause delays and surprises. For megaprojects to succeed they require a planned approach for systems integration right from the start, and one which incorporates both technical and administrative innovation.

“The Heathrow Terminal 5 megaproject adopted client-led systems integration which underpinned its delivery model. Project teams were integrated, and operational processes adopted modular pre-assembly and just in time logistics. Ultimately, systems integration is a strategic leadership task which is central to megaproject management.

“When considering megaproject research, Net Zero public policy is an opportunity to study radical innovation (technical and administrative) megaproject infrastructure design and delivery. Many new megaprojects launched at rapid pace, each once increasingly complex, uncertain, and urgent. Net Zero policy faces difficulties translating future goals into concrete and immediate action. There is much literature on transitioning to Net Zero, but much less on how to manage the process of delivery, which is what we are looking at here at the Business School.”