Major projects often fail due to high complexity or many dependencies. Very often, this leads to damages in the millions for companies and the state.
Modularized megaprojects: Failure of Conventional Approaches (Part 1)Timo Gerhardt, Tuesday 18 October 2022 | Reading time: 4 min.
Tesla as a pioneer in the modularization of megaprojects
In Germany, it is almost a tradition that large public projects fail. A prime example in this context is the BER Airport. Originally, the megaproject was to be completed in 2007 at costs of only 2 billion euros. Instead, it did not open until 2020, at a total cost of over 6 billion euros.
A project of similar scope was the first Tesla Gigafactory in Nevada. This high-tech factory now produces batteries for the car manufacturer. Just two years after construction began on the 500,000 m² complex, the grand opening was to be the starting point for mass production of batteries. The cost was expected to be around $5 billion. After the start of construction in 2014, the Gigafactory was opened in 2016, and the planned costs were met.
In this two-part blog post, we show how the quality of planning can be so different for two projects of similar scope, and how Tesla was able to achieve much more efficient project delivery through modularization.
Monolithic project approach as reason for failure
Projects in the past have typically formed a self-contained, monolithic entity. They were also highly customized to the individual project goal. With such an approach, a project can always be executed in a goal-oriented manner and very specific requirements can easily be considered.
This approach also entails certain disadvantages. While the project forms a closed unit externally, there are strong dependencies within the project. Processes are highly interdependent. The stronger these dependencies are, the more fragile the construct is and the easier it is for minor inconsistencies to jeopardize the entire success of the project.
Even in the construction of Berlin Airport, delays in supposedly minor areas meant that the entire project had to be paused for months at a time because internal processes were not precisely coordinated. For example, the opening date was delayed by several months due to defective fire doors.
All or nothing
Furthermore, such a monolithic project approach means that the project only creates added value when it is 100% complete, which makes delays even more painful. Due to strong interdependencies, it was not possible to open individual parts of the BER airport while others were still under construction.
The all or nothing problem becomes most apparent when considering the project budget. Even though progress has been made in certain areas that could even operate and start generating value they cannot: only a 100% successfully completed project can start to make you money. The project is therefore either complete or completely useless. An airport that has been planned as one entity and is 95% complete is of no use whatsoever.
Due to its high complexity and a multitude of dependencies, a monolithic project approach is very risky. Failure in one area may disproportionately affect the project as a whole.
In the second part of our article, you will learn how the above-mentioned problems can be avoided by using modular project management and what practical relevance this technique already has for large projects.
It is not only by modularizing the project that certain errors or dangers can be minimized. A project management solution that fits your needs, such as InLoox, can also create added value for you and your project in this respect.