When the legendary French engineer Ferdinand de Lesseps conceptualised the Suez Canal, he significantly underestimated the challenges associated with managing projects of such a vast scale. This miscalculation led to a series of substantial issues: cost overruns, schedule delays, and benefit shortfalls. Ultimately, the project cost 20 times the initial estimate, experienced years of delays, and burdened the Egyptian government with massive debt.
Leap forward a century and a half, and history seems to repeat itself. According to the McKinsey Global Institute, a mere 0.2 percent of all large-scale infrastructure projects initiated since the 2000s around the world have met their original cost, schedule, and benefit projections. Despite these challenges, the demand for these massive ventures has soared, currently representing approximately 8 percent of global GDP or around $9 trillion annually.
So, where does the problem lie?
The primary obstacle facing asset owners is an entrenched reliance on a traditional project management model, reminiscent of those used during the Suez Canal’s construction.
This model is beset by conflicting priorities: asset developers are focused on realising the project vision, while contractors often prioritise cost-cutting to maintain competitive profit margins across individual transactions.
Adding to the challenge, asset developers often lack comprehensive oversight of contractors throughout the supply chain. This combination of misaligned objectives and limited supply chain visibility often leads to hidden costs, budget overruns, compromised quality, supply inconsistencies, and project delays – forming a frustratingly familiar narrative.
Specialist consultancies: Bridging priorities and streamlining giga projects
Addressing this core challenge requires a trusted intermediary to bridge the misaligned objectives, ensuring transparency, quality control, and guaranteed outcome for the asset owners.
In 2020, Saudi Arabia’s Diriyah Gate Development Authority (DGDA) partnered with Versatile International, a Dubai-based stone specialist, for guidance on over 50 projects related to natural stone within their $66bn cultural heritage district.
Acting as a trusted advisor and intermediary on behalf of DGDA, Versatile International brought our niche expertise in the natural stone industry to work alongside architects in stone selection, leverage our global network in procurement, and supervise installation on-site across more than 50 projects. This collaboration provides consistency and quality control throughout the process, brings the asset owner closer to the point of production, and thereby enhances the delivery process with punctuality and precision.
In a broader context, this approach echoes in other regional success stories where asset owners collaborated with specialist consultancies to realise their giga projects with fewer obstacles. In Oman, the transformation of Muscat International Airport in 2018 greatly benefited from the insights of specialist consultancies.
These industry specialists not only provided architectural and aesthetic guidance but also introduced sophisticated tools and strategies to improve supply chain visibility. This ensured timely procurement, consistent quality of materials, and seamless integration of components, leading to a streamlined and accountable completion of the airport expansion.
These examples not only highlight the vital role of specialist consultancies but also underscore their transformative impact, redefining traditional management approaches and setting new benchmarks of excellence for giga projects.
Stepping into a new era of giga projects with specialist consultancy
Why label this period as a “new era”? First, there’s an upsurge in demand for giga projects, especially in the Middle East. Meanwhile, the traditional project management model now increasingly grapples with challenges like global supply chain disruptions, exacerbated by events like the Covid-19 pandemic and geopolitical tensions.
Furthermore, the current era is witnessing a growing focus on ESG compliance from both regulators and investors. Over the past few years, the Saudi Stock Exchange has introduced ESG guidance in areas such as supply-chain labour standards, material sourcing, and tax transparency.
Additionally, the Saudi government has established specific environmental protection targets for the construction of giga-projects: for instance, NEOM aims to reduce construction vehicle emissions by 25 percent and increase construction plant efficiency by 75 percent over the duration of the project.
Traditionally, asset developers have had limited visibility into the intricacies of their supply chain and are made less accountable for practices outside their immediate purview. However, these winds of change suggest that this might not hold true for long. Any potential future regulatory shifts could point towards a scenario where any non-compliance or lapses among contractors could have some impact for the master developer.
In this evolving landscape, the call for supply chain risk management in project planning and execution is more crucial than ever. Collaborative efforts, such as the partnership between DGDA and Versatile International, not only mitigate supply chain risks but also guarantee consistent quality, fulfilling the project’s objectives while satisfying asset owners’ expectations.
Embracing this approach can offer giga project developers worldwide a model for ensuring timely delivery, upholding quality standards, and maintaining a competitive edge. By incorporating this new method into our project management ethos, we can inaugurate a giga project era marked by achievement, excellence, and innovation, lighting the path for future global endeavours.