Tackling the 65% megaproject failure epidemic: six key levers amplified by digital and AI
Peter Carydias A * and Rob Kennedy BA
B
Peter Carydias builds high-performing teams who help clients to accelerate their energy transition with digital and AI. He leads Wood’s Strategy and Transformation capability in its Advisory business and implements plans for clients worldwide. He holds a BEng from Monash University, is a Chartered Engineer with IEAust and the IMechE (UK), and has an MBA from AGSM (Sydney)/HKUST (China). |
Rob Kennedy is an experienced leader in engineering and digital solutions, defining the evolution of Wood’s Digital Asset and DataOps offerings. With almost two decades’ experience in project delivery, asset operations and digital transformation, he brings critical insights that drive successful transformations and deliver lasting value to clients. Rob holds a BEng from the University of Galway, Ireland. |
Abstract
Capital megaprojects (>US$1 billion) face a 65% failure rate, defined as cost overruns ≥25%, schedule delays ≥5%, or significant operational problems. Our research reveals six critical factors driving failures. (1) People and organisation (25–26% of issues): 70% of projects understaffed; only 15% of organisations report high agility. (2) Technical challenges (21–23%): operators often unprepared, especially in complex environments. (3) Governance (18%): 58% of projects misaligned with strategy; short-term focus impacts lifecycle value. (4) External stakeholders (14%): early engagement failures lead to disruptions. (5) Contracting and procurement (12–13%): inefficient strategies impact schedules, costs, and quality. (6) Project management processes (6–9%): poor front-end loading (FEL) implementation; projects average 26 months late. Our work has identified key mitigations for each. (1) Secure experienced teams: hire proven leaders and their established teams; implement talent management programs. (2) Early technology screening: engage vendors early, opt for proven technologies with ‘frozen experience’. (3) Prioritise lifecycle value: use reference class forecasting for realistic predictions; integrate risk assessment into decision-making. (4) Proactive stakeholder engagement: identify and engage stakeholders early, tailor communication strategies. (5) Strategic procurement: leverage sourcing power, establish vendor relationships, pre-order critical items. (6) Thorough FEL: allocate sufficient budget and time for detailed scope definition and risk assessment; use rigorous peer reviews. We bring our case study where targeted interventions orchestrated through a digital asset in front-end engineering and design (FEED) mitigated >A$1.5 B in capital expenditure (CAPEX) costs for a megaproject. By addressing these six areas systematically, the industry can significantly improve megaproject success rates and achieve the coming energy transformation capital delivery wave.
Keywords: artificial intelligence, capital projects, contracting and procurement, digital transformation, governance, people and organisation, project management, stakeholder engagement.
Peter Carydias builds high-performing teams who help clients to accelerate their energy transition with digital and AI. He leads Wood’s Strategy and Transformation capability in its Advisory business and implements plans for clients worldwide. He holds a BEng from Monash University, is a Chartered Engineer with IEAust and the IMechE (UK), and has an MBA from AGSM (Sydney)/HKUST (China). |
Rob Kennedy is an experienced leader in engineering and digital solutions, defining the evolution of Wood’s Digital Asset and DataOps offerings. With almost two decades’ experience in project delivery, asset operations and digital transformation, he brings critical insights that drive successful transformations and deliver lasting value to clients. Rob holds a BEng from the University of Galway, Ireland. |
