Cleaning Up Episode 128 Edited Highlights – Prof. Bent Flyvbjerg

This week’s guest on Cleaning Up is Bent Flyvbjerg. Bent is Emeritus Professor at the University of Oxford and is the most cited scholar in the world on the subject of megaprojects. Bent’s latest book, released this year, is How Big Things Get Done, on the science of successful project delivery.

Michael and Bent discussed the many, substantial implications of Bent’s research for the net-zero transition, including the stark fact that solar and wind projects sit at the top of the tree when it comes to arriving on time and on budget, with nuclear languishing at the very bottom.

Michael Liebreich 

Professor Flyvbjerg, thank you so much for joining us here on Cleaning Up. Can you start us off by saying, how big is the problem of projects not getting done properly?

Professor Bent Flyvbjerg

Well, in my latest book How Big Things Get Done, we find that only around 9% of projects are on budget and on schedule, meaning that over 90% are not on budget and not on schedule. If you add on benefits, then it's half a percent; half of 1% are on budget, on time, and deliver the promised benefits. That’s based on the biggest database of its kind, with 16,000+ projects in it, so we consider it a pretty firm finding that projects are actually performing dismally. So, the situation is grim, that's the only way to describe it. Luckily, a lot of people are now interested in improving the situation.

ML 

One in 200 projects is on time, on budget and delivers the projected benefits... One in 200, half a percent… why is that?

BF

The root causes are two, and they're related to psychology. So, our human psychology is one root cause, and the second is power, and that's about how we jockey for position. If we take psychology first, it is very well-documented in behavioral science, behavioral economics, that the human brain is biased. We are all optimists, and you can see what happens with a budget if it's optimistic: an optimistic budget is low, and then you will have a cost overrun, just as surely as the law of gravity works. The same with a schedule, the same with benefits. On the power side, it's similar, but it's deliberate. So, if you and I wanted to make our project look good on paper, you underestimate the cost, you underestimate the schedule, and you make the project look good by overestimating the benefits. So, now we have a fantastic proposal for the beauty contest, and we have a higher likelihood that our project gets funding, and we did it deliberately. So, these two root causes create a double whammy of cost overruns, schedule overruns and benefits shortfalls.

ML 

And the reason that this is all about the climate is because some of the worst projects, in terms of being on time on budget and delivering benefits are nuclear, and the best category is solar. So, it's very relevant for the climate change challenge, is it not?

BF 

Absolutely, and I would say climate projects are probably the most interesting type of projects. They completely polarize: at one end, you have the worst performing projects, which will be nuclear, but also hydroelectric power. And that's sad, because both nuclear and hydroelectric power, are carbon-free, right? So it would be really great if they performed well, but instead, they have huge cost overruns, and they have huge delays, they take a long time to do, and they become very, very expensive. But at the very opposite end of the scale, we have solar, as the best performing project of any type of projects that we've ever looked at. It has the smallest cost overruns;1%, it's nothing, it's basically on budget on average. The same for wind power; not quite as good but very, very good compared to other project types. Wind power, batteries: same thing. And the explanation is that solar, wind, batteries are born modular, they're completely modular. The solar cell is the basic module, or the Lego as we call it. It has what we call scale-free scalability. You can scale this at any scale, you can scale it up, you can scale it down; it's really easy, it's really cheap, and it's really fast. Wind, same thing. We are so lucky that there are energy technologies that we can really scale up at enormous speeds and to enormous scale, which is exactly what we need now, in order to meet the climate goals for 2030 and 2050. We don't have time to mess around anymore; we don't have time to mess around with nuclear. Some people think that sometimes, because I point out the numbers look bad for nuclear, then people say he must be against nuclear. It's about the numbers, and the economics for nuclear are dismal. I wish they were better, and I hope that small modular reactors might solve that eventually. But I wouldn't be holding my breath, because we don't even have a prototype yet.

ML 

Obviously, nuclear projects by their nature take a long time. Is that why you think fundamentally that nuclear won't be able to address its disadvantage in this game?

BF 

So, I wouldn't go so far as to say that it won't be able to address these issues forever. But the historical evidence shows there isn’t yet a reliable formula for delivering nuclear.. Right now, for instance, with the four nuclear reactors that have been built in the US, two have been given up, and the two that are being built in Europe right now that are going way over budget and way over schedule. Because it takes longer, and because there are more things you need to take into consideration, it also gets more expensive. That's what we call negative learning curves. If things get slower, and more expensive every time you do them, you have negative learning curves. There's still stuff to learn, and I think the prize is so big that we should keep trying, and we certainly shouldn't close well-functioning nuclear power plants that are already up and running.

ML 

I was very interested that one of the projects that is up there with solar and wind and so on, is transmission. Presumably, you're saying, it may take long, but at least it's hitting budget, and it's doing what it says on the tin?

BF 

Yes, but we do need to figure out a way to do that faster. And the way to do that is to build on the parts of the grid that are modular, and there are lots of parts that are modular, and just make that more efficient, like with solar and wind and batteries. We need to do the same for the grid, and it looks like the grid has inherent elements that will actually allow that. Substations are not one of a kind, and cables are not one of a kind, they can be built in modular fashion. And the way to drive efficiencies on that is to create competition between the people who are delivering this. We also need the big connectors between different countries and so on. The concept of the grid that we have today is too small; we can't have grids that are so local, they need to be much, much bigger geographically in order to even out loads and even to send loads between different grids. Another thing that is just as important is that people need to think ahead. It's been clear for a long, long time that the future is electrification, and there's actually no point in building all the wind farms and solar farms and so on if we don't have a grid that they can plug into.

ML 

Bent. I want to finish with your thoughts on some of the other technologies around the net-zero transition: Xlinks, who have a cable bringing electricity from Morocco coming into the UK; heat pumps; and John Redfern’s company, Eavor, with closed-loop geothermal. How do you anticipate they will perform as projects?

BF 

The Morocco project is going to be hugely expensive but if done right it's a good performer. Heat pumps, that depends if you're talking about air-to-air heat pumps or ground-to-air heat pumps. In Denmark, where I'm from, there's some resistance to the air heat pumps because they make noise. But overall, they can be delivered hugely successfully, fast. They are very modular, and the good thing about them is that you don't need a whole system, you can do it individually on each home. I'm not a specialist on geothermal, but I've heard people that I trust saying that that's extremely risky. Drilling very long holes into the ground like that is very risky. I also know that geothermal has been used for a long time in Iceland, for instance. So, there are good geothermal plants that actually work.

ML   

Final question: with all your knowledge about projects, are you optimistic about the net-zero transition?

BF 

If you're talking about the energy transition, I am optimistic. We're actually very lucky that the things that we need are being developed at speed and at scale right now, following the basic heuristics, if you wish, that we that we lay out in the book. So, I'm optimistic about the situation. I think that it's all about electrification now, if we're talking about the energy transition. And then we need to produce that electricity on the basis of renewables. And from what I've seen, that can be done.