Aerospace Management

This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and representing different project types, geographical regions, and historical periods, it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying. The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.

Megaproject Planning and Management: Essential Readings contains the seminal articles from the growing body of research on megaproject planning and management along with an original introduction by the editor, Bent Flyvbjerg. The leading and most cited authority in the field, Flyvbjerg has used crowdsourcing and 25 years of experience to cherry-pick from several hundred articles and books the writings that define the field. This volume will be an indispensable source for those wishing to speak with authority about how megaprojects are prepared, delivered, and fought over. The target audience is students, academics, practitioners, and media pundits alike, as well as communities affected by megaprojects.

Back cover text: Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multi-billion dollar megaprojects systematically and self-servingly misinform parliaments, the public and the media in order to get projects approved and built. It shows, in unusual depth, how the formula for approval is an unhealthy cocktail of underestimated costs, overestimated revenues, undervalued environmental impacts and overvalued economic development effects. This results in projects that are extremely risky, but where the risk is concealed from MPs, taxpayers and investors. The authors not only explore the problems but also suggest practical solutions drawing on theory, experience and hard, scientific evidence from the several hundred projects in twenty nations and five continents that illustrate the book. Accessibly written, it will be the standard reference for students, scholars, planners, economists, auditors, politicians and interested citizens for many years to come.

The article first describes characteristics of major infrastructure projects. Second, it documents a much neglected topic in economics: that ex ante estimates of costs and benefits are often very different from actual ex post costs and benefits. For large infrastructure projects the consequences are cost overruns, benefit shortfalls, and the systematic underestimation of risks. Third, implications for cost–benefit analysis are described, including that such analysis is not to be trusted for major infrastructure projects. Fourth, the article uncovers the causes of this state of affairs in terms of perverse incentives that encourage promoters to underestimate costs and overestimate benefits in the business cases for their projects. But the projects that are made to look best on paper are the projects that amass the highest cost overruns and benefit shortfalls in reality. The article depicts this situation as ‘survival of the unfittest’. Fifth, the article sets out to explain how the problem may be solved, with a view to arriving at more efficient and more democratic projects, and avoiding the scandals that often accompany major infrastructure investments. Finally, the article identifies current trends in major infrastructure development. It is argued that a rapid increase in stimulus spending, combined with more investments in emerging economies, combined with more spending on information technology is catapulting infrastructure investment from the frying pan into the fire.

As megaprojects have become ubiquitous, their real benefits and costs have come under increased scrutiny. We interviewed Bent Flyvbjerg, who has extensively studied megaproject development. Flyvbjerg has found systematic problems in the development process: by intentionally misrepresenting information and deliberately disregarding risks, proponents instigate projects that result in fewer benefits and higher costs than promised.

The Supplementary Green Book Guidance on Optimism Bias (HM Treasury 2003) with reference to the Review of Large Public Procurement in the UK (Mott MacDonald 2002) notes that there is a demonstrated, systematic, tendency for project appraisers to be overly optimistic and that to redress this tendency appraisers should make explicit, empirically based adjustments to the estimates of a project’s costs, benefits, and duration. HM Treasury recommends that these adjustments be based on data from past projects or similar projects elsewhere, and adjusted for the unique characteristics of the project in hand. In the absence of a more specific evidence base, HM Treasury has encouraged departments to collect data to inform future estimates of optimism, and in the meantime use the best available data. In response to this, the Department for Transport (henceforth DfT), has contracted Bent Flyvbjerg in association with COWI to undertake the consultancy assignment "Procedures for dealing with Optimism Bias in Transport Planning". The present Guidance Document is the result of this assignment.

"Over budget, over time, over and over again" appears to be an appropriate slogan for large, complex infrastructure projects. This article explains why cost, benefits, and time forecasts for such projects are systematically over-optimistic in the planning phase. The underlying reasons for forecasting errors are grouped into three categories: delusions or honest mistakes; deceptions or strategic manipulation of information or processes; or bad luck. Delusion and deception have each been addressed in the management literature before, but here they are jointly considered for the first time. They are specifically applied to infrastructure problems in a manner that allows both academics and practitioners to understand and implement the suggested corrective procedures. The article provides a framework for analyzing the relative explanatory power of delusion and deception. It also suggests a simplified framework for analyzing the complex principal-agent relationships that are involved in the approval and construction of large infrastructure projects, which can be used to improve forecasts. Finally, the article illustrates reference class forecasting, an outside view de-biasing technique that has proven successful in overcoming both delusion and deception in private and public investment decisions.

This article presents results from the first statistically significant study of traffic forecasts in transportation infrastructure projects. The sample used is the largest of its kind, covering 210 projects in 14 nations worth U.S.$59 billion. The study shows with very high statistical significance that forecasters generally do a poor job of estimating the demand for transportation infrastructure projects. For 9 out of 10 rail projects, passenger forecasts are overestimated; the average overestimation is 106%. For half of all road projects, the difference between actual and forecasted traffic is more than ±20%. The result is substantial financial risks, which are typically ignored or downplayed by planners and decision makers to the detriment of social and economic welfare. Our data also show that forecasts have not become more accurate over the 30-year period studied, despite claims to the contrary by forecasters. The causes of inaccuracy in forecasts are different for rail and road projects, with political causes playing a larger role for rail than for road. The cure is transparency, accountability, and new forecasting methods. The challenge is to change the governance structures for forecasting and project development. Our article shows how planners may help achieve this.

Do different types of megaprojects have different cost overruns? This apparently simple question is at the heart of research at the University of Oxford aimed at understanding the characteristics of megaprojects, particularly in terms of how they are established, run and concluded. In this study, we set out to investigate cost overruns in the Olympic Games. To do so, we examined the costs of the Games over half a century, including both summer and winter Olympics. We looked at the evolution of final reported costs and compared these to the costs established in the Games bids, submitted to the International Olympic Committee (IOC) up to seven years before the Games occurred. In so doing we established the largest dataset of its kind, and documented for the first time in a consistent fashion the costs and cost overruns for the Olympic Games, from 1960 to 2012. We discovered that the Games stand out in two distinct ways compared to other megaprojects: (1) The Games overrun with 100 per cent consistency. No other type of megaproject is this consistent regarding cost overrun. Other project types are typically on budget from time to time, but not the Olympics. (2) With an average cost overrun in real terms of 179 per cent – and 324 per cent in nominal terms – overruns in the Games have historically been significantly larger than for other types of megaprojects, including infrastructure, construction, ICT, and dams. The data thus show that for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky type of megaproject that exists, something that many cities and nations have learned to their peril. For the London 2012 Games, we find that: (1) With sports-related real costs currently estimated at USD14.8 billion, London is on track to become the most costly Olympics ever. (2) With a projected cost overrun of 101 per cent in real terms, overrun for London is below the historical average for the Games, but not significantly so. (3) The London cost overrun is, however, significantly higher than overruns for recent Games since 1999. London therefore is reversing a positive trend of falling cost overruns for the Games.

As megaprojects have become ubiquitous, their real benefits and costs have come under increased scrutiny. We interviewed Bent Flyvbjerg, who has extensively studied megaproject development. Flyvbjerg has found systematic problems in the development process: by intentionally misrepresenting information and deliberately disregarding risks, proponents instigate projects that result in fewer benefits and higher costs than promised.

This research was funded by, and implemented within, a UK national research organisation, while the author was the KE and Impact Evaluation Manager responsible for assessing impact on a £15m UK government-funded research programme.

This work was also submitted as the authors MBA dissertation which was accepted and awarded in 2009.

ABSTRACT: A methodology and methods ‘toolbox’ is proposed for conducting impact research and assessment from within research programmes. The emphasis is upon how to clarify and assess the wider impacts from the early stages onwards.

The approach explicitly acknowledges, and attempts to address, the known issues and challenges of impact assessment while drawing upon the resources and opportunities available to research managers and researchers within such programmes.

The study has two triangulating foundations. Firstly, it examines the academic literature to help identify and design the pilot methodology and methods. Secondly it trials these in a real programme to both test and improve them.

The study was conducted over one year within one leading UK research organisation, where two research programmes (and around 60 research projects of £15m total value) were being assessed for their impacts. The study draws upon actual impact management experience and reflection, prospective (ex ante) and retrospective (ex post) assessments, participatory contributions from leading researchers undergoing assessment, and consultation with external users. The findings of this study outline the pilot and its first iteration. Recommendations are made for improvement to the methodology and methods.

A subsequent follow-on bid to UK government incorporating the impacts identified from implementing this methodology, successfully led to a further £15m of government funding.

It is expected the pilot methodology and methods will be applicable to other organisations, conducting and funding such research programmes, required to research and assess the wider research impacts.

Although primary focus of implemetation trials was upon research in physical sciences, technology, high-tech engineering, computing/IT, and environment, the wider literature study, the methodology design and justification, the methods proposed and used, and the resulting general recommendations and lessons are expected to apply more broadly to many other research areas, where the impact is to be found more widely in the society, economy, government or public sector or within organizations, policies, professions or the public.

Interest in this work is expected from research programme managers, impact managers and assessors, management consultants advising in this area, and government funding managers, all seeking to embed a developing approach to understand, capture, and enhance wider impact.

Back cover text: This book aims to enlarge the understanding of decision-making on mega-projects and suggest recommendations for a more effective, efficient and democratic approach. Authors from different scientific disciplines address various aspects of the decision-making process, such as management characteristics and cost-benefit analysis, planning and innovation and competition and institutions. The subject matter is highly diverse, but certain questions remain at the forefront. For example, how do we deal with protracted preparation processes, how do we tackle risks and uncertainties, and how can we best divide the risks and responsibilities among the private and public players throughout the different phases of the project? - Presenting a state-of-the-art overview, based on experiences and visions of authors from Europe and North America, this unique book will be of interest to practitioners of large-scale project management, politicians, public officials and private organisations involved in mega-project decision-making. It will also appeal to researchers, consultants and students dealing with substantial engineering projects, complex systems, project management and transport infrastructure.

This paper focuses on problems and their causes and cures in policy and planning for large infrastructure projects. First, it identifies as the main problem in major infrastructure development pervasive misinformation about the costs, benefits, and risks involved. A consequence of misinformation is massive cost overruns, benefit shortfalls, and waste. Second, the paper explores the causes of misinformation and finds that political-economic explanations best account for the available evidence: planners and promoters deliberately misrepresent costs, benefits, and risks in order to increase the likelihood that it is their projects, and not the competition's, that gain approval and funding. This results in the "survival of the unfittest," where often it is not the best projects that are built, but the most misrepresented ones. Finally, the paper presents measures for reforming policy and planning for large infrastructure projects, with a focus on better planning methods and changed governance structures, the latter being more important.

Risk, including economic risk, is increasingly a concern for public policy and management. The possibility of dealing effectively with risk is hampered, however, by lack of a sound empirical basis for risk assessment and management. This article demonstrates the general point for cost and demand risks in urban rail projects. The article presents empirical evidence that allow valid economic risk assessment and management of urban rail projects, including benchmarking of individual or groups of projects. Benchmarking of the Copenhagen Metro is presented as a case in point. The approach developed is proposed as a model for other types of policies and projects in order to improve economic and financial risk assessment and management in policy and planning.

Out-of-control information technology (IT) projects have ended the careers of top managers, such as EADS CEO Noël Forgeard and Levi Strauss’ CIO David Bergen. Moreover, IT projects have brought down whole companies, like Kmart in the US and Auto Windscreen in the UK. Software and other IT is now such an integral part of most business processes and products that CEOs must know their IT risks, which are typically substantial – and overlooked. The analysis of a sample of 1,471 IT projects showed that the average cost overrun was 27% — but that figure masks a far more alarming “fat tail” risk.  Fully one in six of the projects in the sample was a Black Swan, with a cost overrun of 200%, on average, and a schedule overrun of almost 70%. This highlights the true pitfall of IT change initiatives: It’s not that they’re particularly prone to high cost overruns on average – it is that there are a disproportionate number of Black Swans. By focusing on averages instead of the more damaging outliers, most managers and consultants have been missing the real risk in doing IT. In conclusion, the article outlines ideas as to what can be done to avoid Black Swans.

This paper focuses on problems and their causes and cures in policy and planning for large-infrastructure projects. First, it identifies as the main problem in major infrastructure developments pervasive misinformation about the costs, benefits, and risks involved. A consequence of misinformation is cost overruns, benefit shortfalls, and waste. Second, it explores the causes of misinformation and finds that political-economic explanations best account for the available evidence: planners and promoters deliberately misrepresent costs, benefits, and risks in order to increase the likelihood that it is their projects, and not those of their competition, that gain approval and funding. This results in the ‘survival of the unfittest’, in which often it is not the best projects that are built, but the most misrepresented ones. Finally, it presents measures for reforming policy and planning for large-infrastructure projects with a focus on better planning methods and changed governance structures, the latter being more important.

A major source of risk in project management is inaccurate forecasts of project costs, demand, and other impacts. The paper presents a promising new approach to mitigating such risk, based on theories of decision making under uncertainty which won the 2002 Nobel prize in economics. First, the paper documents inaccuracy and risk in project management. Second, it explains inaccuracy in terms of optimism bias and strategic misrepresentation. Third, the theoretical basis is presented for a promising new method called "reference class forecasting," which achieves accuracy by basing forecasts on actual performance in a reference class of comparable projects and thereby bypassing both optimism bias and strategic misrepresentation. Fourth, the paper presents the first instance of practical reference class forecasting, which concerns cost forecasts for large transportation infrastructure projects. Finally, potentials for and barriers to reference class forecasting are assessed.

Dan Lovallo and Daniel Kahneman must be commended for their clear identification of causes and cures to the planning fallacy in “Delusions of Success: How Optimism Undermines Executives’ Decisions” (July 2003). Their look at overoptimism, anchoring, competitor neglect, and the outside view in forecasting is highly useful to executives and forecasters. However, Lovallo and Kahneman underrate one source of bias in forecasting—the deliberate “cooking” of forecasts to get ventures started. My colleagues and I call this the Machiavelli factor.

Results from the first statistically significant study of the causes of cost escalation in transport infrastructure projects are presented. The study is based on a sample of 258 rail, bridge, tunnel and road projects worth US$90 billion. The focus is on the dependence of cost escalation on: (1) the length of the project‐implementation phase, (2) the size of the project and (3) the type of project ownership. First, it was found, with very high statistical significance, that cost escalation was strongly dependent on the length of the implementation phase. The policy implications are clear: decision‐makers and planners should be highly concerned about delays and long implementation phases because they translate into risks of substantial cost escalations. Second, projects have grown larger over time, and for bridges and tunnels larger projects have larger percentage cost escalations. Finally, by comparing the cost escalation for three types of project ownership - private, state‐owned enterprise and other public ownership - it was shown that the oft‐seen claim that public ownership is problematic and private ownership effective in curbing cost escalation is an oversimplification. The type of accountability appears to matter more to cost escalation than type of ownership.

This paper explores how theories of the planning fallacy and the outside view may be used to conduct quality control and due diligence in project management. First, a much-neglected issue in project management is identified, namely that the front-end estimates of costs and benefits – used in the business cases, cost-benefit analyses, and social and environmental impact assessments that typically support decisions on projects – are typically significantly different from actual ex post costs and benefits, and are therefore poor predictors of the actual value and viability of projects. Second, it is discussed how Kahneman and Tversky’s theories of the planning fallacy and the outside view may help explain and remedy this situation through quality control of decisions. Third, it is described what quality control and due diligence are in the context of project management, and an eight-step procedure is outlined for due diligence based on the outside view. Fourth, the procedure is tested on a real-life, multibillion-dollar project, organized as a public-private partnership. Finally, Akerlof and Shiller’s recent discussion in economics of “firing the forecaster” is discussed together with its relevance to project management. In sum, the paper demonstrates the need, the theoretical basis, a practical methodology, and a real-life example for how to de-bias project management using quality control and due diligence based on the outside view.

The scope of activities of University Center for Space Research and Technologies (UCSRT) includes fundamental and applied research in the field of theoretical and experimental physics, space physics, geophysics, atmospheric physics, space, astrophysics, cosmology, space- materials science, development of mathematical models of processes in the near and distant space. At the Center, research and educational activities are performed in the field of space research and technologies, which have applications in electronics, telecommunications, geophysics, meteorology, ecology, archeology and other fields. The Center performs also research on properties of materials for space technologies.
Main educational activities of the Center are master's Program on “Space research” and Module 1 “Aerospace engineering” (small aero-spacecraft) of the master’s Program “Aerospace engineering and communications”, but its members lead also many courses of undergraduate programs in physics and engineering physics.
University Center for Space Research and Technologies is an independent research and educational unit of Sofia University "St. Kliment Ohridski", founded in 1987 and reorganized in 1992 into Unit of the Faculty of Physics. University Centre for Space Research and Technology has its own Rules of Operation, which is approved by decision of the Academic Council of Sofia University. According to the Council, UCSRT represents Sofia University and the Physics Faculty before the national and international bodies and organizations for Space Research.
UCSRT coordinates and manages the efforts of scientists from various departments of Sofia University and Bulgarian Academy of Sciences in temporary research teams, which accomplish scientific tasks related to Space Research and Technologies. Therefore, the Center has associated one internationally recognized observatory (IAU - А79), companies (such as O&K), active student workshop on astronomy, as well as individual professionals. The Center forms temporary laboratories on different scientific high-priority hot topics.
Applied research fields of the Centre include development of IR, UV and visible imaging systems and photometry for remote sensing observations from aircrafts, UAVs and satellites, research of Solar and Space Impacts on the Environment and applications of Space Research and Technologies in Archaeological research and prospecting. It includes also research and location of asteroids and dangerous Near- Earth Objects (NEO) and assessment of the damage which they can produce in result of potential collisions.
The Center has a highly qualified teaching staff, and its scientific production is published in journals, monographs and encyclopedias, some of which are issued by world-known academic publishers such as Elsevier and Thompson company issuing also ISI Citation index. Two of these monographs are awarded by an International Union of UNESCO Prize for the best publication in the relevant scientific field during the year.
The scientific outcome of the Center is significantly higher than the average production of the departments in the Faculty of Physics, despite its smaller staff: the results of the research activities of the members of the Center are published in 750 publications in scientific journals, monographs (mostly international), and conference proceedings, from which 560 publications in journals with impact factor.
Their results are presented in 167 reports at international congresses, conferences, symposia and schools, as 23 of them are invited or plenary talks.
They are cited worldwide 31290 times from foreign scientists, and research teams. 89 from the papers are cited more than 89 times, each (h-factor 89).
Specialists of the Center lead national and international research projects and programs. They have participated in one European, 10 international, 3 Italian and two Canadian research projects. At the moment they are leading two international research programs of one international scientific union. They review articles in prestigious international journals; are members of the editorial boards of international journals, editors of foreign monographs; evaluate Italian research projects in the fields of physics, astrophysics and Earth sciences; and participate in the appraisal of Italian universities. They chaired scientific organizing committees of five international scientific schools and conferences, and 6 sessions of other international conferences.
Specialists from UCSRT participate in large international collaborations and experiments in elementary particle physics, such as ATLAS, CHORUS, DELPHI, HARP, OPERA and H1.
The only Archaeo-geophysics laboratory in Bulgaria operates at the UCSRT.
The Center has intensive international collaborations with Universities and scientific institutions in Australia,  Austria,  Belgium,  Brazil,  Canada, China,  Croatia,  Czech  republic,  Egypt,  France,  Germany,  Hungary, India, Indonesia, Iran, Iraq, Italy, Luxembourg, Portugal, Puerto Rico, Romania, Russia, Slovenia, South Africa, Serbia, Spain, Swisszerland, UK, USA and other countries.

University Center for Space Research and Technologies has YouTube channel:
https://www.youtube.com/channel/UCyH3fFqMfKjLLI9jS4xnWHw

University Centre for Space Research and Technologies, Sofia University 
performs  scientific  and  applied  research,  and  education  in  Space  Research  and
Technologies, which have applications in Monitoring of Pollutions and Protection of the
Environment,  Prevention  of  Forest  Fires,  Global  Change,  GIS,  Electronics,
Telecommunications, Geophysics, Meteorology, Ecology, Archaeology and other fields.
It also performs research on properties of materials for space technology.
The  Centre  coordinates  and  manages  efforts  of  scientists  from  various  departments  of  Sofia
University and external institutions in temporary research teams, which accomplish scientific and
applied tasks related to Space Research and Technologies. Centre forms temporary laboratories on
different high- priority hot topics. It ensures higher flexibility than this of most scientific institutes
and university departments in the country. 
The  Centre  have  affiliated  companies  (O&K,  Hydroloc,  etc),  internationally  recognized
Astronomical  observatory  IAU-  79  and  active  Astronomical  student  circle,  which  also  performs
scientific research. 
Applied  research  fields  of  the  Centre  includes  development  of  IR,  UV  and  visible  imaging
systems and photometry for remote sensing observations from aircrafts, UAVs and satellites, Solar
and Space Impacts on the Environment and  applications of Space Research and Technologies in
Archaeological research and prospecting. 
Main  educational  activity  of  the  Center  are  master's  Programs  on  “Space  research”  and
“Aerospace engineering”. 
Center’s web page is: 
http://www.phys.uni-sofia.bg/eng/departments/ucsrt/index.html
Center’s YouTube channel is:
https://www.youtube.com/channel/UCyH3fFqMfKjLLI9jS4xnWHw
Center forms temporary laboratories, which work in its current directions of research, as its
laboratory in Archaeo-geophysics:
http://www.phys.uni-sofia.bg/bul/departments/ucsrt/agpl/index.html

During World War I, the US Congress made it unlawful to speak against the war. The executive prosecuted many for doing so and when tried at the Supreme Court it upheld the sentences. During the Iraq War it was not a crime to speak against the war, but it was almost impossible to be heard if you had anything critical to say. Mass media practiced a self-imposed censorship. The op-ed below was written a few days after the invasion of Iraq and sent to main media in the US, but none wanted to print it on the grounds that critique of the war was considered untimely.