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0:00 This $80 million machine was the world's biggest tunnel digger until it got stuck beneath Seattle for over 2 years. And California's highspeed rail project promised to connect Los Angeles and San Francisco by 2020, but that never happened. They did not do proper planning before they began construction. And now the estimated cost for completing this thing is over a hundred billion. These issues are common. In fact, less than 1% of all big projects stay on budget, on time, and deliver what they promise. So, why do so many go off the rails? And what can we learn from the rare few that don't? Dan Gardner, the co-author of How Big Things
0:47 Get Done, breaks it down. Every time a country is hosting the Olympics, they're a beginner, and beginners are terrible. If you think about what the Olympic Games are, they go from country to country every four years. So congratulations, you win the bid to host the Olympic Games of some year. Then what do you do? You start planning and preparing this immense project. Well, have you ever done this before? No. Almost by definition, you've never done this before. You haven't done the planning for the events. You haven't built these sorts of buildings. And so you struggle because that's how human beings roll. And then it's some other country's turn. And then it's some other country's turn. And guess what? Nobody
1:34 ever learns from experience. That's why we call it eternal beginner syndrome. The Montreal Olympics was not a successful project. In fact, it came in 720% over budget. So, as is typical in the Olympic Games, Montreal decided that the main Olympic stadium had to be something truly spectacular, unlike anything ever seen before. And so what they did was they created this open stadium and then they had this enormous tower and then there would be a retractable roof that would go down through guywires to cover the stadium. But when it comes to actually constructing it, it's not so amazing
2:19 because nobody had ever done anything like that before. And it was precisely because this basic design was something that had never been tried before that it got into terrible, terrible trouble. In fact, for decades afterward, it continued to cost Montreal taxpayers because it was just an endless headache. the roof of the Olympic stadium and given the situation in Montreal and in the province, I think that it was really a criminal act to build a stadium spending so much money. Canada opens its arms to the world. The Olympics did go ahead on schedule, which meant that in the main Olympic stadium, the athletes showed up and they had the usual ceremonies, but the stadium was supposed to have a roof. A roof was not
3:04 completed. So they were basically having the games in a partially completed construction site. Gigantic stadium for the track events as it nears completion. For decades, the Olympics just kept making this mistake over and over again. And the cost overruns just got worse and worse. And so they've been trying to change insensible ways. So they're trying to reuse buildings. They're trying to reuse designs. They're trying to hire experienced firms that are maybe outside the host country to increase the amount of experience involved and that has led to some improvements but the games continue to struggle. California highspeed rail is massively spectacularly overbudget
3:50 massively spectacularly overtime and it hasn't moved any passengers. when they started it was 30 billion then it was 40 50 billion and now the estimated cost for completing this thing is over a hundred billion if you look at the GDP of small nations that's sort of the scale we're talking about and it hasn't moved any passengers a huge reason for California highspeed rail becoming such a fiasco is that they did not do proper planning before they began construction ction. They had an idea of the general direction of the route, but it was not nailed down. It was not firm. There is an obvious point in central California where the rail
4:37 line should go down a very straight line in an uninhabited region, but for political reasons that got pulled away to a more eastern location which was much more inhabited which meant that it was going through farm fields, very valuable farm fields which produced all sorts of political headaches and legal fights which were just completely unnecessary. Everything we spend in the state is less expensive than this one project. It has instead gone to well we might say not project hell but project limbo. It is a series of construction sites across California. There is no California highspeed rail line. No passengers are being moved and the prospects of the project ever being
5:22 completed moving passengers from Los Angeles to San Francisco and vice versa is pretty close to nil. the project as proposed will never be built. And in fact, most of the members here in this legislature know it won't be built. If I had to pick one factor among the many different factors that led to California highspeed rail becoming such a mess, I would probably pick experience. If you look at the sum total of highspeed rail in the United States, it is zero. There is no highspeed rail, no real highspeed rail. There was a French company that has a huge amount of experience with highspeed rail that came to California and said, "Would you like to hire us and they ended up hiring all these Americans and all these American firms?" And that
6:08 to me is the single most important reason why it became such a mess. Seattle decided that they had a highway that was on the surface. They didn't want it on the surface. They were going to dig a tunnel and put the highway into the tunnel and they would run all the traffic through two decks, two levels inside that tunnel. The problem with that is that you have to build the world's biggest boring machine to drill that tunnel. And if you build the world's biggest boring machine, by definition, that's a machine that has never been used before. It's in human terms really inexperienced. And guess what happens when you use an
6:54 inexperienced machine. They put it in, it started drilling, and it promptly got stuck and broke down and became the world's biggest cork in a bottle. What do you do when you have the world's biggest cork in a bottle? You have to then withdraw the cork, pull it out, fix it, put it back in again. It resulted in all sorts of lawsuits. And as a result of that, primarily the Seattle project was a fiasco. To many Sydney siders, it's a monument to inefficiency and extravagance. The Sydney Opera House uh not only was not a successful project, it was the type of project which if you are in the business of delivering big projects, you want to run screaming away from because it
7:41 destroys careers and corporations. This is the most controversial building in Australia. There was a long-erving politician named Joe Cahill. He had been diagnosed with cancer. He'd been in office for many years and he was thinking about legacy. And he decided, I'm going to get behind this project and make it happen. So they announced a competition, a global competition to design the Sydney Opera House. And they got entries from all over the world. And there was one entry in particular that leapt out because it was just gorgeous. It was graceful. Joe Cahill calls up the winning architect and the man's name was Yorn Nutson. Yorn Utson's entire entry in the design competition basically
8:26 consisted of this group of beautiful sketches. The engineers all looked at it and said, "We have no idea how to build this." It took him 2 years to come up with the technical solution. And you remember I just said that construction started immediately. Well, construction was going on the whole time. That's not how you do big projects. Because of this management of the project, everything got bogged down. The budget blew up. Besides being one of the most advanced architectural creations in the world, it'll also be one of the most expensive. Eventually, the Sydney Opera House was built. That's why we have the building today. But it took 14 years for it to be completed and it went 1,400% over budget.
9:13 When the Sydney Opera House opened, its internal acoustics were so bad it was unsuitable for opera. The Sydney Opera House is in a strange category. It was massively, spectacularly overbudget. It was desperately, desperately late. But to its credit, it did exceed benefits greatly because it became world famous. It drew and still draws tourists to Sydney. So you can say that it exceeded benefits ultimately in the long run, but at terrible, terrible cost. If you think about all project categories as being on a spectrum from most likely to fail to most likely to
10:00 succeed, you will find that solar power and nuclear power are at opposite ends of the spectrum. If you think about what a nuclear power plant, a traditional nuclear power plant is, what is it? It's one really, really big complex piece of machinery. And typically the way that they're designed is that you come up with a unique design for this unique plant on this unique site, which means all those uniques. So people come in, the construction companies come in and they work through it, but eventually you get done and you've got your nuclear power plant. Well, what happens then? Typically 5, 10, 15, 20 years goes by before you actually authorize the next nuclear power plant. And when they do
10:46 that, what do they do? They come up with another unique design for a unique plant in a unique location. And so you're not going up the learning curve. You're not getting more efficient. So that's nuclear power plants at one end of the spectrum. At the other end, solar power. Think about a giant solar farm. It's just a big stack of solar panels that are built in a factory. They're shipped out to a site and then what do you do? You put up one solar panel, you put up another solar panel, and you put up another solar panel and every solar panel is identical. And that means repeat, repeat, repeat. It means you go up the learning curve. You get incredibly good and efficient at it.
11:33 Now, there's a word that captures this idea of single identical building blocks. Repeat, repeat, repeat. It's modularity. My co-author Bent Flubier is uh Danish. Lego is a Danish company. So he likes to talk about it being asking the question, "What's my Lego?" It's an identical block, right? And you can just snap them together piece by piece by piece by piece. Click click click click click. And because you're repeating yourself, you get really, really efficient. You can actually turn projects which are not obviously modular and make them more modular. So the Empire State Building is a fantastic example. What's the module in the case
12:18 of the Empire State Building? It's the floor. Each floor is identical to the floor below it. Click, click, click, click. The Empire State Building is one of my all-time favorite projects. Uh, it was conceived in early 1929. It opened in 1931. Incredibly fast. It was the world's tallest building for 40 years. It was on schedule. And it was not only on budget, it was actually really substantially under budget. So to go from the conception of the project to opening the world's tallest building in 21 months is just unthinkable today. They had experienced construction companies. They had experienced architects.
13:07 A building that they had designed in North Carolina opened. And so they said to the backers of the Empire State Building Project, "How about we do that but taller?" And so if you go to that building, it's still there in North Carolina today. You can go and you can look at it and it's like an Empire State Building except smaller. Right? So what they did was they were taking what I would call an experienced design, a design that's been used in the real world and that succeeded in the real world and they said, "Hey, it worked. Let's use it again." The architects designed every floor of the Empire State Building to be as identical as the floor above it as possible. And as a result, the construction of the Empire State
13:54 Building, which started fast, actually accelerated as the project went along. The architect called this design concept his vertical assembly line, which I think is just genius. And the applicability of that idea to other projects is is vast. So in New York in the 1920s, remember this was the jazz age. The economy is booming. New York is booming and there was a mad race to build skyscrapers because the economy is booming. There are lots of tenants for these buildings and everybody wants to build taller than everybody else. what basically nobody foresaw at the end of 1929 1930 the Great Depression hits and as a result the Empire State Building was not a financial success for its first decade
14:41 not remotely a success that underscores a really important point about big projects. You can do literally everything right and still have an outcome in this case the benefits not be what you want it to be. So the purpose of the Hoover Dam was twofold. It was to control flood waters and it was also to create hydroele electricity and actually it had a third purpose added because it was the early years of the great depression. The government really wanted a large project to employ lots of people. It was built in the desert and it was built in a place where the river basically ran between sharp steep cliffs. It was a brutal environment. It was a brutal,
15:28 difficult undertaking. And so you might imagine, in fact, this is going to be a disaster. Under the Boulder Canyon Project Act shall be called the Hoover Dam. No, it was a great success. It was delivered on time and under budget. There were a number of factors behind the success of the Hoover Dam. The single biggest factor was experience. Six of the nation's most skillful engineering and construction firms had combined their full resources. The construction manager of the project was an engineer named Frank Crowe. Frank Crowe spent his entire career building hydroelectric dams in the American West. By the time he tackled the Hoover Dam project, he had built dams all over the
16:17 place. He was the most experienced dam builder in the world. And because he was going from project to project building hydroelectric dams, Frank Crowe had people who worked for him, who followed him from project to project to project. So when Frank Crowe went to the Hoover Dam, not only was he highly experienced, and not only were the people below him highly experienced, but the people together, Frank Crowe and all those other people were experienced working with each other. to Bill Ba Guggenheim is one of the most successful projects in modern history. So it's one of the 0.5% of projects that delivers on all three promises. In the mid1 1990s, Spanish government officials
17:02 came to the architect Frank Garry and they said, "We have this old building in Central Bill Bao. We would like you to renovate it to make it a suitable space for a Guggenheim Art Museum." He didn't make a decision. Instead, he said to them, "Why? Why do you want to do this project? And what these officials wanted the project to accomplish was to draw the tourists who come to southern Spain up to the north. And by bringing those tourists into Bill Bao, they would revive Bill Bao's economy. And so when Frank Garry heard the why of the project, he thought carefully about it and he realized the project as they had conceived it could not possibly work.
17:47 How do you get global media attention for a building renovation? The answer is you don't. And so Gary went to them and said, "You know what? Down by the river, there's a derelch old factory. If you knock that down, I will design for you an eyepopping building unlike anything you've ever seen before. That will get you your global media attention. That will get you your global awareness. That will get you your tourists and your economic revivocation." And that's exactly what happened. In fact, they had huge, huge goals for the number of tourists that they wanted to attract to Bill Bao, and they massively exceeded them. It was just another building. Turned out great. It actually met all three promises. Not only was it on budget, it was actually a little bit
18:34 below budget. It was on time and it massively exceeded benefits, which is why I would argue it's probably one of the most successful projects in modern history. One of the problems, the big problems with projects is what my co-author Ben Flibear calls uniqueness bias. People tend to look at their own project, whatever it is, and think it's a unique project. Because what people will typically do when they try to forecast how much is my project going to cost and how long is it going to take, they'll look at the specifics of the your project. And so if you're doing a kitchen renovation, you'll look at exactly the dimensions of your granite countertop, of your pantries, and you
19:19 will calculate the cost based on exactly the materials that you're using. A much better way to make a forecast is to not think of your forecast as being unique. Think of it instead as being one in a category. And the category is the project type. The best way to make your forecast is to get a whole bunch of data about kitchen renovations. Get a hundred different kitchen renovations. Say, "How much did they cost? What's the average cost there?" And that's your forecast. And that's how your forecast at a minimum should start. And if you want to adjust it because there are particular problems with your forecast or your your your project, you know, if it's you're using unusually expensive materials or whatever, then you can adjust it up or
20:05 down according to those unusual specifications. But the real core of your forecast should be the category, the base rate as statisticians would call it. [Music]
