If Pixar can do it, so can you: 'How Big Things Get Done'

Big infrastructure projects sometimes go terribly wrong, and are often late or over budget. Ever since the 2003 publication of the academic work  Megaprojects and Risk, Danish economic geographer Bent Flyvbjerg has been the world's leading authority on why this happens and how to prevent it.

Now a professor at the universities of Oxford and Copenhagen and executive chairman of the consulting firm Oxford Global Projects, Flyvbjerg has teamed up with Canadian journalist Dan Gardner to write a new book for general audiences about projects of all sizes, How Big Things Get Done: The Surprising Factors That Determine the Fate of Every Project, From Home Renovations to Space Exploration and Everything in Between. I spoke with Flyvbjerg via videoconference from his Oxford office. What follows is an edited transcript of our conversation.

 A major point of this book, and your career, is that big projects tend not to work out as planned. Why not?

It's two things: psychology and power.

We have lots of cognitive biases. That is well documented by behavioral science, and it's been on the radar of the people thinking about the human condition forever. I read texts that are 2,000 years old and they talk about this: the Greeks were optimistic in war, but you'd lose the war if you were too optimistic. That happens with big projects too. 

The other thing is power. People jockey for a position and use their projects  to try to gain influence. The classic example is monument building. There's nothing that bigwigs like more than getting out and cutting a red ribbon.

Why does this matter so much?

It matters because we need good projects to solve the problems we have on the planet. Take climate change. We are building hundreds and hundreds of giant projects around the world to make the necessary transition to green energy. It's really important to make sure that we are designing and building projects that are realistic, instead of optimistic.

Climate change is just one thing. It applies to all areas. We see a misallocation of resources when we let psychological biases and political biases influence the decision-making process for a big project, which is what is happening for the vast majority of projects these days.

How did you get into this world? What led you to being Mr. Mega-Project?

It was simple observation. I'm an economic geographer, the type of economist focusing on the spatial aspects of economies — urban economics, regional economics and so on. I was involved with city planning and regional planning, and I observed that more and more things were being done as projects and these projects were growing larger. Then I looked into the research on this and there was very little. I couldn't find any data set that documented the performance of mega-projects across a nation, let alone the world.

So you started building this database.

It was only 258 projects, which was large at the time. This is about 20 years ago. Now we have more than 16,000 projects in our database. 

One of the things that enables is "reference-class" forecasting. Why is that important?

In behavioral economics, this is called the "base rate" — it's like your odds when you go to the casino. We have established those odds for many different types of mega-projects. On the basis of that you can make forecasts of what it's likely to cost, how long it's likely to take, and what kind of benefits you're going to generate.

Before this, people were entering into these big projects without having clear ideas of those things?

Often without a clue. We do have examples of mega-projects that are highly successful — the Empire State Building, Hoover Dam — meaning they were built on time and on budget. The people who did these projects were really experienced. They knew what they were doing. But most people doing mega-projects don't know what they're doing.

So how do you go about being better at deciding what to do, and more prepared for that moment when you start building?

You do that by simulating what it is that you're going to build before you build it. It doesn't matter whether this is an actual building, or it's an IT system or a Hollywood movie.

One example that we emphasize in the book is Pixar. They came on my radar because they've had 20-plus blockbuster hits in a row. No Hollywood studio has ever done that. This is statistical evidence that something is going on that is not just chance.

The way Pixar does it is by iterating over and over and over again. If you have an idea for a film, you write a few pages and that's evaluated by your colleagues. Then you write a longer version and you get the feedback on that. Then you start doing storyboards, where you have an image for different things that are going to happen in the movie, and you get feedback on that. They go through eight or nine iterations where they have increasing amounts of feedback on larger and larger versions of the film.

Once you bring in the real actors and the real computer animation, the costs go up many, many times. So Pixar squeezes as much as possible into that preparation stage, where you're trying, you're learning and then you do it again based on what you learn. You try to get higher and higher on the learning curve.

If you're building some large physical thing though, it seems like there's more of a cutoff between the planning stage and the doing stage.

I'm not sure it's so different. We tried to illustrate this in the book by choosing Frank Gehry, my favorite architect. Gehry says it's much cheaper to build a building on the computer than to build it in reality. He basically does the same thing as Pixar. So does every successful mega-project leader that we've come across.

One of the stories you tell in the book is about a disastrous renovation project in a Brooklyn brownstone. What are the lessons from the big projects that can be applied at a small scale like that?

One of the surprising things we find is that there is not a big difference between big projects and small projects. You need to be really well prepared and you need to have experienced people involved. You also need to have a big buffer, because there are going to be unforeseen things. Gehry and Pixar know that things can go wrong and they make sure that they have contingencies in place in terms of extra time and extra money. But it's much more under control than if you haven't simulated your thing first.

That's the same for smaller projects. You need to think, "What are the base rates here? How wrong do home renovations usually go?" Ask around in your family and amongst your friends. "Have any of you tried to renovate a kitchen before? How well or how bad did it go? How many percent did it go over budget?"

Another story you tell in great detail is about the Sydney Opera House, which comes across on an accounting level as a failure, but on a human level is this huge success.

Well, well, well, let me stop you right there. Because at the human level you have to take the architect into account. He's Jørn Utzon, a fellow Dane. We were professors in the same university for a while. His career was completely destroyed by the Sydney Opera House. He never got to build another big building.

I love the Sydney Opera House, and I wouldn't want a world where it isn't there. But I also wouldn't want a world where the architect's career has to be destroyed. And that really wasn't necessary if the Australian government hadn't been so clumsy in managing this project.

One technique you discuss is to make a project as modular as possible, building it out of standardized parts. You describe it as being like Legos. One reason why wind and solar have been climbing up the ranks of energy sources so quickly is they're the most modular large projects out there, right?

This is a main finding of the book, and nobody has ever pointed this out before. Solar and wind and server farms and other things that are completely modular are much more successful in terms of project performance, which means they meet their budgets, they meet their schedules, they deliver the expected benefits.

Are there ways to push other projects in that direction?

I think this is one of the reasons that Elon Musk is so successful. Musk will think, "What are my basic building blocks here?" He then figures it out and is able to do things much more efficiently than NASA, which is still doing things in a bespoke way. Bespoke is nice for an Italian suit, but it's really bad for a mega-project.

Finally: Somebody's late for a meeting. You can only get in a sentence or two to tell them about your book and persuade them to read it. What do you say?

If you do projects in your life — and you do – this book will tell you why so many projects go wrong and how you can make yours right.

Bent Flyvbjerg is the author of the book "How Big Things Get Done."

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of "The Myth of the Rational Market."

Sketch: TBS

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.