Back to News
By TBH Director, Stephen Topp
This article was first published in the July 2024 issue of Construction Week Middle East.
Gigaprojects, as they are commonly known, are typically large development programmes comprised of portfolios of projects. Whilst strategic reprioritisation or rephasing of these gigaprojects may be perceived as a deviation from the original plan, this practice allows organisations to adapt to changing conditions, optimise resource allocation, and enhance project outcomes.
Drivers for Re-evaluation of Implementation Plans
The predominant reason these projects require regular re-evaluation is the passage of time between initial implementation planning and actual project delivery. Large mixed-use developments in mature markets are often delivered in around three to five years, and large infrastructure projects can take more than five years to deliver; however, some of the incredible gigaprojects making headlines in Saudi have delivery horizons of 10-20+ years for full build-out. With these long periods from initial implementation planning to delivery of many of the built-form assets, there is naturally a much greater likelihood that conditions change between the inception of master planning to delivery of assets; therefore, continual re-evaluation is essential to a successful outcome.
This can be further complicated by a siloed approach to implementation planning, resulting in projects being planned individually rather than as a programme or portfolio. This can lead to misestimation of market capacity and market absorption through concurrency and can particularly be an issue in large organisations with complex stakeholder environments. An example could be two projects within a portfolio, based on market research, both delivering 500 luxury villas, unbeknownst to each other, targeting the same market segment.
Market absorption is difficult to accurately predict in mature markets, even more so in rapidly evolving markets, particularly when introducing new product categories. Delivery pipelines of residential and hospitality products (hotels, serviced apartments, etc.), for example, should be reviewed at least annually, based on market response up to that point and any key market drivers on the horizon.
Market capacity, though often discussed in hot markets, is often still an underestimated risk in delivering to an implementation plan. Evaluation of the capacity of market participants, including consultants, designers, contractors, and operators, if undertaken, is often done in a vacuum, underestimating existing commitments or competing projects’ requirements.
Benefits to Regular Re-evaluation of Implementation Plans
Although messaging around resequencing or rephasing committed or publicised projects can be challenging, particularly if the corrective course of action is pushing a project further into the future, there can be very real benefits both in the short and long term.
These benefits start with reducing the risk of redundancy of the delivered product. If the latest market research or consumer patterns suggest that the planned product typology is less desired by the market than an alternative, it makes sense to pivot to what the market demands. Examples of this include pivoting from a residential villa product to apartments or from commercial office space to residential or retail.
Additionally, greater value creation can be achieved by reconsidering the type of product to be delivered or the timing of delivery where it becomes apparent that other projects within the portfolio are scheduled to deliver competing products simultaneously, thus avoiding the potential cannibalisation of returns.
Regarding market capacity-driven changes, these can reduce supply chain pressure benefiting project quality, cost, and human capital.
Quality generally suffers when the supply chain is stressed in terms of materials (suppliers cutting corners to keep up with demand or projects having to select lower-specification materials due to unavailability) or even labour (reduction in quality of available consultants, designers, and contractors). In parallel with quality challenges, the cost of delivering projects typically increases due to demand pressures when supply chains are overstretched.
There is also a benefit to human capital in terms of reducing stress and mental burnout, which has a flow-on effect for organisations, as the cost of staff turnover, recruitment, and retraining is well documented. This applies to all participant organisations, including client organisations, in terms of procurement, approvals, and management pressures.
Strategies to Minimise Re-planning
Each situation is unique, and senior stakeholders will have differing expectations; however, there are a few strategies for implementation planning that can help to minimise the amount of repositioning required in the early stages of development:
- Applying a rolling-wave philosophy to implementation planning, defining short-term delivery in greater detail and longer-term objectives at a high level and progressively increasing the detail and specificity of committed dates as unknowns are resolved.
- Planning should start from a land development perspective, considering any constraints in enabling the land, such as subdivision and titling, regional utility and mobility infrastructure availability in terms of accessibility, and availability of demand quantum, etc., before establishing committed timelines for asset delivery.
- Where possible, incorporate flexibility into the implementation planning. For example, market research may indicate market absorption of 1,000 dwellings per year over the next 10 years for a particular location; however, the particular asset class most in demand today may not be the same for those assets delivered five years into the future. Progressively defining projects in the implementation plan as they move closer to commencing their development lifecycle can reduce re-work due to such shifting demands.
- Learn lessons from similar projects in comparable locations that are further advanced in the development pipeline.
This is not to suggest that a slowdown of any or all projects is required, but rather that shifting priorities or delivery timelines in these large, very complex programmes shouldn’t necessarily be viewed as failures but are often necessary pivots to improve the overall outcome, which will have a legacy of decades.