Mega-projects and Risk Mitigation
1 year ago by Jack Evangelides

Mega-projects and Risk Mitigation

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There is a lot of building work going on in the Gulf at the moment. Saudi Arabia`s Vision 2030, Qatar`s Vision 2022, Dubai`s Expo 2020, new airports, new cities, new cities which are airports, new railway lines, new solar energy plants, new desalination facilities, a new world`s largest swimming pool (at 40 acres) and another new world`s tallest building. From whichever angle you look at them, mega-projects mean investment and that means opportunity. And mega-projects certainly are big investments. By definition, they cost at least a billion US dollars, ranging all the way from the $100 billion allocated for the Washington DC-sized King Abdullah Economic City to the comparatively modest $1 billion being spent on the new leisure centre in Oman`s Duqm Special Economic Zone. And the bigger the project, the more difficult it is to correctly estimate the final cost. In a superbly informative and entertaining study called What You Should Know About Megaprojects and Why, Professor Bent Flyvberg estimates that only around 1% of mega-projects come in on budget and on time, leading him to conclude that the ‘Iron Law of Megaprojects` is that they are: “Over budget, over time, over and over againâ€? Contractors know that once a project is underway, abandoning it is undesirable for everybody involved. This reduces an operator`s incentive to hold up their end of the bargain, meaning that:
“projects tend to "break" sooner or later, for instance when reality catches up with optimistic, or manipulated, estimates of schedule, costs, or benefits; and delays, cost overruns, etc. follow. Projects are then often paused and re-organised – sometimes also refinanced – in an attempt to "fix" problems and deliver some version of the initially planned project with a semblance of success. Typically, lock-in and escalation make it impossible to drop projects altogether.â€? Proof - if proof were needed - that it pays to be vigilant when you`re operating out-of-area or when there`s a lot of investment at stake. In a part of the world where both the opportunities and challenges are bigger than ever, knowing as much as you can about who you`re dealing makes very good sense. At Cedar Rose, we`ve got the largest database of people and companies in the Middle East and North Africa, as well as an unrivalled range of Business Intelligence services from Global Compliance Checks to Reputational Due Diligence Reports, Bankruptcy Checks to Site Visits. All in all, there`s nobody better placed than us to help you understand who you`re dealing with when you`re dealing with the MENA. If you`re involved with the region and want to find out more, then why not come and see what we can do for you at www.cedar-rose.com
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