The conventional approach

In concluding the previous chapter we explained how institutional, organisational and financial set-ups of megaprojects might significantly influence risks and costs in such projects. We therefore concluded that institutional issues and issues of risk need to be analysed together in project development. In what follows, a number of such issues are identified. In this chapter we focus on what we call the conventional approach to project development and appraisal. In the next chapter, the focus will be on approaches with a more recent history, including the so-called BOT, build-operate-transfer, approach.

Projects developed according to the conventional approach are typically financed by public money, or are backed by public (sovereign) guarantees. The majority of projects reviewed in the previous chapters were developed according to this approach, the Channel tunnel being a notable exception. The conventional approach was used for the Øresund and Great Belt projects. Table VIII.i presents an outline of the steps that make up the approach, as used in these projects.

The characteristics and problems of the conventional approach to project development and appraisal are the following:

1. (1) The project cycle does not include a pre-feasibility phase before the decision to carry out a full-scale investigation is taken. The result may be an over-commitment of resources and political prestige at an early stage;

2. (2) Project development and appraisal are seen as technical exercises with a focus on technical solutions at an early stage.