NEWS: How can we improve the prospects for success on South Africa's megaprojects?

Dr Willem Louw makes the case for using ‘executive sponsors’ to improve the prospects for megaproject success as South Africa moves to ramp-up public infrastructure spending as part of its economic recovery effort.

Can the role of an executive sponsor be one of the decisive factors in the success of megaprojects in South Africa?

When, because it cannot be if, we embark on aggressive infrastructure investment as part of the South African Economic Reconstruction and Recovery Plan (ERRP) released by President Cyril Ramaphosa during 2020 to reshape, bolster and improve the South African economic landscape, significant amounts of capital will be involved and required.

In his address in October 2020 to the Joint Sitting of Parliament on South Africa’s ERRP, Ramaphosa reflected that the first priority in the ERRP is embarking on a massive rollout of infrastructure throughout the country. He stated that a robust pipeline of projects existed that by end of June 2020 contained 276 catalytic projects with an investment value of R2.3-trillion.

Additionally, a list of 50 strategic integrated projects and 12 special projects was gazetted in July 2020. These projects, at various stages of the project life cycle have been prioritised for immediate implementation with all regulatory processes fast-tracked, thus enabling over R340-billion in new investment.

Other numbers in the same context being touted e.g. by David Metelerkamp (Engineering News, March 2021) indicate the following:

“They (the Government) have R360-billion for a list of 50, 51 projects which are shovel-ready, but I don’t buy that. Only seven are in implementation phase, according to documents by National Treasury.”

By prioritizing infrastructure development for the modernization of freight and public transport for interconnected industries the following will apparently receive immediate attention:

• Reversing delays in Metrorail modernization and prioritizing the refurbishment of the commuter rail network, including the Mabopane line in Tshwane and the Central line in Cape Town;
• Protecting passenger and freight rail infrastructure from vandalism, arson and other crimes;
• Expanding the national, rural and municipal road rehabilitation and maintenance programme through the roll out of a labour intensive rural roads asset network using alternative technologies as well as local supply and value chains.
• Fast-track the implementation of gazetted strategic infrastructure projects through the approval of credit enhancing instruments, provision of bulk infrastructure, speedy processing of water use licences and environmental impact assessments and township establishment; and
• Adapt the infrastructure procurement framework to enable public-private partnerships and unlock new funding.

This cursory glance at the ERRP leads to the question why would both the cost and schedule performance of particularly the strategic integrated and special projects mentioned above be different to the cost and schedule performance of Eskom’s Medupi, Kusile and Ingula projects as well as Transnet’s NMPP project. Nothing dramatic has as yet changed when contemplating if the capacity of the State has been changed sufficiently to deal with the challenge.

Documentation in the public domain on the ERRP states categorically that: “The successful implementation of the Plan will also depend on a capable, ethical developmental State with the capacity to plan and to implement in a coherent and integrated manner across the national, provincial and local spheres of government.” It goes further to emphasise that strengthening the capacity of the State will be among the priority areas of focus.

There is due recognition that corruption continues to have a profoundly negative impact on the ability and capability of the State to deliver. It has reached alarming proportions, and bold corruption has over time negatively influenced the ability and capability of the State to deliver.

Intense efforts by the State to deal with corruption are required. If not provided, the successful implementation of the plan and its dependence on an ethical State remains a problem as ‘ethical’ and 'corruption’ do not belong on the same page.

To enable strengthening of the capacity of the State, it is intended to expand dedicated capacity in project preparation, project implementation and execution of infrastructure and high impact capital projects. This apparently will include strengthening partnerships with the private sector. It is well known that the wheels of the State machinery turn very slowly and strengthening actions such as described take months, if not years to materialise. Metelerkamp also indicated that there is a severe skills shortage in government to implement these projects and emphasised that the divisive nature of the current political environment created a lack of investor confidence.

The prolonged strengthening of capacity and addressing the impact of corruption on the projects foreseen by the State are distinctly problematic in the context of the ERRP. This can be ameliorated in the short term with distinct benefits to be obtained. Willem Louw, in research on the executive sponsor (in the South African context) as key factor in megaproject success, was awarded a PhD in 2020. Louw arrived at an output for the research that not only confirmed the potential advantage of appointing an executive sponsor(s) for these projects very early in the project lifecycle but also provided a clear indication of six essential attributes that such an individual should possess.

Megaprojects in literature are defined as “large-scale, complex ventures that typically cost $1-billion or more, take many years to develop and build, involve multiple public and private stakeholders, are transformational, and impact millions of people”. For the purpose of this article it is assumed that there will be a number of infrastructure projects to be developed and implemented in the ERRP that meet the requirements of the definition, even at an exchange rate of R15 to the dollar. The typical cost of $1-billion should not pedantically be seen as the only definer of a megaproject. Without also considering the large-scale, complexity (complicatedness) and the rest of the definition an opportunity may be missed for the appointment of an executive sponsor.

Having these projects fail at a concerning and unsustainable rate is a major problem for the funders (private and public sector) who invest very large sums of money in the projects. These failed projects are also troublesome for the societies in which they are being carried out, and can affect the health of the national economy of the country.

Executive sponsors are primarily allocated to megaprojects of strategic importance that are complex, carry a considerable degree of risk, and are highly visible. A megaproject is thus entitled to a sponsor from the executive (most senior) ranks of an organisation. Although the role of the executive sponsor is merely one of the many decisive factors in the success of megaprojects, it is an essential element that is still much neglected in project management literature. No guide for the identification of the attributes of the executive sponsor could be found in literature nor has the effect of the executive sponsor on megaproject success been studied sufficiently.

In fact Lynda Bourne in 2015 commented on the governance process of nominating or appointing the sponsor as follows: “ The era of the ‘accidental project manager’ has largely passed, but we are still in the age of the ‘accidental sponsor’.”

Where the sponsor or sponsorship was addressed in the project management literature, it was comprehensively recognised that the sponsor role was a crucial appointment on any project leaning towards the definition of a megaproject. It was also acknowledged that the sponsor made a significant contribution to the success or failure of the project.

The role of the executive sponsor essentially revolves around the following key themes:

• Selection/appointment from the (aspiring) executive level in the owner (a.k.a. client or customer) organisation;
• A role involving substantial dimensions of leadership (as opposed to sponsorship being just a management role);
• Responsibility for ensuring that an effective governance framework was created for the project;
• Ultimately being responsible for the delivery or realisation of the benefits intended for the project; and
• Organisational positioning on the interface between the owner and project organisations. This positioning enables decision-making and support for the project manager, particularly for issues beyond his/her control.

The research by Louw reports on the perceptions of 26 executives with circa 250 years of combined megaproject experience. These executives played key roles on six South African megaprojects completed since 2006. The industry sectors that were represented in the selection of projects analysed in the research were mining and minerals (coal), energy (fuels and petrochemicals, i.e., wax from natural gas), transport (rail and pipeline), and energy (pumped-storage power generation). Using cost, schedule, and operability information available in the public domain, it was found that the split between success and failure for South African megaprojects was reasonably similar to the global norm for failed megaprojects, i.e. 65%.

The findings of the research included information on important and essential attributes that an executive sponsor should have to increase the probability of megaproject success. The single most significant attribute required is appropriate seniority, being empowered and accountable, with apposite credibility and with both personal and positional power. The other five essential attributes are:

• Ability and willingness to provide objectivity to the project team and challenge the project assumptions for meaningful alternatives to maximise value in a complex or complicated environment;
• Ability to provide clarity of direction (includes the ability to develop a compelling vision, understanding strategy of the organisation, appreciating the linkage between the business or project objectives and the corporate strategy, and a focus on results);
• Ability to have a holistic view (see the big picture), engage peers and take advice from others for key decisions;
• Understanding of basic project management (can comment constructively at a high level on scope, risk, schedule, and cost management) and has project experience (preferably megaproject experience); and
• Ability to engage – demonstrated by taking personal ownership, showing commitment and loyalty, and acting in the long-term interest of the organisation.

The list of attributes developed, and their ranking, makes a recognisable contribution to the sparse literature on this topic and provides valuable guidelines for boards of companies and executives who appoint sponsors on megaprojects. To enable the future success of megaprojects, these guidelines explain how leadership theories are used to identify instruments that can assist in the assessment of the leadership style and attributes of an executive sponsor. A framework for this is duly proposed in the research.

During June 2020 at the inaugural Sustainable Infrastructure Development Symposium South Africa (SIDSSA), the Infrastructure and Investment Office (IIO), located in the Presidency, launched a new methodology for infrastructure planning and project preparation, known as the Sustainable Infrastructure Development System (SIDS) methodology (Engineering News, June 2020). This methodology is intended to ensure that infrastructure development is not merely undertaken in a transactional manner. The SIDS methodology relates to the identification, consideration, evaluation, approval and implementation of sustainable infrastructure, in order to progress the proposal to achieve bankability.

As per the booklet produced by the SIDSSA, it is stated that increasing investment in public infrastructure will be a key part of the infrastructure development package. It is also stated that policy reforms that improve business confidence will need to play a real part by driving private sector infrastructure investment, as infrastructure investment is an important signal that investment and expansion is happening. In the long run, infrastructure investment increases the capacity of the economy.

Also read: Do we have clear principles to attract private capital investments on infrastructure?

All indications are that the SIDS methodology does not make provision for the concept of an executive sponsor (as described above) in the methodology. It will clearly enhance the achievement of the ultimate ‘economic capacity increase’ intent of investing in infrastructure should the appointment of an individual with the commensurate essential attributes performing the role as outlined above be included in the methodology. De facto it presents an enhanced opportunity for good value-for-money to the taxpayer, projects/programmes being delivered on time, and the provision of quality services to the public.

Enhancing the SIDS methodology by implementing an approach where the essential attributes of a potential infrastructure megaproject sponsor are assessed is neither revolutionary nor a very difficult or costly process. It is also no ‘silver bullet’ solution to a very complicated problem – the failure of megaprojects/the inability to deliver as promised. It does, however, have the potential to result in a very significant return on the infrastructure investment in the ERRP.

This opinion piece was written for the Engineering News by Dr Willem Louw a former MD of Sasol Technology and a former nonexecutive director of Group 5. He is currently a Faculty at the Business School of the Stellenbosch University, the chairperson of the Council of the University of the Free State, a registered professional construction project manager and a Fellow of the South African Academy of Engineering.

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