Site C likely a failed megaproject

BY MARK HUME originally appearing in The Globe and Mail

The great divide over the Site C hydroelectric project on the Peace River was evident at an energy conference in Vancouver last week when two former British Columbia premiers expressed polar opposite views.

Mike Harcourt, New Democratic premier from 1991 to 1996, said the project is “a disaster” that should be abandoned, even though billions of dollars have already been spent on it.

“You cut your loss at $2-billion or you go ahead and blindly build” and end up $15-billion to $19-billion in the hole, he said, predicting massive cost overruns.

But Gordon Campbell, Liberal premier from 2001 to 2011, took the stage the next day and urged the province to stay the course on the controversial project, which is currently estimated to cost about $9-billion. “I remain for Site C,” said Mr. Campbell, who first announced the dam was going ahead at a news conference in 2010, using the imposing W.A.C. Bennett dam on the Peace River as a dramatic backdrop.

Mr. Campbell believes, as does B.C. Premier Christy Clark, that energy demand is climbing rapidly and over the 100-year life of the project, it will be a profitable venture that benefits taxpayers.

BC Hydro has said it will take 70 years to pay off the debt – but that’s assuming the cost overruns predicted by Mr. Harcourt don’t materialize.

However, a paper by Bent Flyvbjerg, a professor of major program management at Oxford University’s Said Business School, strongly supports the view expressed by Mr. Harcourt. Prof. Flyvbjerg looked at megaprojects globally in 2014 and found that almost all had budget overruns, fell behind schedule and did not produce the benefits promised.

Despite those problems, he found that there is a boom in megaprojects around the world. Governments, it seems, just can’t get enough of them.

And his analysis of what drives projects such as Site C may make B.C. taxpayers start to feel nervous.

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Prof. Flyvbjerg said there are “four sublimes” that explain why megaprojects are so attractive to decision makers.

One of the key motivations is known as the “political sublime,” which Prof. Flyvbjerg describes as “the rapture politicians get from building monuments to themselves and their causes.”

He said megaprojects “lend an air of proactiveness to their promoters,” and draw a lot of media attention, “which appeals to politicians who seem to enjoy few things better than the visibility they get from starting megaprojects.”

Other motivations are technological, the thrill engineers get from undertaking big projects; economic, “the delight business people and trade unions get from making lots of money and jobs off megaprojects”; and aesthetic, “the pleasure designers and people who appreciate good design get from building, using and looking at something very large.”

Prof. Flyvbjerg said those four motivators create strong coalitions of stakeholders who benefit from megaprojects and who push them, even if they don’t make economic sense.

He adds that sometimes megaprojects succeed in fulfilling all the dreams they come packaged with. But that is rare.

“Success in megaproject management is typically defined as projects being delivered on budget, time and benefits,” he writes. “If, as the evidence indicates, approximately one out of 10 megaprojects is on budget, one out of 10 is on schedule, and one out of 10 is on benefits, then approximately one in a thousand projects is a success, defined as on target for all three.”

Prof. Flyvbjerg said his “iron law” of megaprojects is that they will be: “Over budget, over time, over and over again.”

Harry Swain, former chair of the federal-provincial joint review panel that held public hearings into the Site C project, stated in a newspaper commentary in June that the dam’s hydro power is not needed domestically and likely can’t be sold profitably outside B.C. because demand is flat and prices don’t match production costs.

“BC Hydro is going hell for leather in pursuit of a wildly unprofitable project that will cost us, its owners, billions,” he wrote. “And that’s without accounting for more ‘significant adverse environmental effects’ than any project that has ever been approved before.”

That sounds more like the kind of failed megaproject that Mr. Flyvbjerg describes, and Mr. Harcourt predicts, than the great success Mr. Campbell and Ms. Clark foresee.


Read the original article in The Globe and Mail.

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