Phase or stage-gating is a common governance approach applied to the planning and execution of megaprojects that involves defined points, or “gates”, in a project’s development where key stakeholders review the status and deliverables associated with that stage of the project before approving the project to advance to the next stage, with the “gate” serving as a formal decision point for senior/executive management.

Within different industries the specific terminology around the phase gates differs, however it commonly involves the sequential and structured advancement of a project.

With the execution of an EPC agreement, some may view that the heavy lifting of aligning the contractor and owner parties has been completed – as defined by the EPC agreement itself. However, the project characteristics, type of contract in place, the specific terms and conditions, as well as how the contract is being managed can directly lead to unnecessary issues if the parties are not sufficiently aligned.

Research on megaprojects has shown that initial cost and schedule estimates for megaprojects are often overly optimistic and driven by incentives to support project approval rather than project accuracy. This over-optimism leaves the project exposed to increased likelihood for significant cost and schedule increases, particularly for megaprojects with large first-of-a-kind aspects.

First-of-a-Kind (FOAK) megaprojects represent the large first-ever construction of facilities with unique aspects and face unique risks not seen in typical projects that have been built numerous times. Because they involve aspects that have never been done before such as new unproven technology, new commercial models, novel engineering methods, and unfamiliar risk profiles, they inherently carry a level of uncertainty and complexity far beyond that of convention infrastructure projects, which typically rely on proven designs, engineering and execution models.

Within the construction industry, use of AACE’s classification of cost estimates is fairly widespread, particularly for estimates supporting project authorization. However, this common application of the estimate classification system runs the risk of misinterpretation by project stakeholders into what the class of estimate is really telling them. Within this article, we examine the nature and characteristics of AACE’s estimate classification system including what each estimate class is typically used to support and how to interpret the expected accuracy range of the estimate.

Within this article, we review the common project approval process for regulated electric utilities, including what information typically supports the project’s application to its regulator, the limitations of that information and risks associated with that limited project definition. Examples of such risks are demonstrated through the real-world experience on two novel, first-of-a-kind projects, which includes discussion on how the respective Commissions for the utilities sponsoring these projects addressed these risks.

Within the regulated utility industry, prudence reviews represent a commonly applied process by the regulator to ensure the utility’s project management decisions and actions were reasonable and in alignment with standard industry practices. This allows the regulator to have an informed view on whether the costs associated with the project in question were also reasonable and necessary and thus appropriate to be recoverable through rates or tariffs, protecting customers from bearing costs of unreasonable decisions.

Independent monitoring involves the use of outside experts to collect, measure, and assess the health of a major project/program, commonly applied in the utility and infrastructure industries. In some respects, it is synonymous with the work performed by an “expert review panel” or a “technical advisory committee.” The overall objective is to provide the sponsor and key stakeholders with recurring and objective feedback on the progress of achieving the intended results of the project/program throughout its execution.

Megaprojects are well-known throughout the world and represent a wide range of scopes executed under a variety of strategic management practices. Within this article, we review the common characteristics that define megaprojects, introduce the gigaproject class of megaprojects, review issues and challenges often encountered on these large and unique projects, and provide recommended practices to support successful megaproject delivery.