Megaprojects are Risky Yet Lucrative

By Lauren White, RCS Reporter.

While more and more megaprojects are awarded and being planned, there are multiple drawbacks to these projects.

There’s an increase of owners and developers who are choosing to complete a large collection of construction projects instead of focusing on separate projects.  These megaprojects take a significant amount of time, resources, and labor, and can be valued at more than $1 billion.  “A single megaproject can impact the lives of millions of people,” according to Cotney Construction Law. 

These projects are complex, unpredictable, have a host of challenges that can transpire, yet are still lucrative.  Cotney Construction Law wants to make sure your company is in a position to profit when work on a megaprojects begins.

By the Numbers

More than 320 megaprojects, valued at $700 billion, were awarded between 2012 and now, according to a report published by Brian Strawberry, Senior Economist for FMI Corporation, which provides the engineering and construction industries with research, management consulting, and investment banking.  “670 megaprojects are currently being planned with a combined value of $2 trillion,” according to Cotney Construction Law.  “The average U.S. megaproject is expected to increase from $2.1 billion to $2.9 billion— an incredible 37% increase.”

Downtown Tampa, Florida is slotted for one of these megaprojects.  A $3 billion dollar makeover called “Water Street” will be developed by Strategic Property Partners (SPP).  This is a joint venture between Cascade Investment LLP, Bill Gates’ investment fund, and local businessman Jeff Vinik, who owns the NHL’s Tampa Bay Lightning and the Arena Football League’s Tampa Bay Storm.  9 million square feet of downtown will accommodate hotels, retail stores, office spaces, and living spaces.  “However, for megaprojects like Water Street to reach completion, they have to overcome a myriad of hurdles that cause the vast majority to go over budget,” Cotney Construction Law reveals.

An estimated 65% of megaprojects fail, according to Edward Merrow, Founder and President of Independent Project Analysis (IPA).  While an individual small project has its own problems, those problems are multiplied by each smaller project that falls under the umbrella of the megaproject.  With a low success rate, these projects often fail due to inaccurate estimates, inadequate organization, and poor execution.  It’s important for construction companies to have a partner who thoroughly knows the industry in order for a megaproject to be successful. 

Necessary for Our Country’s Growth

With a population of close to 400,000 people living in the city, the Water Street project is a necessity for Tampa.  According to a Bloomberg Report, Tampa is the third largest metropolitan area in the United States with 149 people moving to the area every day.  Tampa is just behind Dallas, Texas and Phoenix, Arizona.  While there are a host of challenges construction companies face with megaprojects, due to the growth of the country, these projects are essential.  And Cotney Construction Law is prepared to help companies big and small be successful with their megaproject endeavors.

Consult an experienced construction attorney like Cotney Construction Law before starting construction on a megaproject.

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Disclaimer: The information contained in this article is for general educational information only.  This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.