The needs of the growing population, several megaprojects are underway in the world. But these constructions happening around the world are shocking in terms of their budget. A few years ago mega projects costing $10 billion or more were considered large.
But now many megaprojects with budgets of more than $100 billion are underway around the world. According to construction software company ‘1Build’, due to rising inflation, the world will probably start a round of mega projects worth more than $ 1000 billion before the end of this decade. Among the megaprojects currently underway in the world, the hi-tech city NEOM being built in Saudi Arabia, California High-Speed Rail, Malaysia’s Forest City and Delhi-Mumbai Industrial Corridor are prominent.
Nine of the world’s major megaprojects have budgets of $100 billion or more, and nearly 50 per cent of these are in the Gulf. For the past few years, the UAE and Saudi Arabia have been focusing on new sources of income other than oil to boost the Gulf economies. Megaprojects attract world attention by developing infrastructure. In such a situation, work is going on on big projects in the Gulf countries intending to increase foreign investment. Megaprojects in Gulf countries also need to be special to attract international tourists and compete with Asia and Europe, due to which the budget of these projects has increased.
The cost impact of rising raw material prices:
The coronavirus pandemic, continuous advances in technology, rising raw material and labour prices, a shortage of skilled workers, and unconventional construction methods have all contributed to the increase in the cost of large projects in recent years. For example, the start of the Dubailand project was delayed due to the global recession and subsequent financial crisis in the late 2000s. Then the outbreak of the Corona pandemic caused complete devastation for the theme park industry. Around 17 different Dubailand projects had to be cancelled early last year.
Megaprojects are considered large-scale complex enterprises. It takes many years to make them. Many public and private stakeholders are involved and they affect millions of people. The biggest example of this is the International Space Station, which launched in 1998 with a budget of $150 billion. At that time this project was the largest megaproject in the world. However, as the plan progressed, new sections and equipment were added and the cost increased. It is estimated that the station will cost at least $230 billion when the megaproject is completed in 2030. McKinsey estimates that 98 per cent of megaprojects have cost overruns of more than 30 per cent. While 77 per cent of large projects are completed with at least 40 per cent delay.
World’s major mega projects under construction
Ten-T Core Transportation Network – $600 billion
Neom City – $500 billion
Gulf Railway – $250 billion
International Space Station – $230 billion
Silk City – 132 billion dollars
King Abdullah Economic City – $100 billion
Delhi-Mumbai Industrial Corridor – $100 billion
California High-Speed Rail – $100 billion
Forest City – $100 billion
Dubailand – $64 billion