Energy megaprojects - those exceeding $1 billion - face persistent delivery challenges. With 65% experiencing delays, cost overruns or operational setbacks, the result is a 31% erosion in returns. In a world racing toward net zero, can we afford this?
This challenge is not confined to traditional energy. As the world pivots toward sustainability, energy transition projects which are critical to decarbonisation are proving even more vulnerable. Their poor delivery track record threatens investor confidence, slowing progress at a time when speed is essential.
The integration of new technologies and lack of delivery experience compound the risks. There is also the irony that the very projects needed to drive the energy transition are struggling to attract critical capital.
Closing the value gap in megaprojects
At Wood, we’ve analysed decades of project data and uncovered six interconnected drivers of megaproject underperformance. By strategically applying digital and AI solutions, we’ve demonstrated measurable improvements.
Our research reveals six factors that contribute to capital project failures
1. People and organisation (26%)
A looming talent cliff threatens project delivery. By 2030, much of the experienced workforce will retire, leaving a gap in leadership and technical expertise. Seventy percent of projects are understaffed, and inexperienced teams drive up costs by 20%. AI-powered knowledge systems and simulation technologies can amplify the reach of scarce experts and accelerate skill development.
2. Technical challenges (22%)
Weak technical definition leads to an average delay of 26 months. Early vendor engagement and prioritising proven technologies are essential. Digital transformation enables data-centric engineering, using intelligent data objects instead of static datasheets and drawings. This provides a foundation for AI to significantly accelerate front-end engineering and deliver higher-quality outputs. Generative AI and intelligent data objects can streamline front-end engineering, reduce rework and improve design quality.
3. Governance (18%)
Strategic misrepresentation - lowballing costs and overstating benefits - destroys up to 30% of planned value. AI “control towers” unify project data, making it harder to sustain unrealistic forecasts. Automated AI workflows can consistently test business cases against evolving political, economic, social and environmental factors, enabling the early identification and proactive mitigation of risk.
4. External stakeholders (14%)
Regional complexities and poor stakeholder engagement cause unpredictable delays. Successful management requires early stakeholder mapping and tailored communication strategies to build trust and consensus. AI-driven sentiment analysis and digital platforms enable proactive reputation management and tailored communication strategies.
5. Contracting and procurement (12%)
Supply chain volatility threatens 13% of project success. Agentic AI can autonomously scan markets, generate RFPs and monitor global supply chains, predicting disruptions from weather, geopolitics, or shipping issues, enabling real-time logistics replanning and vendor selection.
6. Project management processes (8%)
Poor process discipline compounds all other risks by creating inefficiencies and leading to systematic overruns. AI-enhanced project costing improves accuracy by 30% and reduces analysis time by 40%, while live scheduling tools improve accuracy and responsiveness. Modular design and rigorous front-end loading are essential to reduce delays and improve outcomes.
Implementing digital and AI from the get-go
In a recent Middle East megaproject, Wood deployed a digital twin from inception, uncovering 20,000 data inconsistencies, representing $1.1 billion in hidden risk. Early intervention prevented costly rework and construction clashes, safeguarding project value.
Digital and AI technologies aren’t just tools – they are force multipliers. When applied strategically, they amplify proven best practices, accelerate delivery and improve outcomes. They help ensure projects land in the successful 35%, not the struggling majority.
To succeed, the industry must pair disciplined fundamentals with bold digital adoption. That means building experienced teams, leveraging validated technologies, and embracing data-driven planning from the outset.
The competitive edge lies in predictability. Delivering megaprojects on time, on budget, and with the returns needed for a secure and sustainable energy future is not just possible – it’s imperative.
The path forward is clear. To deliver the energy future we need, the industry must embrace digital and AI – not as add-ons, but as core enablers. The winners will be those who combine disciplined fundamentals with bold innovation. Let’s make sure our projects are among the successful 35%.