The impact of limited rationality on the creation and management of complex infrastructure projects: The cases of Heathrow and Berlin- Brandenburg airports

Abstract

The article aims to examine the impact of decision-makers’ limited rationality on creating and managing infrastructure projects. The object of the study is transportation enterprises that have critical importance for the national and global economy. I argue that the success of the infrastructure projects depends on the external environment state and is most evident during macroeconomic recovery. Authorities make less rational decisions and approve more innovative and expensive projects at the micro level if the national economy approaches the peak of growth. The productivity of operating objects depends on the interplay between the external environment and the internal functional and isolated levels of the enterprise — physical, distribution, economic, technological, and design. I suggest that these levels differ dramatically by their innovativeness and planning horizon. The physical level implies the routine and short-term planning, whereas the project level implies the higher level of innovativeness and long-term planning horizon. The remaining levels occupy an intermediate position between these two poles. A significant deviation from the indicated distribution at the functional levels can undermine the productivity of transportation enterprise and infrastructure projects. I illustrate this assumption using the cases of the construction projects of Terminal 5 at Heathrow and Berlin–Brandenburg Airports. In both projects, the obtained results were far from the planned ones, which proves the distortions in the way their activities were distributed between functional levels.