After R300-billion in cost overruns at State-owned utility Eskom’s Medupi and Kusile power stations, South Africa's megaproject governance model requires fundamental reform.

When Medupi Power Station broke ground in 2007, it carried an initial budget of R69-billion with completion targeted for 2014. By 2021, when the final unit achieved commercial operation, Eskom reported capital costs of R122-billion, with estimates not exceeding R135-billion. Independent assessments incorporating interest charges and redesign costs place the true figure at R234-billion.

Kusile's trajectory proved even more challenging. Originally budgeted at about R80-billion in 2008 with a 2014 completion date, the final cost reached R233-billion when the last unit came online in September 2025.

These figures represent more than accounting failures. Loadshedding cost South Africa's economy about R2.8-trillion in 2023 alone, with every delayed megawatt translating into lost manufacturing capacity, unemployment and sustained economic underperformance. As South Africa embarks on major infrastructure programmes, including the Integrated Resource Plan, national gas infrastructure development, and the R400-billion Transmission Development Plan spanning 14 000 km of new transmission lines, the imperative for improved project governance has never been more urgent.

Why Traditional Oversight Fails

Global research across 16 000 projects in 136 countries reveals that 91.5% of megaprojects experience cost overruns, schedule delays or both. Rail projects average 44.7% cost overruns, while road projects average 20.4%. McKinsey research indicates bridges and tunnels incur average 35% cost overruns. South Africa's outcomes significantly exceed these already challenging benchmarks.

The local environment compounds universal megaproject risks. State capture legacies embedded corruption into procurement processes. Construction mafia activities add an additional 10% to 30% to project costs through extortion and work stoppages. Policy volatility shifts regulatory frameworks mid-execution. Skills exodus from state entities creates critical expertise gaps. Grid infrastructure bottlenecks delay connection for years. Social licence challenges can halt progress indefinitely.

Traditional governance, including steering committees, project management offices and external audits, was designed for stable environments with good-faith actors and available expertise. These assumptions no longer hold. The governance model must match the complexity of the challenge.

The Independent Expert Sounding Board Model

An expert sounding board differs fundamentally from conventional advisory mechanisms. It functions as a governance intervention with three defining characteristics:

Independence Without Conflicts
Unlike project teams or politically appointed steering committees, the sounding board serves objective truth. Members maintain no financial stake, face no political pressure, and hold no contractual obligation to please sponsors.

Expertise Matched to Risk
Members bring deep experience in reference class forecasting, comparing projects against global benchmarks and in quantifying socio-technical and political risk. They also possess local contextual knowledge across permitting, grid integration and financing structures.

Authority to Influence Decisions
The board can demand alternative cost estimates, require stress testing against historical overrun data, and escalate risks directly to Cabinet, boards and financiers.

Five Critical Interventions

Reality testing the business case
Projects proposing costs in the bottom 10% of global price distributions must be justified or risk-adjusted up front. Failure to do this has contributed to renegotiated tariffs and stalled renewable projects.

Combating escalating commitment

Predetermined cost and schedule triggers would have forced reassessment at Kusile long before costs more than doubled.

Early warning on social licence

Independent communication with communities and other stakeholders prevents work stoppages before they escalate into costly conflicts.

Knowledge transfer and capability building

A permanent learning institution prevents the systemic loss of skills after every project.

Transparency as competitive advantage

Demonstrating rigorous oversight improves confidence and lowers the cost of capital on future projects.

International Precedents

Norway has an external quality assurance scheme for major public investment projects. Australia’s Infrastructure Australia advisory body provides external oversight for transport infrastructure above certain thresholds. The UK’s integrated governance for nuclear portfolio management provides independent review mechanisms. The model is not experimental, it is proven.

The Economic Case

A comprehensive expert sounding board might cost R50-million to R100-million over a project's lifetime—around 0.1% of a R50-billion budget.
Preventing even a 10% overrun saves R5-billion.
Bringing power assets online six months earlier reduces national loadshedding losses by billions.

The question is not whether South Africa can afford independent oversight. It is whether it can afford the status quo.

To implement this approach, a pilot programme should be launched by applying expert sounding boards to three active megaprojects in the energy, water, and transport sectors, while concurrently establishing a South African Megaproject Excellence Centre to capture lessons learned and develop local expertise, and integrating oversight requirements into the frameworks of Treasury, the Development Bank of Southern Africa (DBSA), and municipal infrastructure policies.

South Africa can continue the cycle of optimistic beginnings, crisis-driven recovery, cost blowouts and degraded outcomes. Or it can implement governance equal to the scale of its ambitions.

The tools exist. The evidence* is overwhelming and the economic case is compelling. What remains is to act.

*Sources available on request.

This Thought Leadership piece* is compiled by Cebisi Consulting senior consultants Max Clark (sustainability), and Peter Raymond (due diligence & lenders engineer), specialists in capital investment project strategy, planning and execution, with extensive experience in megaproject oversight and governance reform.

https://www.cebisi.com/