Consultants tell House Resources committee megaprojects routinely run over budget; recommend FEED review and independent oversight for Alaska LNG

Consultants from Pegasus Global told the House Resources Committee on April 7 that large energy megaprojects commonly face cost and schedule overruns and urged Alaska decision-makers to require rigorous front-end engineering and design (FEED) review, contract risk assessments and ongoing independent oversight for the Alaska LNG effort.

Pegasus Global representatives Jeremy Clark, senior vice president, and Joe Miller, president and CEO, presented findings from work they performed in 2019 and from broader megaproject experience. They described common problem areas — optimism in early estimates, inadequate contingency and escalation allowances, underestimated labor needs, and interdependent risks that can ripple across a complex project.

"Megaprojects are... over budget, over time, under benefits over and over again," Clark said, summarizing an observed pattern across large projects. Pegasus cited the Trans‑Alaska Pipeline System (TAPS) and a later strategic reconfiguration as historical examples where early estimates proved low: the presentation said TAPS’s initial estimate roughly doubled in real terms and the reconfiguration project’s initial $249 million estimate later rose near $800 million, according to sources Pegasus reviewed.

Pegasus outlined specific recommendations for the current Alaska LNG development stage: a detailed review of the FEED study, a readiness review before a final investment decision, contract risk reviews that match procurement approaches to project needs, and creation of an independent monitoring and advisory committee during project execution.

Committee members asked about applicability of older projects to modern work, who bears project risk, and how to evaluate a developer’s capacity. Clark said many megaproject risks are structural and persist despite changes in regulation and technology; he recommended involving construction expertise earlier, using stage‑gate reviews and presenting cost estimates as ranges rather than single point figures to reflect uncertainty. "You have to be prepared to address the risks that are associated with these large and complex projects," he said.

Representatives raised specific concerns in the Q&A: some asked whether financiers should have ample capacity to absorb overruns; others asked how risk allocation is determined (Clark replied it is typically defined by contract negotiations). Several members asked about Glenfarn (rendered in testimony as "Glenfarrin" or "Glenfern"), the company then associated with moving the project forward; Pegasus said it had no meaningful familiarity with Glenfarn and recommended owners ensure technical competence through owner’s engineering or other third‑party oversight when a project sponsor lacks prior experience at the required scale.

Pegasus also recommended that project owners insist on robust, transparent risk registers, clear risk allocation to the party best able to manage each risk, and independent oversight paid for by the project during execution. The consultants said these steps reduce the likelihood and impact of the common "iron law" outcomes for megaprojects.

The committee noted the presentation was informational; no formal action was taken on the presentation itself. Chair Burke said Alaska Gasline Development Corporation (AGDC) was scheduled to present to the committee in a subsequent meeting. Several members said they viewed Pegasus’s remarks as a starting point for more detailed technical review.

Ending: Lawmakers and witnesses emphasized the need for more information before any final investment decision; AGDC and project sponsors were expected to appear in committee in coming days for follow-up briefings.