What the World’s Most Ambitious Megaproject Reveals About the Future of Urban Development

Photo by NEOM on Unsplash

In March 2025, an internal audit revealed what many had suspected but few dared to say out loud: NEOM, Saudi Arabia’s $500 billion bet on the future, would actually cost $8.8 trillion and take until 2080 to complete. That’s more than 25 times Saudi Arabia’s annual budget and 17 times more than originally promised.

But here’s what makes this story fascinating: NEOM isn’t just failing. It’s failing in ways that illuminate fundamental truths about how megaprojects work, why they fail and what that means for the future of urban development globally.

Why NEOM Was Always Going to Struggle

Before we look at NEOM’s specific challenges, we need to understand a critical statistic that rarely makes headlines: research analyzing over 300 infrastructure megaprojects found that approximately 65% fail to achieve their performance objectives. In the oil and gas sector specifically, that failure rate jumps to 78%.

This isn’t about incompetence. It’s about a systemic pattern that NEOM has inadvertently become the poster child for.

Let’s call this the Megaproject Inevitability Trap, a phenomenon where the very characteristics that make a project “mega” also make it vulnerable to specific, predictable failure modes. NEOM demonstrates all five of these failure modes simultaneously:

The Five Failure Modes of the Megaproject Inevitability Trap

1. The Optimism Inflation Spiral

NEOM’s internal audit discovered evidence of deliberate financial manipulation by certain members of management. But here’s what’s interesting: this wasn’t just corruption, it was a predictable response to institutional pressure.

When projections didn’t work, managers inflated revenue assumptions. A boutique hiking hotel initially priced at $489 per night was readjusted to $1,866 to make the math work on paper. An “inventive glamping” site jumped from $216 to $794 overnight, not because of market research, but because the internal rate of return needed to hit certain benchmarks.

Former NEOM employees compared the work culture to Hans Christian Andersen’s “The Emperor’s New Clothes”, dissent was ignored or punished and when one project manager challenged unrealistic cost estimates, they were removed.

This pattern isn’t unique to NEOM. The research shows that megaprojects inherently create cultures of optimism where bad news becomes increasingly difficult to deliver upward.

2. The Expertise Scarcity Problem

Here’s a sobering reality: even professionals who build large infrastructure projects for a living may only execute three or four megaprojects in a lifetime. Each one is unique, making the learning curve steep every time.

NEOM needed to create organizations of several thousand people in 12 to 18 months, equivalent to launching a major startup, but with stakes measured in trillions. The challenge isn’t finding skilled people; it’s that true megaproject expertise is, by definition, rare.

3. The Layered Accountability Paradox

In most megaproject organizational structures, the project director sits four or five levels below top leadership. Each layer has conflicting incentives: upper layers seek more work and larger budgets, while lower layers focus on delivery within constraints.

At NEOM, Crown Prince Mohammed bin Salman reportedly proposed increasingly bold ideas that staff had concerns about. When staff suggested cost-cutting measures, like reducing the height of The Line yet the prince rejected them and ordered savings to be found elsewhere. This created an impossible dynamic where technical reality couldn’t reach decision-makers effectively.

4. The Scale-Complexity Multiplication Effect

NEOM’s original vision included The Line (a 170km linear city), Oxagon (a floating industrial hub), Trojena (a mountain ski resort), Sindalah (a luxury island) and multiple other developments, all simultaneously.

Research shows that complexity in megaprojects doesn’t add linearly — it multiplies. Coordinating The Line alone would be extraordinarily complex. Adding interdependent components across 26,500 square kilometers created a coordination challenge of unprecedented magnitude.

5. The Political Insulation Trap

Megaprojects often become too big to question. NEOM was framed as central to Saudi Vision 2030, the Kingdom’s plan to diversify beyond oil. Criticizing NEOM became tantamount to questioning national strategy.

This political insulation prevented course corrections until problems became catastrophic. By the time the audit was presented in spring 2024, The Line had already been scaled back from 170km to just 2.4km by 2030, and contracts had dried up completely.

What’s Actually Working at NEOM: The Green Hydrogen Paradox

Here’s where the story gets interesting: while The Line falters, NEOM’s green hydrogen project is quietly achieving an 80% construction completion rate as of Q2 2025.

This $8.5 billion facility, a joint venture between NEOM, ACWA Power and Air Products, aims to produce 600 tonnes of green hydrogen daily, potentially becoming the world’s largest green hydrogen production facility.

Why is this succeeding while The Line fails? The answer reveals something crucial about megaproject success:

The Focused Complexity Principle: Projects with singular, well-defined technical objectives and established supply chains have dramatically higher success rates than projects trying to revolutionize multiple systems simultaneously.

Green hydrogen is technically challenging but conceptually straightforward: solar and wind power → electrolysis → hydrogen → ammonia → export. The technology exists, the supply chains are established and the physics are well-understood.

The Line tried to revolutionize urban planning, transportation, energy systems, waste management, governance structures and human behavior patterns — all at once, in a remote desert location, with no precedent to learn from.

The Sindalah Test: When Reality Meets Renderings

In October 2024, NEOM held a $45 million launch party for Sindalah, its luxury island resort. Celebrities including Will Smith and Tom Brady attended. Crown Prince Mohammed bin Salman notably did not.

Three years behind schedule and costing more than three times its initial budget, Sindalah was supposed to be NEOM’s proof of concept — the first tangible success that would quiet the skeptics.

As of January 2026, Sindalah remains closed to the public. Its hotels are unfinished, high winds disrupted the launch festivities, and its fate is uncertain.

This reveals another pattern in megaproject failures: the “showcase trap.” When projects become primarily about demonstrating possibility rather than delivering value, resource allocation becomes distorted. The $45 million party could have addressed dozens of construction challenges, but optics took precedence over operations.

Looking Forward

Despite everything, I’m cautiously optimistic about what NEOM represents for the future of urban development, not because it’s succeeding, but precisely because it’s failing instructively.

Every field needs its cautionary tales. NEOM is becoming infrastructure development’s most comprehensive cautionary tale and that has immense value if we actually learn from it.

The components that are working such as the Oxagon port and the green hydrogen facility demonstrate that ambitious infrastructure development is possible when grounded in technical reality and focused on specific, achievable objectives.

The components that are failing teach equally valuable lessons about what to avoid.

If NEOM’s legacy becomes “the megaproject that taught the world how to build megaprojects successfully” — then even its failure will have served a crucial purpose.