CGI and spreadsheets have revolutionized the construction of Potemkin villages

Our favorite YouTube financial commentator, Patrick Boyle, ("The city would naturally form a line as it tried to get away from itself," "There seems to be a plague of jellyfish and really a plague of anything is usually not considered good.") revisits the ongoing fiasco of Neom, a multi-trillion dollar project that manages to simultaneously set the bar for dictator's hubris and techno-optimistic stupidity (and take it from me, those are both very competitive fields at the moment). 

Boyle also makes a rather profound point about not just this proposal but about our age of bad ideas.

In another example, the price of a “boutique hiking hotel room” was marked up to $1,866 per night, from $489 per night. I don’t know what a boutique hiking hotel room is either—but I’m guessing it doesn’t come with a parking space.

One way or another, these adjustments helped push the project IRR [internal rate of return -- MP] up to 9.3%, which is above MBS’s target of 9%.

That’s the great thing about spreadsheets: just like you can design any building you want in CGI, you can achieve any IRR you want in a spreadsheet.

It always works.

Saudi Arabia's Megaproject Disaster!





Long time readers of the blog will be shocked to learn that McKinsey & Company had a hand in this.

There are some winners, however. Consulting giant McKinsey & Company is reportedly earning more than $130 million annually for its services, despite some controversy surround its role, given the firm’s involvement in both the planning and validation of some of the project’s financial projections, per the story. A McKinsey spokesman tells the WSJ the firm has “strict protocols to prevent conflicts of interest in our engagements.”