Megaprojects are complex and contain multiple risks and uncertainties. The dominant 'predict and control' planning method mainly ignores risks and uncertainties, making megaprojects inflexible and vulnerable to unforeseen changes. Insights and methods from real options theory (ROT) in economics and finance have the potential to improve planning of megaprojects in three ways: (a) better management and assessment of risks and uncertainties, (b) a more transparent and explicit identification and communication of risks and uncertainties, and (c) a monetary valuation of flexibility. An in-depth literature review of 42 papers of real options applications to megaprojects serves as a benchmark to analyse if current real options literature meets these three expectations. Through this review, we identify the main trends, relevance and research gaps. While its theoretical relevance is illustrated, three main gaps impede real options' practical relevance for megaprojects: the applications paint an incomplete picture of megaprojects; its mathematical complexity; and the lack of empirical evidence of real-life cases. Based on a plea for more interactive research between scholars and planning practitioners, we provide an agenda for further research as to how ROT can better meet its expectations and fulfill its potential for the planning of megaprojects.

Urban designs, and in particular urban masterplans, must deal with an inherently uncertain future. However, in practice, many urban masterplans still seem to underestimate or even ignore uncertainty. Some scholars have proposed design flexibility and adaptivity as a way to deal with uncertainties, but a formal framework has been lacking in urban design theory.Drawing upon theories of real options in finance and economics, a framework for design under conditions of uncertainty is developed. Five generic design strategies are identified, offering different flexibility options to urban design.Although such design options are currently used in practice in an intuitive way, the real options framework allows designers to cope with uncertainties in a more structured way and offers the possibility to quantify the added value of flexibility options.

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This paper asks why uncertainties are avoided in dominant megaproject practice while planning scholars are increasingly advocating adaptive planning and uncertainty acknowledgement. We propose a novel analytical framework to explain uncertainty avoidance, consisting of two current explanations -resource constraint and strategic behaviour models -and a complementary institutional model. We apply the framework to a seaport megaproject in Flanders to test its validity. Results show that the institutional model increases our understanding of uncertainty avoidance. More attention to planning institutions and far-reaching institutional changes are required to facilitate a move towards uncertainty acknowledgement and adaptive planning.

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