Showing papers on "Cost overrun published in 2005"

Design by deception: The politics of megaproject approval

Abstract: Some argue that almost no projects, including our most treasured ones, would ever be undertaken if some form of deception about costs and benefits weren‘t involved. The Brooklyn Bridge, for instance, had a cost overrun of 100%, the Sydney Opera House of 1,400%. Had the true costs been known, these architectural wonders may not have been built. Deception is necessary for action—and for exquisite design—according to this argument. By systematic comparison of the Guggenheim Bilbao Museum and the Sydney Opera House, and by examples from dozens of other projects, the article demonstrates how seductive, yet precarious, the argument is.

Evaluating Cost Overruns of Asphalt Paving Project using Statistical Process Control Methods

Abstract: While some projects will experience changes to the contracted cost by deduction or additions, construction cost overruns are becoming a common problem in the construction industry. Steps need to be taken to minimize cost overrun through cost and quality control techniques. This paper presents a study conducted to evaluate construction cost overruns of asphalt paving operations performed by the Illinois Department of Transportation (IDOT). The main objective is to analyze the main causes of cost overruns and evaluate the amount of cost overrun of asphalt paving operations, using statistical process control (SPC) techniques. Real data from projects in the year 2000 were collected from IDOT. These data contain cost information of 219 projects. The results indicate that the average cost overrun for the sample collected was 4% above the bid price. Reasons for cost overruns are analyzed and a Pareto chart and a cause and effect diagram are constructed. Individuals and Moving Range (MR) control charts are developed and their interpretation and use are discussed. Furthermore, the benefits and limitations of using the individuals and MR chart in cost control applications are pointed out. It is recommended that SPC analysis be an integral part in managing and controlling project costs.

Design by Deception: The Politics of Megaproject Approval

Abstract: Some years ago, I was threatened by a high-ranking government official as I was beginning research on cost overrun in large public works projects. The official told me in no uncertain terms that if I came up with results that reflected badly on his government and its projects he would personally make sure my research funds dried up. I replied he had just demonstrated the research must be done and was likely to produce interesting results. The results are now being published and if the official walks his talk, I will never receive another research grant.Den svenska versionen av den har artikeln hittar du pa: http://www.ssrn.com/abstract=2278258

Managing Cost Overrun Risk in Project Funding Allocation

Abstract: This paper discusses decision making of project funding allocation under uncertain project costs. Because project costs are uncertain and funding allocations may not necessarily match the costs required, each project is inherently subject to a cost overrun risk (COR). In this paper, a model is proposed in which project cost is treated as a factor with a probability density function. The decision maker then allocates the total funding to the projects while minimizing a weighted sum of mean and variance of the COR of the project portfolio. Some properties of project COR are derived and interpreted. Optimal funding allocation, in relationship to factors such as various project sizes and riskiness, project interdependency, and the decision maker’s risk preference, is analyzed. The proposed funding allocation model can be integrated with project selection decision-making and provides a basis for more effective project control.

Construction baseline schedule review and submittal timeframe

Abstract: The construction industry is typically a complex business that involves many parties, agencies, and trades. In order to control and monitor the progress of a project, the resources and cash flow should be identified and planned well in advance of the start of construction. Project schedules are a great tool for tracking projects in terms of resources (labor, equipment, materials), activity duration, and costs. A properly used project schedule can provide the necessary information to help project managers act promptly for any schedule or cost overrun. Consequently, adjustments to work durations, logic sequence, and resources are needed to bring the planned schedule back into compliance. A thoroughly planned and developed baseline schedule can effectively assist management in tracking resources. In the event that the schedule duration, logic, resource or budgeted cost requires modification, a well developed baseline schedule will benefit greatly in the updates. In addition, the project schedule will be one of the most critical elements in the review and/or approval of changes. The baseline schedule establishes the foundation for both elements of cost and time, where by all progress is measured. Therefore, the development and review of the baseline schedule should be carefully performed. This article provides criteria and guidelines for reviewing a baseline schedule. The review criteria are based on the procedures developed by a consulting firm and the authors' experience. It has been successfully applied in the construction industry. In addition, a renovated and improved baseline schedule submittal timeframe over the traditional method is introduced.