Showing papers on "Cost overrun published in 2007"

Cost Overruns and Demand Shortfalls in Urban Rail and Other Infrastructure

Abstract: Risk, including economic risk, is increasingly a concern for public policy and management. The possibility of dealing effectively with risk is hampered, however, by lack of a sound empirical basis for risk assessment and management. This article demonstrates the general point for cost and demand risks in urban rail projects. The article presents empirical evidence that allow valid economic risk assessment and management of urban rail projects, including benchmarking of individual or groups of projects. Benchmarking of the Copenhagen Metro is presented as a case in point. The approach developed is proposed as a model for other types of policies and projects in order to improve economic and financial risk assessment and management in policy and planning.

Cost overruns and demand shortfalls in urban rail and other infrastructure

Abstract: Risk, including economic risk, is increasingly a concern for public policy and management. The possibility of dealing effectively with risk is hampered, however, by lack of a sound empirical basis for risk assessment and management. This article demonstrates the general point for cost and demand risks in urban rail projects. The article presents empirical evidence that allow valid economic risk assessment and management of urban rail projects, including benchmarking of individual or groups of projects. Benchmarking of the Copenhagen Metro is presented as a case in point. The approach developed is proposed as a model for other types of policies and projects in order to improve economic and financial risk assessment and management in policy and planning.

How Does Requirements Quality Relate to Project Success or Failure

Abstract: Our research goal is to Jind relations between requirements quality and project success. To attain the goal, we investigated 32 projects started and completed during the period of 2003-2005 in a large business application software development division of a company in Tokyo. Data of requirements specijication quality evaluated by software quality assurance teams as well as overall project pevormance data in terms of cost and time overrun were available. Requirements specijication quality data were Jirst converted into a multiple-dimensional space, each dimension corresponding to an item of the recommended structure of software requirements specijications (SRS) deJined in IEEE Std. 830-1998. We applied various statistical analysis techniques over the SRS quality data and project outcomes. Some interesting relations between requirements quality and project success or failure were found, including: 1) a relatively small set of SRS items have strong impact on project success or failure; 2) descriptions of SRS in normal projects tend to be balanced; 3) SRS descriptions in Section 1, where purpose, overview and general context of SRS are written, are rich in normal projects and poor in overrun projects; 4) when the descriptions of SRS Section 1 are poor while those of functions and product perspective are rich, the project tends to result in a cost overrun.

Six sigma project selection using data envelopment analysis

Abstract: Purpose – The evolution of six sigma has morphed from a method or set of techniques to a movement focused on business‐process improvement. Business processes are transformed through the successful selection and implementation of competing six sigma projects. However, the efforts to implement a six sigma process improvement initiative alone do not guarantee success. To meet aggressive schedules and tight budget constraints, a successful six sigma project needs to follow the proven define, measure, analyze, improve, and control methodology. Any slip in schedule or cost overrun is likely to offset the potential benefits achieved by implementing six sigma projects. The purpose of this paper is to focus on six sigma projects targeted at improving the overall customer satisfaction called Big Q projects. The aim is to develop a mathematical model to select one or more six sigma projects that result in the maximum benefit to the organization.Design/methodology/approach – This research provides the identification ...

An evaluation of the impact of risk on project cost overrun in the Nigerian construction industry

Abstract: One of the major reasons for ineffective project delivery in the Nigerian construction industry is the improper assessment of risk factors. As a result, the industry continues to suffer poor performance with many projects failing to meet time and cost targets. This paper identifies the risk factors inherent in different building procurement methods and assesses their perceived relative importance with a view to evaluating their impact on project cost. The paper reports on a study carried out through a questionnaire survey of professionals within the construction industry in order to asses the relative importance placed on risk factors. Responses from the survey were analysed using relative importance index for the purpose of evaluating the impact of risk on projects cost. Data were collected on selected completed projects and analysed using frequencies, mean values and relative important index. The main risk factors identified are finance and political influence. A model was developed by relating the variation between the initial contract estimate and the actual project cost to the risk variables. From the analysis, the percentages of projects cost overrun due to the impact of risk were established for each procurement method investigated. The paper recommends that contingency additions should be based on the procurement method used.

Knowledge based Decision Support Tool for Duration and Cost Overrun Analysis of Highway Construction Projects

Abstract: Highway construction is considered to be one of the important infrastructure developments of any nation. It involves lot of uncertainties in its planning and execution stages. In addition to uncertainties in the planning stage, which mainly deals with resources, time and technology uncertainties in execution stage is mostly site specific. Due this high level of uncertainties risk associated with site delays are unpredictable and requires specific attention by project personnel. The conventional technique for combating time and cost overrun adopts project monitoring using bar charts which are prepared by other conventional scheduling techniques which necessities crashing of entire train of activities which may or may not be affected by the delay. Hence, this paper deals with an innovative decision support tool (DST) that can predict the duration overrun cost overrun and activities associated with any specific delay in high way construction projects. This tool uses sim ulation models as the knowledge base for generating the duration and cost overrun. The simulation models for the duration and cost overrun of the project is developed based on the nature of delay activities associated with the delay and stochastic nature of the duration and cost overrun associated with the activities.

RFID facilitated construction material management - a case study of water supply project

Abstract: Due to the complex and dynamic nature of the construction industry, construction material management faces many unique challenges from material planning, ordering, receiving and storing, handling and distribution, site usage and monitoring (Johnston and Brennan 1996). Poor material management has been identified as a major source for low construction productivity, cost overrun and delay (Fearon 1973, Olomolaiye et al. 1998). Although many fac-tors contribute to the problems of material management, the lack of active, accurate and integrated information flow from material planning, inventory to site use and monitoring is the major contributor. However, it is difficult to obtain such accurate information actively due to the nature of the industry, particularly for large or material intensive projects such as oil or water pipe-laying projects. A Radio Frequency Identification system (RFID) facilitated construction ma-terial management system has been developed to tackle this problem. This latest technology helps the project team to collect material storage and usage in an active and accurate way, and further to facilitate the information flow through the construction material management process with focus on the dynamic material planning, ordering and monitoring. The developed system is being implemented in a water-supply project.

A Generic Agent Framework to Support the Various Software Project Management Processes

Abstract: Introduction Software Project Management (SPM) has become a critical task in many organisations. Managing software projects is a complex task, further complicated by a continued increase in the size and complexity of the software-intensive system. In the 1980's SPM methodologies primarily focused on providing schedule and resource data to management (Schwalbe, 2006.) However, present-day SPM activities involve much more. With the advent of the Internet, improvement of computer hardware, software, and networks, global interdisciplinary work teams have changed the working environment addressed by SPM. Global networking capabilities have become more pervasive with the result that cost effective computing resources will continue to play a major role in improving organisational operations. SPM involves the management of all issues involved in the development of a software project, namely scope and objective identification, evaluation, planning, project development approaches, software effort and cost estimation, activity planning, monitoring and control, risk management, resource allocation and control, as well as managing contracts, teams of people and quality. Since publication of the 1995 report of The Standish Group, this same organisation studied 13,522 projects in a follow-up survey, aptly dubbed EXTREME CHAOS (The Standish Group, 2000). This study determined that 23 percent of the surveyed projects failed, 49 percent did not meet the requirements and only 28 percent succeeded. In March 2003 the group reports that success rates increased to a third of all projects, but time overruns increased to the 82nd percentile, whilst only 52 percent of required and specified functions and features were included in the final product (The Standish Group, 2003). Many software projects still failed to comply with the triple constraints of scope, time and cost (Oghma: Open Source, 2003). These triple constraints refer to the fact that the failure of software projects can mostly be attributed to projects not delivered on time and that it does not meet the expectations of the client (scope), and as a result have cost overrun implications. As previously mentioned, the SPM environment is continuously changing due to globalisation and advances in computing technology. This implies that the traditional single project, commonly executed at a single location, has evolved into distributed, collaborative projects. The focus in SPM processes has clearly shifted from the position that it held two decades ago. Consequently, the size, complexity and strategic importance of information systems currently being developed require stringent measures to ensure that software projects do not fail. As organisations continue to invest time and resources in strategically important software projects, managing the risk associated with the project becomes a critical area of concern. Software agent technology offers a promising solution in order to address SPM problems in a distributed environment. According to this technology, software agents are used to support the development of SPM systems in which data, control, expertise, or resources are distributed. Software agent technology provides a natural metaphor for support in a distributed team environment, where software agents can support the project manager and team members to monitor and coordinate tasks, apply quality control measures, validation and verification, as well as change control. Agent technology has distinct advantages over client/server technology as distributed system instantiation. SPM skills, especially in the distributed computing environment, are greatly in demand. Moreover, there is a need for technologies and systems to support management of related aspects of software projects in such environments. Our research is therefore aimed at software practitioners and software developers, but will also be beneficial to researchers working in the field of SPM. …

Project cost overrun simulation in software product line development

Abstract: The cost of a Software Product Line (SPL) development project sometimes exceeds the initially planned cost, because of requirements volatility and poor quality. In this paper, we propose a cost overrun simulation model for time-boxed SPL development. The model is an enhancement of a previous model, specifically now including: consideration of requirements volatility, consideration of unplanned work for defect correction during product projects, and nominal project cost overrun estimation. The model has been validated through stochastic simulations with fictional SPL project data, by comparing generated unplanned work effort to actual change effort, and by sensitivity analysis. The result shows that the proposed model has reasonable validity to estimate nominal project cost overruns and its variability. Analysis indicates that poor management of requirements and quality will almost double estimation error, for the studied simulation settings.

The framework for minimizing construction time and cost overruns in Padang and Pekanbaru, Indonesia

Abstract: It has been said that Indonesian constructions often suffer serious cost and time overrun. Kaming et.al., (1997a) and Trigunarsyah (2004) have studied the causes of these problems. However, their studies focused only on the high rise buildings in Jakarta and Yogyakarta. Since Indonesia is a large country with more than 3000 islands, it pertinent to ask whether their findings are also applicable to low-rise constructions in other major cities in the country. It appeared that the low-rise constructions in Padang and Pekanbaru, the two major cities in Sumatera, are also facing the problems of time and cost overrun. The issues bring about some related questions – what are the causes of these problems? Are they similar to the findings made by Kaming and Trigunarsyah? How do contractors and managers in Padang and Pekanbaru manage construction cost and time? Are they adhering to the good practice of project cost and time management? What is considered as the best time and cost management practice? What is good time and cost management framework or model like? Generally, the aim of this study is to answer all these questions. But more specifically, the main objectives are threefold; firstly, to identify the major causes of project time and cost overrun in low - rise projects in Padang and Pekanbaru; secondly, to develop and establish the theoretical framework of a good construction time and cost management practice, and thirdly, to compare the time and cost management as currently practiced by contractors and consultants in Padang and Pekanbaru against the “theoretical� framework of the good time and cost management. The study focused on low-rise projects in Padang and Pekanbaru, Sumatera which are managed by contractors and consultants in class B and M respectively. The study looked at both from contractors’ and consultants’ perspectives. Data and information for the study are collected using a combination of documentary analysis and structured interview techniques. The data were systematically compiled and analysed using descriptive statistic techniques. The study shows that the major causes of project time and cost overrun in Padang and Pekanbaru ranges from lack of labour, lack of equipment to material delivery problems and frequent design changes. The study also highlighted that there are several approaches to efficient and effective project time and cost management. They can be summarized in the form of a framework or model that form the basis for the study. It is found that, generally contractors and consultants in Padang and Pekanbaru have adhered to the good time and cost management framework. However, the main area of concern is their lack of emphasis on the control aspects of the management. They are found to be lacking in monitoring the difference between planned and actual time and cost performance and identifying or establishing the deviation or problems associated with it. The study also pointed out that contractors and consultants in Padang and Pekanbaru need a clear and systematic project time and cost management framework that they can use as guidelines or reference for more efficient management.

Systemic and political factors affecting cost overrun in the world economy’s large investment projects

Abstract: The most common reasons for the cost overrun of large (including international) investment projects are analyzed using numerous examples. The material is partially based on the information supplied by the Russian rating agency Expert-RA represented at the conference on Implementation Problems of Large Projects, held at the Alexander House business center in Moscow on April 20, 2006.

Bid Risk and Contingency Analysis

Abstract: This article looks at a technique for bidders to determine a bid price they are significantly confident of achieving without cost overrun Since there are inherent uncertainties and cost variations in the work packages that constitute a project, there are many chances of underrunning and over running a bid price This article presents an example problem that illustrates the technique of evaluating bid contingency using triangular distributions How the bid profile can be used by the owner is also demonstrated Risk transfer and absorption strategies are discussed

Overview of Risk Assessment

Abstract: A broad overview of the process of risk assessment/analysis in the construction industry is provided in this paper. Motivations for risk analysis, the issue of cost overrun and delays, and transportation agency approaches in conducting risk assessments are described in this paper. A framework for the conduct of risk analysis is also presented. Steps involved in risk analysis consisting of risk identification, quantification, mitigation, and implementation are described. The paper ends by reporting the results of a recent survey on the Construction Management (CM) industry. In this survey, CMs responded to various questions about the prevalence of risk assessment practice in the industry, methods used, type of clients who demand risk assessments, impediments to the success of, and benefits of the risk analysis process.

DSS-PL : Decision Support System for Risk Assessment of Pipeline Projects

Abstract: Schedule overrun and cost overrun are critical factors that might cause failure or stoppage of construction projects leading to claims between owners and contractors. It is very important to asses the risks, associated with construction projects, during planning phase to avoid such problems. This article presents a decision support system (DSS-PL) dedicated for risk assessment in pipeline projects. The developed system consists of four main components: input module, multi-attribute utility module (MAU-PL), Bayesian belief network module (BBN-PL), and reporting module. These four components are integrated and coded using Microsoft® Visual Basic™ Version 6.0 programming language. A list of 26 attributes, which greatly influence the schedule and cost overruns in pipeline projects, were selected and considered as input attributes for the system. These attributes are clustered in five main criteria; job conditions, resources, project parties, area conditions, and project scope. The multi-attribute utility module estimates the weighted utility values for those criteria which are fed to the Bayesian belief network module. The schedule and cost overruns are estimated by applying the probability assessment. The article also analyzes the impact of changing input attributes on the estimated overruns by conducting a sensitivity analysis. A case study is presented to validate the system and illustrate its main features and capabilities.

Minimisation des surcoûts dans un contexte hors délai : cas des projets de construction dans les pays en développement

Abstract: Cost overruns are frequent in the construction industry. They become greater the more the construction project is delayed. In developing countries, this situation is recurring and constitutes a significant financial problem. In a time-overrun context, our objective is to find a method that can enable us to reduce the delay while minimizing the subsequent cost overruns. We thus developed a mathematical model named CCOMTOC (construction cost optimisation model in time-overrun context). The model was tested and results reveal that the reduction of cost overruns is effective. We showed that in a time-overrun context, according to the importance of delay penalties, we obtain two distinct situations. On the basis of the reference cost calculated for a maximum compression of tasks within the normal duration, we note that, for low delay penalties, the total cost after further delays to the estimated completion time decreases as we deviate from the initial completion time. On the other hand, for relatively high de...

Construction project partnering in Texas' public universities

Abstract: Partnering is a tool used in the construction industry to reduce claims and litigations and also to deliver a quality product in a cost efficient and timely manner. This research analyzes the impact of the partnering process on the outcome of construction projects in TexasA¢Â€Â™ public universities. For this study project specific data were obtained from 218 buildings built between 1996 and 2006. Parametric and non-parametric statistical tests were used to measure and explain the project performances of partnered and nonpartnered projects on four different building types in terms of cost overrun, schedule change, change orders and claims. One of the variables that had a significant effect on the outcome of the project performance parameters was the initial cost of the project. It was found that projects that utilized partnering were less likely to have claims that non-partnered projects. Partnered projects also had fewer change orders than non-partnered projects for two of the four building types that were analyzed. The results of this study can be used in the successful planning and execution of construction projects by organizations involved in the construction procurement processes for TexasA¢Â€Â™ public universities.