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Article
Publication date: 10 November 2020

Bertram I. Steininger, Martin Groth and Brigitte L. Weber

We investigate causes for the cost overrun and delay of the railway project Stuttgart 21. Besides, we try to forecast the actual costs and completion date at an early stage.

Abstract

Purpose

We investigate causes for the cost overrun and delay of the railway project Stuttgart 21. Besides, we try to forecast the actual costs and completion date at an early stage.

Design/methodology/approach

The results of exploratory research show the causes for the cost overrun and delay of Stuttgart 21; we compare our findings with other railway projects. To estimate the costs at an early stage, the reference class forecasting (RCF) model is applied; to estimate the time, we apply an OLS regression.

Findings

We find that the following causes are relevant for the cost overrun and delay of Stuttgart 21: scope changes, geological conditions, high risk-taking propensity, extended implementation, price overshoot, conflict of interests and lack of citizens' participation. The current estimated costs are within our 95% confidence interval based on RCF; our time forecast underestimates or substantially overestimates the duration actually required.

Research limitations/implications

A limitation of our approach is the low number of comparable projects which are available.

Practical implications

The use of hyperbolic function or stepwise exponential discount function can help to give a clearer picture of the costs and benefits. The straightforward use of the RFC for costs and OLS for time should motivate more decision-makers to estimate the actual costs and time which are necessary in the light of the rising demand for democratic participation amongst citizens.

Social implications

More realistic estimates can help to reduce the significant distortion at the beginning of infrastructure projects.

Originality/value

We are among the first who use the RCF to estimate the costs in Germany. Furthermore, the hyperbolic discounting function is added as a further theoretical explanation for cost underestimation.

Details

Journal of Property Investment & Finance, vol. 39 no. 3
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 4 April 2017

James Prater, Konstantinos Kirytopoulos and Tony Ma

One of the major challenges for any project is to prepare and develop an achievable baseline schedule and thus set the project up for success, rather than failure. The…

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2939

Abstract

Purpose

One of the major challenges for any project is to prepare and develop an achievable baseline schedule and thus set the project up for success, rather than failure. The purpose of this paper is to explore and investigate research outputs in one of the major causes, optimism bias, to identify problems with developing baseline schedules and analyse mitigation techniques and their effectiveness recommended by research to minimise the impact of this bias.

Design/methodology/approach

A systematic quantitative literature review was followed, examining Project Management Journals, documenting the mitigation approaches recommended and then reviewing whether these approaches were validated by research.

Findings

Optimism bias proved to be widely accepted as a major cause of unrealistic scheduling for projects, and there is a common understanding as to what it is and the effects that it has on original baseline schedules. Based upon this review, the most recommended mitigation method is Flyvbjerg’s “Reference class,” which has been developed based upon Kahneman’s “Outside View”. Both of these mitigation techniques are based upon using an independent third party to review the estimate. However, within the papers reviewed, apart from the engineering projects, there has been no experimental and statistically validated research into the effectiveness of this method. The majority of authors who have published on this topic are based in Europe.

Research limitations/implications

The short-listed papers for this review referred mainly to non-engineering projects which included information technology focussed ones. Thus, on one hand, empirical research is needed for engineering projects, while on the other hand, the lack of tangible evidence for the effectiveness of methods related to the alleviation of optimism bias issues calls for greater research into the effectiveness of mitigation techniques for not only engineering projects, but for all projects.

Originality/value

This paper documents the growth within the project management research literature over time on the topic of optimism bias. Specifically, it documents the various methods recommended to mitigate the phenomenon and highlights quantitatively the research undertaken on the subject. Moreover, it introduces paths for further research.

Details

International Journal of Managing Projects in Business, vol. 10 no. 2
Type: Research Article
ISSN: 1753-8378

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Article
Publication date: 24 September 2019

James Prater, Konstantinos Kirytopoulos and Tony Ma

Despite the advent of sophisticated control methods, there are still significant issues regarding late delivery of information technology projects. The purpose of this…

Abstract

Purpose

Despite the advent of sophisticated control methods, there are still significant issues regarding late delivery of information technology projects. The purpose of this paper is to investigate the common causes of scheduling problems specifically in the information technology projects context.

Design/methodology/approach

Through a quantitative research, the importance of those causes, as well as the underpinning factors driving them, is explored. The causes are ranked according to their relative important index, and exploratory factor analysis is employed to reveal underlying dimensions (factors) of these causes.

Findings

From the analysis, four factors were extracted, namely, “Dataless Newbie,” “Technical Newbie,” “Pragmatic Futurist” and “Optimistic Politician.” These factors explain the different latent conditions that lead to scheduling problems in information technology projects.

Practical implications

The key contribution of this research is that it enlightens the latent conditions underpinning scheduling problems. Also, the evidence provides that schedule development for information technology projects is impacted by the same causes that impact engineering projects, and that applying a number of mitigation techniques widely used within the engineering area, such as reference class, would, no doubt, not only improve information technology schedules but also reduce the political pressures on the project manager.

Originality/value

This research provides a valuable insight into understanding the underlying factors for poor project estimation.

Details

International Journal of Managing Projects in Business, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8378

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Article
Publication date: 4 January 2021

Nismah Panjaitan, Ab-Samat Hasnida and Amir Yazid Ali

This study aims to find work concepts and mesoergonomic stages that are not well known and are not widely used in solving problems related to ergonomics using macro and…

Abstract

Purpose

This study aims to find work concepts and mesoergonomic stages that are not well known and are not widely used in solving problems related to ergonomics using macro and micro ergonomics.

Design/methodology/approach

The study used a questionnaire distributed to several ergonomists who were able to provide opinions on meso ergonomics, especially in determining what aspects affected meso ergonomics so that the meso stages could be determined.

Findings

The results of data collection show that aspects that affect meso ergonomics are closely related to macro and micro ergonomics, aspects that are found to have similarities between the three because meso ergonomics is between them.

Research limitations/implications

Determine the stages of meso ergonomics and clarify the limits of meso ergonomics using a questionnaire distributed to several respondents who understand ergonomics.

Practical implications

This paper can be applied to organizations that have a tiered organizational structure so that departments in the organization are divided into several parts to be observed and related to each other in carrying out organizational functions.

Social implications

Provides convenience for researchers in observing organizations with the presence of mesoergonomics which is a bridge between macro and micro ergonomics.

Originality/value

The stages of meso ergonomics are arranged based on aspects and meso ergonomics variables that have been obtained from previous studies which now have added some considerations in the preparation of mesoergonomic stages such as the macroergonomic analysis design on macro ergonomics.

Details

Journal of Engineering, Design and Technology , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1726-0531

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Article
Publication date: 7 April 2014

Dominic D. Ahiaga-Dagbui and Simon D Smith

Drawing on mainstream arguments in the literature, the paper presents a coherent and holistic view on the causes of cost overruns, and the dynamics between cognitive…

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2974

Abstract

Purpose

Drawing on mainstream arguments in the literature, the paper presents a coherent and holistic view on the causes of cost overruns, and the dynamics between cognitive dispositions, learning and estimation. A cost prediction model has also been developed using data mining for estimating final cost of projects. The paper aims to discuss these issues.

Design/methodology/approach

A mixed-method approach was adopted: a qualitative exploration of the causes of cost overrun followed by an empirical development of a final cost model using artificial neural networks.

Findings

A conceptual model to distinguish between the often conflated causes of underestimation and cost overruns on large publicly funded projects. The empirical model developed in this paper achieved an average absolute percentage error of 3.67 percent with 87 percent of the model predictions within a range of ±5 percent of the actual final cost.

Practical implications

The model developed can be converted to a desktop package for quick cost predictions and the generation of various alternative solutions for a construction project in a sort of what-if analysis for the purposes of comparison. The use of the model could also greatly reduce the time and resources spent on estimation.

Originality/value

A thorough discussion on the dynamics between cognitive dispositions, learning and cost estimation has been presented. It also presents a conceptual model for understanding two often conflated issues of cost overrun and under-estimation.

Details

Journal of Financial Management of Property and Construction, vol. 19 no. 1
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 5 July 2018

Christian A. Rudolf and Stefan Spinler

Large-scale projects are the typical delivery model in the engineering and construction industry, with their very own characteristics. Even though well established, only 1…

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1785

Abstract

Purpose

Large-scale projects are the typical delivery model in the engineering and construction industry, with their very own characteristics. Even though well established, only 1 in 1,000 large-scale projects is successful (Flyvbjerg, 2011). A lack of effective supply chain risk management (SCRM) has repeatedly been identified as one of the main causes. While the SCRM body of knowledge seems increasingly well established, a lack of effective methods meeting the specific requirements of large-scale projects can be observed.

Design/methodology/approach

This paper presents a structured and prioritized view on the supply chain risk portfolio in this sector: first, the authors identified and categorized the key supply chain risks in the recent literature. Next, the authors surveyed large-scale project managers across multiple industries, mainly coming from the domains of supply chain management and project management. Finally, the authors provide a contextualized risk taxonomy for engineering, procurement and construction (EPC) projects.

Findings

The identified risk portfolio deviates from generic projects significantly and shows a very high inherent risk exposure of large-scale projects. In particular, behavioral risks are identified as crucial. Additionally, a bias to considerably underestimate risks at project beginning is found.

Originality/value

The contextualized SCRM taxonomy offers a systematic and structured view on the key supply chain risks in EPC large-scale projects. The identified risks are considerably different in their characteristics compared to generic projects or classical SCRM approaches. The authors thus provide a new perspective on SCRM in this specific setting and complement traditional risk and project risk management techniques.

Details

Supply Chain Management: An International Journal, vol. 23 no. 4
Type: Research Article
ISSN: 1359-8546

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Book part
Publication date: 21 December 2010

Massimo Garbuio, Dan Lovallo and John Horn

Mergers & acquisitions (M&A) are an important element of any company's growth plan. However, the actual performance of most M&A activity fails to live up to the…

Abstract

Mergers & acquisitions (M&A) are an important element of any company's growth plan. However, the actual performance of most M&A activity fails to live up to the expectations of the acquirers. The psychological biases that affect decision-making have been posited as a source of this disappointing performance. The broad strokes in which these biases have been offered up as explanation for M&A failure don't offer much insight into the specific causes, and therefore the actions business leaders can take to mitigate their impact. We review a 4-step M&A process, identify the different biases that affect the different stages, and then offer practical debiasing techniques targeted at that particular stage of the decision-making process. This targeted debiasing can help business leaders find practical solutions to this vexing problem. Finally, we review two biases that motivate decision makers to avoid pursuing M&A deals at all – to the detriment of achieving their growth targets.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-0-85724-465-9

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Article
Publication date: 25 July 2018

David Higgins and Treshani Perera

Whilst existing literature on real estate risk management focusses almost exclusively on holistic risk management techniques, documented increases in frequency and…

Abstract

Purpose

Whilst existing literature on real estate risk management focusses almost exclusively on holistic risk management techniques, documented increases in frequency and magnitude of unforeseen, rare and extreme events can throw up sudden, unexpected shocks that can challenge recognised real estate decision-making strategies. The paper aims to discuss this issue.

Design/methodology/approach

To advance real estate decision-making practice in this area, this research paper takes the skilfully conceptualised downside risk framework presented by Diebold et al. (2010), being the known (K), the unknown (u) and the unknowable (U) risk categories, to provide a blueprint for effective real estate decision making in a changing global environment.

Findings

In recording categories of risk, managing uncertainty can be achieved by an interrelated approach of adaption, robustness and resilience. This is important part of a real estate manager’s decision-making toolkit as risk recognition and knowledge of KuU event categories can augment an effective management strategy.

Originality/value

The mastery of modern real estate risk management can be better served by understanding and managing extreme downside risk events. Creating a comprehensive risk management framework can enhance comparative real estate performance whereby unprepared competitors fail in a world increasingly affected by large, highly improbable and unpredictable events.

Details

International Journal of Building Pathology and Adaptation, vol. 36 no. 4
Type: Research Article
ISSN: 2398-4708

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Article
Publication date: 2 April 2019

Jing Du, Qi Wang and Qian Shi

Capital project delivery, such as the delivery of transportation networks and industrial facilities, often suffers losses due to overly aggressive planning. Planners often…

Abstract

Purpose

Capital project delivery, such as the delivery of transportation networks and industrial facilities, often suffers losses due to overly aggressive planning. Planners often are overly optimistic about the chance of success while underestimating risks. The purpose of this paper is to examine the hypothesis that these biases are from the difficulties most decision makers face when interpreting probabilistic information.

Design/methodology/approach

Three behavioral experiments were conducted to test the theoretical fitness of the paradigms proposed by the description–experience gap literature, namely, the sampling errors effect, the recency effect and statistical information format. College students were recruited to participate in a series of estimating tasks. And their estimating results were compared given different levels of information completeness.

Findings

It was found that the existing paradigms could predict risk decision making in the risk-averse estimating scenarios where test subjects were required to give a relatively conservative estimate, but they seemed to be less effective in predicting decisions in the risk-seeking estimating scenario, where test subjects were asked to give a relatively aggressive estimate.

Originality/value

Based on these findings, an integrative model is proposed to explain the observations pertaining to aggressive planning in capital projects. Two dimensions are deemed to be relevant: including risk-taking intentions, and an information uncertainty continuum that ranges from an implicit experience-based information representation to an explicit description-based information representation.

Details

Engineering, Construction and Architectural Management, vol. 26 no. 6
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 30 April 2021

Alexis Barrientos-Orellana, Pablo Ballesteros-Pérez, Daniel Mora-Melia, Maria Carmen González-Cruz and Mario Vanhoucke

Earned Value Management (EVM) is a project monitoring and control technique that enables the forecasting of a project's duration. Many EVM metrics and project duration…

Abstract

Purpose

Earned Value Management (EVM) is a project monitoring and control technique that enables the forecasting of a project's duration. Many EVM metrics and project duration forecasting methods have been proposed. However, very few studies have compared their accuracy and stability.

Design/methodology/approach

This paper presents an exhaustive stability and accuracy analysis of 27 deterministic EVM project duration forecasting methods. Stability is measured via Pearson's, Spearman's and Kendall's correlation coefficients while accuracy is measured by Mean Squared and Mean Absolute Percentage Errors. These parameters are determined at ten percentile intervals to track a given project's progress across 4,100 artificial project networks with varied topologies.

Findings

Findings support that stability and accuracy are inversely correlated for most forecasting methods, and also suggest that both significantly worsen as project networks become increasingly parallel. However, the AT + PD-ESmin forecasting method stands out as being the most accurate and reliable.

Practical implications

Implications of this study will allow construction project managers to resort to the simplest, most accurate and most stable EVM metrics when forecasting project duration. They will also be able to anticipate how the project topology (i.e., the network of activity predecessors) and the stage of project progress can condition their accuracy and stability.

Originality/value

Unlike previous research comparing EVM forecasting methods, this one includes all deterministic methods (classical and recent alike) and measures their performance in accordance with several parameters. Activity durations and costs are also modelled akin to those of construction projects.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

Keywords

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