Liu, L and Napier, Z (2010) The accuracy of risk-based cost estimation for water infrastructure projects: Preliminary evidence from Australian projects. Construction Management and Economics, 28(1), pp. 89-100. ISSN 1466433X
Abstract
Infrastructure projects are still being plagued by cost overruns, delays and revenue shortfalls despite decades of practice and research. Risk-based estimating (RBE) is growing in popularity and has the potential to overcome the two main cost overrun factors-optimistic bias and strategic misrepresentation. Yet, little is known about the accuracy of RBE and its performance drivers. A comparison of water projects using RBE with a sample of construction projects using the conventional estimating approach shows that the projects estimated using RBE have better estimation accuracy than those estimated using more conventional approaches. In addition, the projects using RBE appear more likely to be under-budget while the ones using the conventional approach appear more likely to be over-budget. Further, through interviews and observations of the RBE process, three main performance drivers for the RBE method were identified to include outside view/collective experience, attention focusing and probabilistic, bottom-up modelling.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | accuracy; cost estimating; fixed contingency approach; forecasting; risk-based estimating |
| Index terms: | estimation, cost overrun, bias, evidence, interview, contingency approach, modelling, construction project, estimating, forecasting, cost estimating, accuracy, revenue, infrastructure project |
| Subjects: | economic analysis, organization, data collection methods, probability and distributions, prediction and forecasting, professional development, infrastructure and transport systems, production management, evaluation and assessment methods, financial and cost management, analytical methods |
| Topics: | Project Management, Business Strategy, Organizational Design, Research Practice, Engineering Principles, Cost Management, Information Management |
| Descriptive scope: | 4 PCEA |
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