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PhD workshop 4.- 6. October 2004

PhD workshop 4.- 6. October 2004. Quality Assurance of Major Governmental Investment Projects: Relevance and Significance Researcher, M.Sc. Ole Morten Magnussen The Concept program, the Norwegian University of Science and Technology, Norway. The Concept program.

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PhD workshop 4.- 6. October 2004

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  1. PhD workshop 4.- 6. October 2004 Quality Assurance of Major Governmental Investment Projects: Relevance and Significance Researcher, M.Sc. Ole Morten Magnussen The Concept program, the Norwegian University of Science and Technology, Norway

  2. The Concept program • Front-end management of projects • Effects of the Quality-at-entry Regime • Trailing research

  3. The scope of the paper • Consider the relevance and significance of the current Quality-at-entry Regime on the basis of the gathered data concerning cost estimates • How does the quality assurance process affect the project?

  4. Important findings • The project reserves are on average 10 % • A final evaluation concerning the cost effect must take place when the actual cost is available • A striking difference between the estimates proposed by the project organisation and the revised estimates • The external consultants’ revised estimates were higher than the proposed estimate in nearly 75 % of the projects • The parliamentary decision rely directly on the external consultant’s recommendation in many projects • Support the claim that the project owners deem the information provided by the external consultant to be highly relevant

  5. Important characteristics of the projects in the sample • Completed quality assurance cycle (cf. next slide) • Data availability • Pertains the possibility to establish what is included in costs, price level etc • Fixed prices/equal basis: • The cost estimates for each single project are brought to the same price level (year) and they describe the same project

  6. Quality assurance Time 1 2 3 • The proposed cost estimate from the project organisation prior to the quality assurance • The recommendation from the external consultant • The budget approved by the parliament The points in the process

  7. Probability Cost The s-curve

  8. Example – The New Opera House

  9. Presentation of findings • Number of projects included in the sample • 32 • The data organised so that it can be viewed in a useful form • No final evaluation • More data will become available as new projects complete the cycle

  10. The recommended reserve

  11. The decided reserve

  12. The difference between the project’s proposal and the revised estimate

  13. The external consultant’s recommendation vs approved budget

  14. Summary/Conclusions The study of 32 projects suggests that: • The project reserve is 10 % • The striking difference between the proposed estimates from the projects and the revised estimates needs further attention • The project owners consider the external view on the project to be useful and rely on the provided information when preparing the proposal for the parliament

  15. Key issues for further research • What explanations are there to the cost underestimation suggested by this study? • Are the observed differences only random errors? • Does the current sample of projects allow systematic, statistical analyses?

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