Causes of Project Delay and Cost Overrun
Cost overruns in construction project is a pet theme for discussion in any industry forum. While several attributes like the inherent nature of uncertainty, risk associated with such projects lead the stack, critics in the industry have also attributed to Strategic Misrepresentations and Bias as key factors contributing to cost overruns in such a project.
Stakeholders have often been accused of letting the Machiavelli factor play into construction project management. This refers to the habit of sponsors and estimators often low balling the initial cost just to get it approved and kick started. The underlying belief was that once major investment goes into a project it becomes a difficult decision for the sponsors to scrap the project. Another factor is genuine gross underestimation of the costs involved either due to lack of detailed information on scope or lack of experience on behalf of the estimator. Optimum bias in Cost forecasts for several industries like transportation, infrastructure is pegged at 44.7% and 33.8% respectively. And for roads 9 out 10 projects overruns beyond 100% is quite common.
It is at this stage, a robust solution that can allow comparison of cost estimate as done by different functions with one click of a mouse can provide the breather and booster to effectively manage costs. Along with this feature, if the solution can give the past history of any project / contract / estimate in a story board form, it is easy for concerned managers to make effective course corrections to ensure better Return on Investment (ROI).