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(OWN-1566) Public Construction Projects -- Failures in Forecasting: Honest Mistakes… and Otherwise

Primary Author: Mr. William M. Hart PE CFCC PSP

Audience Focus: Intermediate
Application Type: Application
Venue: 2014 AACE International Annual Meeting, New Orleans, LA, USA

Abstract: We have all read accounts of government-funded construction projects that greatly exceed original estimates of cost and schedule, or fall well short of achieving promised benefits. Much research has been conducted over the past decade in an attempt to understand this problem. The research shows us that the forecasting problem is widespread - in one study it was shown that initial cost projections for nearly 90% of all transportation projects may be underestimated. Additionally, that research identifies and describes four common explanations for this problem: Technical, Economic, Psychological and Political. Analysis and additional research conducted for this paper finds that the Technical and Psychological explanations, while valid, are much less significant than are the Economic and Political explanations. Moreover, the Economic and Political explanations are quite often linked to a concept known as “Strategic Misinformation” (or more simply put, lying) on the part of project promoters. Because of Strategic Misinformation, the accuracy of estimates presented for public projects during the selection/approval process can generally not be trusted. In order for the public to be able to trust these initial project estimates as reflective of what the actual costs will be, the process for delivering public projects must be reformed.