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Effects of long-term improvement efforts within project uncertainty management

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Effects of long-term improvement efforts within project uncertainty management

Authors: Agnar Johansen, Jan Alexander Langlo,

Presented at the 29th EGOS Colloquium, Montréal, Canada.

Abstract:

Managing the uncertainty (threats and opportunities) is one of the main activities in large scale capital projects. In Norway, project uncertainty management has been in focus for research and continuous structured development since the 1990s. The main question after all these years is: Have these efforts had any results or effects? This paper will address this question and show some of the possible effects the efforts have had on cost estimation and budgeting in six large organizations' in Norwegian. In addition, we will take a closer look at how organizational maturity and individual maturity within project uncertainty management have evolved as a result of the long-term improvement efforts in these organizations.

The research is based on a longitudinal investigation of investment projects in Norwegian public sector from year 2000 until present. Approximately 100 projects from a sequence of projects planned and executed under a common framework for project improvement have been included in this investigation. In addition, a case study has been carried out in six large project organisations comparing uncertainty management practice and experience in 2006 and in 2011. This longitudinal study is used to see whether uncertainty management in the organisations have matured in this period.

The research has shown that cost estimates normally increase over time. However, the increase from sanction to delivery is modest and normally within acceptable risk contingencies. We have seen that the accuracy of cost estimates has increased from 2000 up until present. The reasons for this development are multifaceted and divergent, which will be elaborated in this paper. The research has also confirmed that organisational maturity in the uncertainty management area and individual maturity have evolved from 2006 to 2011. Potential reasons for this evolvement will be presented.