Link to thesis - Concept - NTNU

5. Effectiveness and efficiency5. Effectiveness and efficiencyProject success is often measured in terms of efficiency and effectiveness. In general,efficiency is related to producing direct outputs, and effectiveness is related to addedvalue for owners and users. Changes usually reduce project efficiency. Flexibleapproaches in projects are frequently seen as enablers of effectiveness. One keypurpose of project flexibility is to achieve flexible projects without creating a flow ofscope changes. Cost of changes is a common argument against project flexibility.Changes are key issues when discussing flexibility, but project flexibility as discussedin this thesis is a wider concept than scope change management.5.1 Cost implicationsFigure 8 shows the relative cost in relation to the degree of flexibility. Two curves aredrawn: one for internal (how?) flexibility and one for external (what?) flexibility.Increasing cost for high external flexibility is primarily related to external changes. Tobe highly flexible causes, on average, a higher cost, compared to a project that is lessflexible. Increased cost of high flexibility comes either from redundant resources tomanage changes and decision iterations, or unintended change to cost if suchredundancy was not available but changes came anyway. This relation is similar to thetraditional curve with increasing cost of changes over time in a project. It should benoted that increased cost can be compensated for by increased benefits. On the otherhand, the cost curve related to internal flexibility decreases with higher flexibility.The fewer restrictions, the better opportunities a contactor or project manager has tooptimise the use of available resources. This is a part of the logic behind leanconstruction.The results presented in this thesis have shown significant cost overruns for highlyflexible projects. Cost overruns have ranged at c.100% for highly flexible projects, asshown in Paper 7. These results have justified a steep rising cost curve for externalflexibility in Figure 8. In comparison, Jacobsen (2006) refers to cost reductionsrelated to high internal flexibility (or more precisely, related to lean constructionimplementations in the USA and Denmark) at c.10%. Koerckel et al. (2005) reportthat a lean construction initiative resulted in a 6.4% budget underrun on a railwayinvestment project (related to the railway tunnel between Britain and France). Therelatively flat curve related to cost reduction for internal flexibility is drawn withthese numbers in mind.23