Link to thesis - Concept - NTNU

5. Effectiveness and efficiencyconflicts related to scope changes can be identified. First, conflicts may ariseregarding quantification of the increase in effectiveness and reduction in efficiency.This is related to the high and unpredictable cost of change orders. The secondconflict source is linked to allocating responsibility for reductions in efficiency.Challenges in estimating the effect of changes orders are discussed by Eden, Williams& Ackermann (2005). They particularly point to problems in finding a reference pointwhich describes the performance of a project in a period when the project was notdisturbed by changes. Eden, Ackermann & Williams (2005) describes underlyingmechanisms for how changes can cause cost overruns. They point to non-linearrelations between changes and cost development.Project internal processes can be simulated, either ex ante to predict the outcome of aparticular project design or ex post to explain and illustrate causes and effects inprojects. Kunz, Levitt & Jin (1998) and Christiansen (1993) describe how principlesfrom general management research can be applied in a computer based simulationmodel. This type of simulation has been used as decision support to predict theoutcome of a particular project, as shown by Kunz, Rivero & Levitt (2000) and DNV(2000). Williams (2003) proposes combined use of causal mapping and SystemDynamics to analyse the effect of a delay upon a project.To quantify the effect of changes, Cooper & Reichelt (2004) have performedsimulations of the aggregated disruptions caused by changes. Their simulationspredicted that a change equivalent to 10% of the total project budget would causedisruptions amounting to 2.8 times the estimated size of a change.Løken (2005) tested this estimate on a major scope change (called ‘U96’) in aNorwegian hospital project (Nytt Rikshospital). Based on a cut-off in year 2000, thescope change isolated was estimated to 424 million NOK, equivalent to c.10% thetotal cost. At the same cut-off time, total cost overruns were estimated to 1,105million NOK. Simulations of Cooper & Reichelt (2004) then predict that such achange causes disruptions in the order of 2.8 times the estimated size of a change, or1,013 million NOK. One interpretation of this is that disruptions from the scopechange caused 92% the total cost overruns. This interpretation is supported by anevaluation report of the project (Arbeids- og administrasjonsdepartementet 2001). Theevaluation report claims that this particular scope change was a major contribution tothe total cost overruns, even though there were other additional factors.Paper 3 studied how change management was approached in quality assurancereports. The strong emphasis on scope change management in the quality assurancereports indicates that changes and flexibility are primarily treated as something to beminimised, or at least to have a strict regime for. Management of changes wasmentioned as a top issue in half of the projects. In most cases, the purpose was toestablish a structured management of scope changes in order to minimise the amountand size of the changes.Thus, at least two different strategies can be identified to manage scope changes:either to avoid changes or to reduce the negative impact from any changes that doarise. In the following, these two approaches for change management will bediscussed in relation to redundancy.25