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In other words, the QA scheme is a tool for evaluating the quality of information and forproviding additional information as required.QA1 entails quality assurance of four types of documents:• Needs analysis• Overall strategy document• Overall requirements specification• Analysis of alternativesThe quality assurance includes a complete economic assessment of alternatives, according toguidelines set forth by the Ministry of Finance. At least two viable alternative concepts must bepresented for review, in addition to the zero-alternative of no project. The quality assurers arerequired to present their findings in a report that at least covers:• Uncertainties likely to affect the project• Anticipated socio-economic benefits versus costs• Anticipated relevance, efficiency of implementation and sustainability• Ranking of alternatives• Management strategyQA2, the first QA initiative introduced in 2000, takes place at the end of the pre-planning phase,before formal submission to the Parliament. Its purpose is to provide the Ministry with anindependent review of the project before its budget is appropriated by Parliament. It functions asa final control to ensure that the basis for allocation of funds is acceptable in terms of scope andquality. In part, it’s a forward-looking exercise that identifies the managerial challenges of theproject, so it should be used during implementation as a basis for Ministerial control. It isdocumented in a final report that at least covers:• The total capital costs, including an additional contingency allowance• How the project should be managed to make sure the cost frame will holdQA2 alone is merely an instrument to ensure that a project performs adequately within theconstraints of time, resources and target efficiency. It is not concerned with the question ofwhether a project is the best solution to the needs identified; that’s a task for QA1.Even so, QA2 brought sophistication to monitoring project costs. The independent qualityassurer reviews the estimate prepared by the government agency responsible for execution of theproject and accordingly puts forth a total budget, including reserves to cover the consequences ofidentified uncertainties. The executing government agency is responsible for the basic budgetplus anticipated extra costs. However, use of reserves must be approved by the responsibleMinistry. Should the total budget then need an upward adjustment during execution, the projectmay be presented anew to Parliament. At the outset in 2000, the ambition for QA2 was that itwould help cut additional funding and increase the reliability of cost estimates.Data and MethodThe study includes historical data from projects subjected to QA2 from 2000 through 2007.Projects where data on actual cost are obtainable were completed between September 2004 andMarch 2008. The data for this study were obtained from a variety of sources, including final4
eports from quality assurers, government documents (proposals and reports to Parliament),NPRA reports on cost estimating, and NPRA annual reports.Several cost estimates are associated with each project. The first cost estimate is usually made aspart of the feasibility studies and usually has an accuracy of about ±40%. The second costestimate is made when the corridor plan (a plan for a strip of land between two endpoints withinwhich roads and other transportation infrastructure facilities are evaluated) is drawn up. The firsttwo cost estimates then are refined to an accuracy of about ±25%. The final refinements aremade at a detailed planning level during which design, specifications and final cost estimates aremade with a resultant accuracy of ±10%. 4 Two estimates are highlighted at the detailed planninglevel: the estimate based on 50% subjective probability (the P50 estimate) 5 that the project will becompleted within budget, and an estimate based on the 85% subjective probability (the P85estimate) 6 of staying within budget. These two estimates are often incorporated in the expectedcost and the upper financial level of the budget presented to Parliament. The difference betweenthe upper financial level and the expected cost serves as an additional financial back-up. Thisfinancial back up is not expected to be used and is not administered at the level of the project orthe agency. Reserves may be used only as approved by the project owner, in this case the Ministryresponsible for the project.The P50 and the P85 estimates suggested by the NPRA are at the detailed planning levelreviewed by independent quality assurers before they are presented in the national budget forapproval by Parliament. The estimation technique used is judgmental forecasting, which aims topredict how future factors may influence project costs so as to arrive at a reliable estimate of thecost and/or duration of a project. In practice, judgemental forecasting involves a team ofprofessionals experienced in cost estimates and construction who work together to identifyfactors that may contribute to accurate cost estimates.In principle, the external review of costs by independent quality assurers is, as their designationimplies, independent. But in practice, there are some constraints on independence. Costestimating is arduous and time consuming. So it might be argued that an independent costestimate would take months to compile and therefore could not be completed within the timewindow of a quality assurance task. This brings in the nigh classic dilemma of the trustworthinessof input data. In most large projects, the project organisation itself acquires most of the data thatan external reviewer may use as input to the uncertainty analysis. If the external reviewer truststhe data, he is not completely independent of the project. If he distrusts the data, he mustcompile his own and therefore may not get the QA job done. So usually the data used by aquality assurer are a mix of project data and data compiled in investigations of costs or otheraspects of the project. Independence then rests in the assurer’s ability to independently judgeexisting material and the methods employed in producing it.In this paper, estimates from the feasibility study level and the corridor plan level are used as theearly estimates as they are first presented to decision-makers. The early estimates are comparedwith the estimates presented at the detailed planning level, which are scrutinized by independentquality assurers before being submitted to Parliament. Finally, the paper compares budgeted costsat the time of decision to build with actual costs. As mentioned above, to the knowledge of this4 Some may argue that stating the level of accuracy without the corresponding level of confidence is misleading andthereby incorrect. The essential matter is that the level of confidence rarely is explicitly communicated to decisionmakers, but has been verified by the underlying rule on the detailed planning level of a likelihood of 30% that theoutcome will fall outside the ±10% range (i.e a 70% confidence interval).5 The value at which the likelihood of staying within budget is 50%.6 The value at which the likelihood of staying within budget is 85%.5
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3PrefaceThe research presented in t
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5Table of contentsPART 1 ..........
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7Summary/abstractThe work reported
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101 IntroductionProjects are increa
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collection and interpretation of th
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15normative agendas, in other words
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17world of projects. The choice of
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19Figure 3 Sources and dataThe proj
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21In line with Flyvbjerg (2006b), t
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233 Concepts and constructs of thep
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25by most BOKs and textbooks in pro
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274 Main topics covered by the rese
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294.2 Empirical indications from ex
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31Budget proposed by the Norwegian
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3330 %Difference (%) from the propo
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3520 00018 000Cost development from
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37In paper 9 (Magnussen 2009a) an a
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395 Conclusions and directions for
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41estimates must be implemented at
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43Klakegg, Ole Jonny, Terry William
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45List of government documents 11Fi
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47Part 2 - Papers1. Magnussen, Ole
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Paper 1Magnussen, Ole Morten, and K
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AbstractCost overruns and delays ar
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Cost effectiveness considerations:
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demonstrates another fundamental is
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Figure 1 The Extended Quality Assur
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Expected effects of the revised qua
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ReferencesBerg, Peder, Kilde, Halva
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International Journal of Project Ma
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O.M. Magnussen, N.O.E. Olsson / Int
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Paper 3Magnussen, Ole M., and Nils
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MANAGING THE FRONT-END OF PROJECTS:
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Olsson, Samset, Austeng and Lädre
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1995; Packendorff, 1995), mainly cr
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to a better way of managing the fro
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Figure 1 Basic structure of the ind
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from empirical investigations has b
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among organizations, not individual
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actors, the relationships are repro
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the network approach has been used
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established based on the views of i
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IHFJKGAELDMBCA - The focal projectB
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the NDEA. The communication strateg
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Directorate for Cultural Heritage (
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the project. The basic activity was
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assumed to be more important than o
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Another interesting observation was
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REFERENCESEngwall, Mats. 2003. No p
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Söderlund, Jonas. 2002. On the dev
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Flexibility at Different Stages in
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Reproduced with permission of the c
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Paper 5Olsson, Nils O. E., and Ole
Page 126 and 127: PAPERSGovernance Frameworks for Pub
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Page 130 and 131: The study proceeded as follows:•
Page 132 and 133: y the Chief of Defence Materiel, he
Page 134 and 135: (within MoD but independent of thep
Page 136 and 137: Norway U.K. (MoD) U.K. (OGC)Charact
Page 138 and 139: from the external consultants was s
Page 140 and 141: governance. International StudiesRe
Page 142 and 143: Paper 7Williams, Terry, Ole Jonny K
Page 144 and 145: The development of the frameworksUK
Page 146 and 147: notable characteristic of the Norwe
Page 148 and 149: Office to the National Audit Office
Page 150 and 151: highly complex and changing decisio
Page 152 and 153: ARTICLE IN PRESSAvailable online at
Page 154 and 155: ARTICLE IN PRESST. Williams et al.
Page 164 and 165: Paper submitted to the Internationa
Page 166 and 167: One constraint is that actual costs
Page 170 and 171: author, there apparently are no stu
Page 172 and 173: 20,0 %15,0 %10,0 %5,0 %0,0 %P50 est
Page 174 and 175: The pre-eminent result is that the
Page 176 and 177: Results from the analysis of the de
Page 178 and 179: more fundamental assessments of pro
Page 180 and 181: Paper 10Magnussen, Ole M. 2009. Exp
Page 182 and 183: Explaining cost estimate difference
Page 184 and 185: changes and external factors. Facto
Page 186 and 187: 30 %Difference (%) from the propose
Page 188 and 189: Table 2 Areas associated with expla
Page 190 and 191: agency. In this case, the observed
Page 192 and 193: ReferencesFlyvbjerg, B., Holm, M.K.
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