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30 %Difference (%) from the proposed estimate25 %20 %15 %10 %5 %0 %-5 %-10 %-15 %-20 %-25 %-30 %Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08Month of presented reportFigure 1 Percentage differences between quality assurer estimates and project organizationestimates in 61 projects.The essential finding evident in Figure 1 is that the independent quality assurers recommendedbudget increases in 40 of 61 projects. Although the differences are small, within the ±5 % range,for nearly half the projects (30 of 61), the range of the total sample is from 24.2 %(recommended budget raise) to -14.0 % (recommended budget reduction). So the difference inan individual projects may be significant. However, the average difference is 3.4 % and thestandard deviation is 6.9 %, which together imply fair consistency of the estimates.In comparison, Magnussen and Olsson (2006) reported quality assurer’s recommended budgetincreases in 23 of 31 projects and an overall recommended budget raise of 5.1 %. Moreover, thedifferences apparently decreased systematically after QA2 was introduced. First, the distributionof projects where the quality assurers recommend higher budgets is sustained by the updatedsample. As apparent in Figure 1, the differences tended to be larger when QA2 was new. Forexample, early on, eight projects exhibited differences of more than 10 %, but subsequentdifferences were not as great. Furthermore, 13 projects in a sample of the first 31 exhibiteddifferences were within the ±5 % range. The extended sample adds 17 cases to this category. Ifwe compare summary statistics of the first 31 projects with the subsequent 30, it can be seen thatboth the average recommended budget increase (1.6 %) and the standard deviation (5.2 %) arelower in the last 30 projects. 1Though the differences observed are spread over a period of eight years, they are assumed to becomparable, as the underlying cost data have been normalized to the same price level, and factorssuch as price escalation, project changes, and so on, have been accounted for. Consequently, it’sreasonable to assume that the observed differences between estimates are real. However, thisquantitative assessment provides no evidence as to why the differences arose. So the next sectionpresents results from an investigation of differences based on available contextual information.1 Extra care should be exercised in interpreting the results of the comparison because the cut-off between the first 31and the 30 following projects was selected arbitrarily.5
6. What might explain the observed differences?The type of each of the projects is known, so the projects could have been segmented by type.But this was not done, as the initial aim is to analyse possible explanations and present anddiscuss them in a manner which could be meaningful above the level of an individual project.The magnitudes of the differences in estimates presented above might comprise anotherdimension that could be segmented in the data. Yet that would reveal little, as the investigationwas guided by (and to some extent was adjusted for) the empirical observation that thedistinctness of identifiable explanations for differences in estimates do not increase with the sizeof the observed difference. In other words, it would not be easier to verify causes of largedifferences than the causes of small differences. Projects with small differences were found to bejust as important targets for investigation as those with large differences. As an example, in thefinal report from a review of a transportation infrastructure project, where the recommended abudget increase was 2.3 %, some NOK 40 million (€ 5 million) in absolute terms, the qualityassurer made the following statement about the estimation process carried out by the projectorganization before the quality assurance took place: “The approach applied here, in which [theestimation tool] is employed without good, unambiguous and easily traceable documentation withrespect to design basis and experience data, is not in accordance with good practices forestimation and untenable in the [agency]. It is purely coincidental that the discrepancy [betweenthe estimate proposed by the agency and the external consultant] is not substantially larger, andthis illustrates the need for the [agency] to implement immediate measures to improve theproject’s estimate.” (Author’s translation from the Norwegian)The project organization’s response to this statement was not made available, so the statementmust be regarded to be one actor’s subjective view about the estimation process of one particularproject. However, this particular case illustrates the sort of qualitative information that may beavailable. It also shows that reviewers explicitly comment on cost estimation practices andsuggest why differences in results may arise. Above all, it shows that quantitative evidence aloneis insufficient to assess how front-end quality assurance may affect planning. The areas associatedwith explanations for differences in estimates are listed in Table 2. The descriptions of identifiedissues are impartial to avoid result bias.6
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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
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PAPERSGovernance Frameworks for Pub
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supporting setting of and achieving
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The study proceeded as follows:•
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y the Chief of Defence Materiel, he
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(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 168 and 169: In other words, the QA scheme is a
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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 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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