The Processes of Public Megaproject Cost Estimation: The Inaccuracy of Reference Class Forecasting

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

Governments worldwide are introducing “reference class forecasting” to improve the accuracy of megaproject cost estimation and thus ultimately the ability to deliver megaprojects on budget without altering the project specifications and/or changing the time schedule. In contrast to current findings, which show that reference class forecasting leads to more accurate project cost estimates by counteracting human cognitive and organizational biases, this article indicates the contrary, that reference class forecasting does not lead to more accurate cost estimates. The article theorizes that reference class forecasting fails to produce more accurate project cost estimates because estimates are always a relational network effect of human and nonhuman actors’ “biased” efforts to establish them. This finding challenges the existing literature by pointing to a more complex understanding of project cost estimation and biases. The finding is based on a longitudinal case study of a 23.6-billion-kroner Danish public megaproject, which failed to meet its objectives despite the application of reference class forecasting.
OriginalsprogEngelsk
TidsskriftFinancial Accountability and Management
Vol/bind35
Udgave nummer4
Sider (fra-til)337-352
Antal sider16
ISSN0267-4424
DOI
StatusUdgivet - nov. 2019

Bibliografisk note

Published online: 1 July, 2019

Emneord

  • Actor–network theory
  • Megaproject
  • Project cost estimation
  • Public budgeting
  • Reference class forecasting

Citer dette

@article{7d0eeca7694147428e4fbd2a18a6b59b,
title = "The Processes of Public Megaproject Cost Estimation: The Inaccuracy of Reference Class Forecasting",
abstract = "Governments worldwide are introducing “reference class forecasting” to improve the accuracy of megaproject cost estimation and thus ultimately the ability to deliver megaprojects on budget without altering the project specifications and/or changing the time schedule. In contrast to current findings, which show that reference class forecasting leads to more accurate project cost estimates by counteracting human cognitive and organizational biases, this article indicates the contrary, that reference class forecasting does not lead to more accurate cost estimates. The article theorizes that reference class forecasting fails to produce more accurate project cost estimates because estimates are always a relational network effect of human and nonhuman actors’ “biased” efforts to establish them. This finding challenges the existing literature by pointing to a more complex understanding of project cost estimation and biases. The finding is based on a longitudinal case study of a 23.6-billion-kroner Danish public megaproject, which failed to meet its objectives despite the application of reference class forecasting.",
keywords = "Actor–Network Theory, Megaproject, Project cost estimation, Public budgeting, Reference class forecasting, Actor–network theory, Megaproject, Project cost estimation, Public budgeting, Reference class forecasting",
author = "{Neerup Themsen}, Tim",
note = "Published online: 1 July, 2019",
year = "2019",
month = "11",
doi = "10.1111/faam.12210",
language = "English",
volume = "35",
pages = "337--352",
journal = "Financial Accountability & Management",
issn = "0267-4424",
publisher = "Blackwell Publishing",
number = "4",

}

The Processes of Public Megaproject Cost Estimation : The Inaccuracy of Reference Class Forecasting. / Neerup Themsen, Tim .

I: Financial Accountability and Management, Bind 35, Nr. 4, 11.2019, s. 337-352.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

TY - JOUR

T1 - The Processes of Public Megaproject Cost Estimation

T2 - The Inaccuracy of Reference Class Forecasting

AU - Neerup Themsen, Tim

N1 - Published online: 1 July, 2019

PY - 2019/11

Y1 - 2019/11

N2 - Governments worldwide are introducing “reference class forecasting” to improve the accuracy of megaproject cost estimation and thus ultimately the ability to deliver megaprojects on budget without altering the project specifications and/or changing the time schedule. In contrast to current findings, which show that reference class forecasting leads to more accurate project cost estimates by counteracting human cognitive and organizational biases, this article indicates the contrary, that reference class forecasting does not lead to more accurate cost estimates. The article theorizes that reference class forecasting fails to produce more accurate project cost estimates because estimates are always a relational network effect of human and nonhuman actors’ “biased” efforts to establish them. This finding challenges the existing literature by pointing to a more complex understanding of project cost estimation and biases. The finding is based on a longitudinal case study of a 23.6-billion-kroner Danish public megaproject, which failed to meet its objectives despite the application of reference class forecasting.

AB - Governments worldwide are introducing “reference class forecasting” to improve the accuracy of megaproject cost estimation and thus ultimately the ability to deliver megaprojects on budget without altering the project specifications and/or changing the time schedule. In contrast to current findings, which show that reference class forecasting leads to more accurate project cost estimates by counteracting human cognitive and organizational biases, this article indicates the contrary, that reference class forecasting does not lead to more accurate cost estimates. The article theorizes that reference class forecasting fails to produce more accurate project cost estimates because estimates are always a relational network effect of human and nonhuman actors’ “biased” efforts to establish them. This finding challenges the existing literature by pointing to a more complex understanding of project cost estimation and biases. The finding is based on a longitudinal case study of a 23.6-billion-kroner Danish public megaproject, which failed to meet its objectives despite the application of reference class forecasting.

KW - Actor–Network Theory

KW - Megaproject

KW - Project cost estimation

KW - Public budgeting

KW - Reference class forecasting

KW - Actor–network theory

KW - Megaproject

KW - Project cost estimation

KW - Public budgeting

KW - Reference class forecasting

UR - https://sfx-45cbs.hosted.exlibrisgroup.com/45cbs?url_ver=Z39.88-2004&url_ctx_fmt=info:ofi/fmt:kev:mtx:ctx&ctx_enc=info:ofi/enc:UTF-8&ctx_ver=Z39.88-2004&rfr_id=info:sid/sfxit.com:azlist&sfx.ignore_date_threshold=1&rft.object_id=954921383829&rft.object_portfolio_id=&svc.holdings=yes&svc.fulltext=yes

U2 - 10.1111/faam.12210

DO - 10.1111/faam.12210

M3 - Journal article

AN - SCOPUS:85068484627

VL - 35

SP - 337

EP - 352

JO - Financial Accountability & Management

JF - Financial Accountability & Management

SN - 0267-4424

IS - 4

ER -