Abstract
Cost estimation is an important part of project planning. Over the years different approaches have developed, taking uncertainty into account in the cost estimation processes in order to tackle the dynamic nature of projects. However, when implementing these approaches, some challenges have been revealed. The aim in a cost estimation process is to establish a realistic overview of the total project costs and its uncertainties. Even though tools and methods for taking uncertainty into account are implemented, projects with cost overruns are often seen. In this paper we look into some challenges with the practice in cost estimation processes and identify possible improvements to overcome them. The purpose of this paper is to illustrate better solutions to some of the major weaknesses identified in current cost estimation practice. We use a case study of decommissioning of Barsebäck Nuclear Power Plant to illustrate how to overcome these challenges. First of all, this is an interesting case with challenges related to the project and the cost estimation process, given the complexity in the situation and that very few have experiences related to decommission of nuclear power plants. Second, we applied an approach that is not yet commonly used to develop cost estimates for this kind of projects. The paper concludes that it is possible to improve the results of uncertainty analysis of cost estimates. A well prepared process, with a suitable group of experts that go through a well-structured process, focusing both on risks and opportunities and using a top-down approach can compensate for some of the challenges related to cost estimation under uncertainty.
Highlights
To allow the owner to make the right decisions about the size of the investment and whether or not to realize it
We identify some practical challenges with cost estimation under uncertainty and discuss ways of handling these
Based on the case of cost estimation under uncertainty for the decommissioning of Barsebäck nuclear power plant, we will demonstrate some practical solutions for cost estimation and uncertainty analysis in complex projects
Summary
To allow the owner to make the right decisions about the size of the investment and whether or not to realize it. Every project proposal needs realistic cost estimates. Every project manager is dependent on realistic cost estimates to allow for successful cost management. Budgeting and cost control is very critical and challenging under uncertainty. Since the early 1990s, the authors of this paper have been actively performing and researching cost estimation and uncertainty analysis in projects. We have been involved in more than 100 major projects, both individually and jointly, as facilitators and support functions in cost estimation and uncertainty analysis. We identify some practical challenges with cost estimation under uncertainty and discuss ways of handling these. Based on the case of cost estimation under uncertainty for the decommissioning of Barsebäck nuclear power plant, we will demonstrate some practical solutions for cost estimation and uncertainty analysis in complex projects
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
