IMPLEMENTATION OF THE REFERENCE CLASS FORECASTING METHOD FOR PROJECTS IMPLEMENTED IN A CHEMICAL INDUSTRY COMPANY

Renata Walczak,Tomasz Majchrzak

doi:10.18267/j.aop.593

Abstract

The purpose of this article is to present an industrial application of the Reference Class Forecasting Method (RCFM) developed by Kahneman and Tversky for planning and decision-making under uncertainty. Project plans are usually prepared on the basis of detailed calculations and arrangements according to selected project management methodology. Undertakings that are planned in this manner often fail and do not achieve their goals. However, the American Planning Association recommends using the RCFM as an additional method. The article presents four groups of projects implemented by a chemical industry company over four years. A few of the projects were accomplished according to the plan in terms of triple constraint i.e. time, cost, and scope. The cost aspect was taken into account in the paper. During the study, the planned and implemented costs of 222 projects were analysed. On the basis of the distribution of cost overruns, according to RCFM, new patterns of planned costs were prepared. The Reference Class Forecasting Method, which was effective for large homogeneous projects turned out to be completely useless for various projects implemented by the chemical company.

Highlights

Concern about executing projects on time and within a planned framework has become the central issue of many project management methodologies: PRINCE2 introduces a management framework in order to make project success more probable where project success is defined as meeting the project objectives and customer requirements
The objective of this paper is to present the use of the Reference Class Forecasting Method in a chemical company
The objective of this research was to use the method for small projects executed in the analysed chemical company

Summary

Introduction

Concern about executing projects on time and within a planned framework has become the central issue of many project management methodologies: PRINCE2 introduces a management framework in order to make project success more probable where project success is defined as meeting the project objectives and customer requirements. This is measured in six fields: budget, schedule, quality, scope, risk, and benefits. The standard published by the Project Management Institute defines project success as meeting or exceeding customers’ expectations by fine-tuning competing requirements such as costs, duration, scope, and quality (PMBOK, 2008; Dinsmore and Cabanis-Brewin, 2010).

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