Schedule matters: Understanding the relationship between schedule delays and costs on overruns

Abstract

This paper examines the relationship between schedule delays and cost overruns on complex projects. It is generally accepted by many project practitioners that cost overruns are directly related to schedule delays. But what does “directly related to” actually mean? Some reasons or root causes for schedule delays and associated cost overruns are obvious, if only in hindsight. For example, unrealistic estimates, supply chain difficulties, insufficient schedule margin, technical problems, scope changes, or the occurrence of risk events can negatively impact schedule performance. Other factors driving schedule delays and cost overruns may be less obvious and more difficult to quantify. Examples of these less obvious factors include project complexity, flawed estimating assumptions, over-optimism, political factors, “black swan” events, or even poor leadership and communication. Indeed, is it even possible the schedule itself could be a source of delay and subsequent cost overrun? Through literature review, surveys of project practitioners, and the authors' own experience on NASA programs and projects, the authors will categorize and examine the various factors affecting the relationship between project schedule delays and cost growth. The authors will also propose some ideas for organizations to consider to help create an awareness of the factors which could cause or influence schedule delays and associated cost growth on complex projects.