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Project Cost Overruns and Risk Management

This .pdf from Simon Jackson at the University of Reading examines project cost overruns and risk management from the viewpoint of the construction industry. The parallels with IT are thought provoking: large, complex projects serving the needs of many stakeholder groups delivered with complex architectural constructs bringing many technologies together into a functioning whole – and the challenges of delivery are similar too. Using a research method of examining actual construction projects where project cost overruns were found, Jackson also interviewed experts in the field of cost estimating and asked about the reasons for cost overruns. Moving then to risk management, Jackson explains how the working plan of the construction industry is to accept risk and uncertainty. A parallel can be drawn here to IT: both industries recognize that there are risks and uncertainties, and until recently, IT has simply accepted those risks. The size and complexity of projects in both construction and IT demand a high level of risk management and attention to potential cost overruns as well, and in both cases the managers of those projects need to define the expectations and scope of the project long before the project begins ““ and then continually monitor that scope to be sure that new requirements or expectations are being added to the work initially being performed.

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