Improving the Predictability of Accurate Project Outcomes

RT-291 Topic Summary
RT 291

Overview

Project outcome predictability is actually influenced by factors across multiple core competencies intrinsic to capital project delivery. The team found that the processes and tools used to generate, communicate, and revise a project’s cost and schedule forecasts are as diverse as any other assessment or evaluation undertaken within the industry. However, the research revealed that there were distinct and identifiable practices, that when implemented, distinguished effective project from ineffective ones, with respect to their ability to forecast final cost and schedule outcomes.

For owners, changes associated with scope, work planning, and execution disrupt predictability the most, while for contractors, changes associated with scope and control functions were statistically found to be the most disruptive. The outcomes of this research show predictability to be an effective risk mitigation and value-increasing mechanism. Early predictability adds value by enabling the proper response to surprises and changes. Project managers who can foresee impending cost and schedule deviations can mitigate the causes by assigning the right people, implementing the right processes, and encouraging the right behaviors.                                                                             

This study has produced a comprehensive set of recommended practices for improving the accuracy and timeliness of project outcome predictions. This research proves that human behaviors and interpersonal team interactions, all influenced by the culture of the organization have the most significant and profound influence on forecasting. Further, there should be recognition, as presented in this research, that there are certain variables associated with project characteristics, forecasting practices, and management processes that can determine the effectiveness of cost and schedule predictions. Change reasons must be proactively managed, and their potential negative impact to overall performance must be properly mitigated.  
 

Key Findings and Implementation Tools

1 : Proposes Predictability Practices

Predictability, the condition to produce early and accurate forecasts for cost and schedule measures at completion and needs to have a high degree of accuracy and reliability in order to have meaningful benefit to the sponsoring organizations.

The research team concluded that the processes and tools utilized to generate, communicate, and revise a project’s cost and schedule forecast are as diverse as any other techniques used within the profession to address challenges. Importantly however, the research revealed that there were distinct and identifiable differences between effective and ineffective projects with respect to the practices they use to forecast final cost and schedule outcomes. The research team categorized these practices as follows:

  1. Human behavior and organizational culture
  2. Project characteristics
  3. Forecasting practices
  4. Management processes

These four categories form the basis of the team’s Four-casting model. Of the four, human behavior and organizational culture was the category statistically shown to have the greatest influence on predictability. The four categories of practices are presented in detail in IR291-2 including key “takeaway” findings, a list of potential predictability “derailers,” and recommended mitigation actions.

Reference: (RS291-1)

2 : Early Predictability

Predictability enables project teams to address project performance proactively and in a timely manner, through proper management decisions, and thus increase value to the organization. Predictability is an effective risk mitigation mechanism. (IR291-2, p. 9)
Reference: (IR291-2)

3 : Effective Practices

There are distinct and identifiable practices between effective and ineffective projects with respect to their ability to forecast final cost and schedule outcomes. (RS291-1, p. v)
Reference: (RS291-1)

4 : The Predictability Index

Project team performance needs to be evaluated based on the team’s ability to mitigate cost and schedule deviations through the early and accurate prediction of cost and schedule outcomes, as opposed to the prevalent evaluation of a team’s performance based solely on the magnitude of such deviations at project completion.

RT-291 developed a numerical index to measure cost and schedule predictability performance. This resource, the Predictability Index, indicates a project team’s past ability to proactively and effectively address the events and surprises that have affected the accuracy and timeliness of its forecasts. Indeed, project teams cannot eliminate surprises (or all bad news), but they can—and should—mitigate the effect of such surprises with their early recognition, transparent and candid reporting, and full appreciation of the events that influence effective forecasting. To this end, project stakeholders are strongly encouraged to consider the importance of human behavior and organizational culture as explained in the research findings and as emphasized in the proposed predictability practices. (RS291-1, p. 47)
Reference: (RS291-1)

5 : Change Reasons

The disruptive nature of change on owner and contractor project performance presents itself in varied form, frequency and intensity. While some companies categorize changes through many individual change reasons grouped into key types of change, others choose to catalog changes through only a few individual reasons. Reported change reasons also reflected the different approaches to business taken by distinct industry sectors. Differences were also observed between owner and contractor organizations:

  • For owners, changes associated with scope, work planning and execution disrupt predictability the most
  • For contractors, changes associated with scope and control functions were found to be the most disruptive

In its effort to categorize changes that affect predictability, the team identified 36 distinct change reasons, grouped into 10 types of change: (RS291-1, p. 33)

  1. Scope changes
  2. Standard, regulatory, and legal requirements
  3. Engineering design
  4. Work planning and execution
  5. Commissioning and start-up
  6. Control functions
  7. Vendor/supplier and procurement
  8. Economic conditions
  9. Legal and social conditions
  10. Force majeure
Reference: (RS291-1)

6 : Implementation Tool #1

IR291-2, Four-Casting for Early Predictability

Use for continuous assessment during execution. Provides an assessment of severity or negative impact of 85 elements on predictability. This model addresses each of the four practice categories in separate chapters. Each chapter provides key “take away” findings, a list of potential predictability “de-railers,” and mitigation actions.

  • Continuous evaluation of project predictability practices
  • Project team member input
  • Highlights practices that need attention
Reference: (IR291-2)

7 : Implementation Tool #2

IR291-3, The Predictability Index – Benchmarking Project Outcome Predictions

Use this tool at project completion to provide a quantitative assessment of accuracy and timeliness of cost and schedule forecasts.

  • Benchmarking predictability performance
  • Quantitative and objective measure
  • Timeliness and accuracy of cost and schedule forecasts
Reference: (IR291-3)

Key Performance Indicators

Improved predictability, Improved cost, Improved schedule, Improved estimating/forecasting, Improved performance/achieved success, Reduced change, Reduced project growth, Reduced/improved risk

Research Publications

The Predictability Index — Benchmarking Project Outcome Predictions - IR291-3

Publication Date: 01/2014 Type: Implementation Resource Pages: 15 Status: Tool

Four-casting for Early and Accurate Predictability - IR291-2

Publication Date: 12/2013 Type: Implementation Resource Pages: 103 Status: Tool

Improving the Accuracy and Timeliness of Project Outcome Predictions, Version 1.1 - RS291-1

Publication Date: 09/2013 Type: Research Summary Pages: 48 Status: Supporting Product

Improving the Accuracy and Timeliness of Project Outcome Predictions - RR291-11

Publication Date: Type: Research Report Pages: Status:


Supporting Resources

Presentations (CII Annual Conference & Workshops)

Plenary Session - Improving the Predictability of Project Outcomes

Publication Date: 07/2013 Presenter: Number of Slides: 25 Event Code: AC13

Implementation Session - Improving the Predictability of Project Outcomes

Publication Date: 07/2013 Presenter: Number of Slides: 65 Event Code: AC13

Session - How to Assess and Improve Your Project Outcome Predictions

Publication Date: Presenter: Number of Slides: 58 Event Code: PIW414


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