Unrealistic Project Goals: Detection and Modification

Abstract

Determining whether to invest in a project is a complex and challenging decision. This project investment decision relies heavily on its promised strategic goals (i.e., target benefits) stated in its business case and which are expected to be realized following project completion. However, in many cases, the proposed project benefits are far greater than those that the project realistically can achieve, leading to the risk of projects being funded erroneously. The construction management literature has offered approaches such as reference class forecasting (RCF) to rectify unrealistic project estimates. This paper identifies weaknesses in the current approaches, exposes their inefficiency, and proposes a step-by-step stratified approach as an effective alternative to detect, measure, and rectify unrealistic estimates of project benefits, and utilizes the proposed approach on a light rail construction project. The contribution of this approach is that each project benefit target can be rectified differently, based on the measurable levels of deviation from more-realistic estimates. This paper advances the construction management literature by enabling managers to set realistic project goals in the project front end, increase the reliability of estimates in the project business case, and improve the quality of project investment decisions. Show more