Nonlinear cost estimates at completion adjusted with risk contingency

Forecasting the final cost with Earned Value Management (EVM) and managing contingency budgets during the project execution have been traditionally considered as two separate streams of project management research. In an attempt to combine the two areas for the purpose of reflecting the risk impact on the cost forecast, this paper presents a cost estimate at completion (CEAC) methodology adjusted with risk contingency. The proposed method is a refined Earned Schedule (ES) based nonlinear CEAC model modified with a new parameter representing the S-shaped contingency consumption as a portion of the project budget at completion. The model is validated on eight construction projects and its estimates’ accuracy and stability with a varying contingency parameter value in the early, middle, and late stages are evaluated. The cost–schedule-risk relationship represented in the model is a contribution to creating a stronger connection between EVM and contingency cost management theories through capturing the interconnected dynamics between a cost baseline and contingency accounts of ongoing projects. As a practical implication, the model is a tool for integrating the contingency consumption into nonlinear CEAC models for accurate and stable cost forecasting especially during the early and middle stages of project execution

Generator Contribution Based Congestion Management using Multiobjective Genetic Algorithm

 Congestion management is one of the key functions of system operator in the restructured power industry during unexpected contingency. This paper proposes a method for generator contribution based congestion management using multiobjective genetic algorithm. In the algorithm, both real and reactive losses have been optimised using optimal power flow model and the contributions of the generators with those optimised losses are calculated. On second level, the congested lines are identified by the proposed overloading index (OI) during contingency and those lines are relieved with the new contribution of generators, which is the outcome of the developed algorithm. The planned method depicts the information related to congestion management to minimize the investment cost, without installing any external devices and to maximise the consumer welfare by avoiding any load curtailment without affecting the voltage profile of the system as well as the optimised total system loss. IEEE 30 bus system is used to demonstrate the effectiveness of the method

Fuzzy Set-Based Contingency Estimating And Management

Contingency estimating and management are critical and necessary functions for successful delivery of construction projects. Considering such importance, academics and industry professionals proposed a wide range of methods for risk quantification and accordingly for contingency estimating. Considerably less work was directed to contingency management including its depletion to mitigate risk over project durations. Generally, there are two types of risks; 1) known risks which can be identified, evaluated, planned and budgeted for and 2) unknown risks which may occurred. These two categories of risks required a cost and time contingency, even if they weren’t planned for, in order to mitigate their impact in an orderly manner. In this respect, the importance of contingency management become critical in view of increasing project complexity and difficulty of estimating and/or allocating sufficient contingencies to mitigate risks encountered during project execution. This thesis focuses on the contingency management from two perspectives; estimating and depletion of contingency over project durations. A new method is developed using fuzzy sets theory, along with a set of measures, indices, and ratios to model the uncertainty inherent in this process and estimate cost contingencies. The uncertainties are expressed in the developed model using a set of measures and indicators including possibility measure, agreement index, fussiness measure, ambiguity measure, quality fuzzy number index, fuzziness expected value ratio, and ambiguity expected value ratio. These measures, indices, and ratios provide not only the possibility of having adequate contingency but also address issues of precision and vagueness associated with the uncertainty involved in a generic computational platform. The thesis, also, presents a comparison between fuzzy existing methods, Monte Carlo Simulation, PERT, and a proposed direct fuzzy set-based method. As to depletion, the thesis presents a management procedure focusing on depletion of the contingency. The developed procedure makes use of policies and procedures followed by leading construction organizations and owners of major constructed facilities. The developed method and its computational platform were coded using VB.net Programming. Two project examples drawn from the literature are analysed to demonstrate the use of developed method and to illustrate its capabilities beyond those of traditional Methods

Project Cost Estimation : Promoting quality of cost estimation to reduce project cost variance

One of the dimensions of evaluating project success is assessing whether the project has been completed within the assigned budget. However, it is unlikely that the actual costs will be exactly as planned, and historically, industrial projects are prone to cost overruns. Careful planning and a reasonable cost baseline are key to achieving project success. The cost baseline consists of the aggregated cost estimate and contingency reserve. Literature identifies various methods for increasing the reliability of the cost baseline via setting appropriate contingencies. However, there is a gap in the literature regarding the other of the two components of the project cost baseline – the cost estimate. The objective of this thesis is to investigate and develop a method for reducing project cost variance by improving the quality of the cost estimation process in industrial project-based firms. The objective was achieved by observing the sales organization and the cost estimation procedure in the case company and identifying the underlying issue that results in the project cost variance. The method was developed by surveying the best available practices of cost estimation techniques and processes employed by industrial project organizations and synthesizing a holistic method for improving the quality of cost estimation and promoting knowledge management within an organization. From a practical perspective, the research offered the case company a new point of view on cost variances in terms of element-specific variances. This analysis revealed the need to update the cost estimation tools for specific elements in the company’s product portfolio. From a managerial perspective, the work emphasizes the information and procedural requirements of the cost estimation process. Furthermore, the work provides advice on employing alternative cost estimation techniques to balance resource utilization as well as making the process more lean. A new risk category that roots from within the organization was identified and the findings of the thesis suggest that this category should not be a part of the contingency reserve. The internal foreseen risks can be managed with procedural changes. The thesis proposes a stage-gate standardized model for cost estimation, that guides the organization to select an appropriate cost estimation technique corresponding to the stage of project preparation. The findings suggest that the cost estimation process should be followed systematically, and to proceed with the process, all milestone requirements should be met. In addition, the role of the historical information database was deemed central to the quality of the cost estimate, making it imperative to accentuate diligent high-quality reporting and knowledge management practices

Strategies for implementing activity-based costing in the UK manufacturing industry

The purpose of this paper is to report the findings with a case study on why activity based costing lacks impact in the UK manufacturing industry. Activity based costing was performed on selected MT range subsystems of an electrical power generator to compare with the current UNN UK’s conven-tional costing system. The results have found that the current costing system works well for the MT products and thus change of costing system is not necessary for these products. The activity based costing system can be partially implemented in UNN UK for areas requiring detailed costing infor-mation such as new renewable products. Based on the result of the case study, this paper also high-lights the strategies need to be considered in order to adopt activity based costing within a typical manufacturing environment

The price of risk in construction projects: contingency approximation model (CAM)

Little attention has been focussed on a precise definition and evaluation mechanism for project management risk specifically related to contractors. When bidding, contractors traditionally price risks using unsystematic approaches. The high business failure rate our industry records may indicate that the current unsystematic mechanisms contractors use for building up contingencies may be inadequate. The reluctance of some contractors to include a price for risk in their tenders when bidding for work competitively may also not be a useful approach. Here, instead, we first define the meaning of contractor contingency, and then we develop a facile quantitative technique that contractors can use to estimate a price for project risk. This model will help contractors analyse their exposure to project risks; and help them express the risk in monetary terms for management action. When bidding for work, they can decide how to allocate contingencies strategically in a way that balances risk and reward

Human resource management in India: strategy, performance and complementarity

This study seeks to explore which types of HR practice are associated with better organisational performance (OP). Whilst the core finding—that specific HR practices lead to better organisational outcomes may not be surprising—we also found an absence of complementarity. Normally, the absence of complementarities would suggest limitations in institutional supports; on the one hand, however, institutional shortfalls are not unique to India and may be encountered in many emerging market settings. In contrast, the great internal diversity of the Indian setting, with strong variations recognised amongst institutions, along with enforcement capabilities, might suggest that these tendencies are particularly pronounced. We also found a strong link between the intrinsic rewards and performance—an unexpected result in a low-income country, where wages are generally low. We suggest that this may reflect the nature of the labour market and the limited (and possibly proportionately shrinking) pool of good jobs, making exit a difficult option for all but the best qualified. Whilst this puts employees in a poor bargaining position in bidding-up pay (making pay rises seem unfeasible), the intrinsic attributes of the job become more important