Getting Incentives Right: do we need ex post CBA?

This paper, presented at the Sixth European Conference on Evaluation of Cohesion Policy (Warsaw, 30 November-1 December 2009), discusses why there is a strong need of ex-post Cost-Benefit analysis and which conditions should be met for a proper ex-post exercise to be carried out in the framework of Cohesion Policy major projects. After an introduction about the objectives and instruments of the 2007-2013 EU Cohesion Policy, and in particular the legal framework for co-financing environmental and transport projects, the paper illustrates and discusses some methodological choices which have been made by the authors of the EC CBA Guide. It is showed that, without an ex-post Cost-Benefit analysis, the ex-ante exercise is also weakened as a decision making tool. In particular, in the light of evidence from literature about the most common mistakes and pitfalls in ex-ante project appraisal, it is explained how systematic ex-post evaluation is important in particular linked to ex-ante incentives to reveal true information about the projects characteristics (especially on investment costs and demand forecast which are often respectively under and overestimated due to an optimism bias) and ex-post performance assessment. The EC has a unique role to play in this context, and recommendations are given about how to improve the use of CBA for investment decisions and how to contract co-funding of major projects in the framework of incentive theory.CBA, Cohesion Policy, Incentives

Risk ranking and analysis in PPP water supply infrastructure projects : an international survey of industry experts

2014-2015 > Academic research: refereed > Publication in refereed journalAccepted ManuscriptPublishe

Delay and Cost Overrun Risks in Sudanese Construction Projects: QuantitativeApproach

It is quite observed and frequently iterated in the risk literature that construction projects are prone to various and interrelated risks. Risks that span over a wide spectrum such as delays, cost overrun, safety, design, construction, environmental, weathering, legal and operational risks. Delays and cost overruns are considered among the leading threat risks that a project can experience and suffer. Quantifying those risks is intricate due to the complex and interrelated nature of construction projects and risks encountered over them. Isolating and quantifying the effect of those risks (delays and cost overruns), apart from the overall interacted effect of other risks, is an important performance indicator. Moreover, it can serve as a useful predictive and proactive tool for Sudanese construction project management professionals in formulating risk response plans. In order to achieve such a goal, special circumstances and conditions shall hold valid. Conditions as holding still the key other risks that are expected to affect the overall project risk interaction. The aim of this paper is to develop predictive models in order to quantify the magnitude of delays and cost overruns. This is sought by incorporating non-probabilityreadily accessible sample (n=19) of solely-steady funding, defined scope, contractual time frame and cost projects. This is meant to isolate (as much as practical) other than delays and cost over runs risk factors. To achieve the stated goal, regression statistical techniques and Monte Carlo simulation are utilized using Minitab, SPSS and @risk softwares. Comparison between the results obtained by the Monte Carlo simulation and the actual finish durations and costs was conducted. It was found that the uniform distribution is the best fit for the actual project durations and Pareto distribution for the actual cost. It was also found that there is a significant difference between the actual and contractual durations, which resulted in significantly large delays. In the author opinion this is can be attributed to one or collateral of the scenarios of owner imposed contractual time frame, non-compensable time extensions, changes and variations, contract miss -management and lack of accurate project scope definition

Risk Management of West Semarang Water Supply PPP Project: Public Sector Perspective

While the need for water supply infrastructure development keeps increasing, many local governments of Indonesia are facing problems related to limited funding. This condition opens up an opportunity for private sector to invest in water supply infrastructure projects through Public Private Partnership (PPP) scheme. As this scheme is relatively new for many local governments in Indonesia, its complexity and typically long duration of the concession period may raise concerns of potential risks throughout the project life cycle. It is, therefore, very important for public sector as owner of the project to understand and to be able to manage risks properly throughout the concession period. The aim of this research is to evaluate risk management of West Semarang Water Supply PPP Project as perceived by public sector. The objectives are to identify, to analyze, and to allocate risks to the right parties. Qualitative and quantitative approaches have been used for the research method. Data were collected through focus group discussion involving 16 relevant officials of local government of Semarang, including its Regional Water Supply Company (PDAM). This research has identified a total of 66 risks as perceived by the public sector, which are then classified into 11 categories, e.g. political, operation, revenue, etc. The proportions of the level of risks are relatively balanced, as follows; low (37.88%), moderate (28.79%) and high (33.33%). In terms of risk allocation, 46.97% of risks are allocated to the public sector, while 37.88% and 15.15% of the risks are allocated to the private sector and shared by both parties, respectively. The results of this research are valuable for the local government of Semarang and can be used as a guidance in managing risks of the PPP project throughout the concession period

Risk Management of West Semarang Water Supply PPP Project: Public Sector Perspective

While the need for water supply infrastructure development keeps increasing, many local governments of Indonesia are facing problems related to limited funding. This condition opens up an opportunity for private sector to invest in water supply infrastructure projects through Public Private Partnership (PPP) scheme. As this scheme is relatively new for many local governments in Indonesia, its complexity and typically long duration of the concession period may raise concerns of potential risks throughout the project life cycle. It is, therefore, very important for public sector as owner of the project to understand and to be able to manage risks properly throughout the concession period. The aim of this research is to evaluate risk management of West Semarang Water Supply PPP Project as perceived by public sector. The objectives are to identify, to analyze, and to allocate risks to the right parties. Qualitative and quantitative approaches have been used for the research method. Data were collected through focus group discussion involving 16 relevant officials of local government of Semarang, including its Regional Water Supply Company (PDAM). This research has identified a total of 66 risks as perceived by the public sector, which are then classified into 11 categories, e.g. political, operation, revenue, etc. The proportions of the level of risks are relatively balanced, as follows; low (37.88%), moderate (28.79%) and high (33.33%). In terms of risk allocation, 46.97% of risks are allocated to the public sector, while 37.88% and 15.15% of the risks are allocated to the private sector and shared by both parties, respectively. The results of this research are valuable for the local government of Semarang and can be used as a guidance in managing risks of the PPP project throughout the concession period

Valuation of risk and complexity attributes causing delays in Australian Transport infrastructure projects for optimal contingency Estimation

The transportation projects have historically experienced significant delays and cost overruns from the time decision to build has been taken by the owner. This thesis addresses the problem of why this delay occurs by looking at the drivers from a risk management perspective. It identifies and analyses the owner risk attributes that contribute to significant delays related to transportation projects from an Australian context. After a literature review of current risks causing delays in transportation projects from across the globe, risk and complexity related to transport projects in Australia are identified from an Australian context using a questionnaire survey completed by participants with relevant experience in the transport industry. The risks are ranked using the Relative Importance Index (RII) based on likelihood and impact score. The results obtained include many attributes which are condensed to factors based on correlations using factor analysis. This gives us a big picture of the main risk and complexity factors affecting delays on transportation projects. Once done, a predictive model is obtained between the overall delay as the dependent variable and risk attributes as the independent variable. This is obtained using the statistical technique of Ordinal Multivariate regression. Lastly, a working framework that allows the methodology used in the thesis to be applied to all projects to understand the risk and complexity factors. This result can be useful for owners in obtaining a realistic design to build estimate in transport infrastructure projects by allocation of suitable contingency on risk and complexity drivers causing delays in transport infrastructure project

AN EMPIRICAL EVALUATION OF NAVY METOC PROJECTS USING PROJECT MANAGEMENT STANDARDS

Although project managers are in high public-sector demand, the Navy Meteorology and Oceanography (METOC) command studied has yet to adopt a project management requirement. With multiple facilities, acquisition elements, and mission-essential projects, cross-departmental dependencies exist that require proper project oversight. Without project management, mission-essential projects are done in a vacuum; personnel are often unaware of the impacts of specific tasks. By requiring a specific type of project management structure, Navy METOC commands would have an avenue to implement a hybrid project management office. This research examined a hypothetical group of projects within a Navy METOC command’s area of the Department of Defense using the Project Management Body of Knowledge (PMBOK) standards. From requirements initiation to project schedules, this analysis identified gaps throughout a Navy METOC command’s ad-hoc project management process. Using the PMBOK as a baseline, we recommend: 1) designate a person or position to support the ongoing creation, command support, and maintenance of project-based documents/templates, 2) implement a hybrid project management office where a position exists to support the command with information, techniques, and tools, and 3) encourage and authorize regular foundational training for one person in each department. With the insertion of project management, the command and its personnel would be more efficient, task-oriented, and aligned.Civilian, Department of the NavyApproved for public release. Distribution is unlimited