Approaching the ERP Project Cost Estimation Problem: an Experiment

This poster reports on a solution to ERP project cost estimation and on results from its first experimental application

Taming the ‘trolls’ : major public projects in the making

Major projects are not yet sufficiently understood, and practices in project governance and project management do not yet reflect the current state of knowledge of large, complex projects. In an attempt to understand the reasons, the authors therefore investigated the latest relevant findings documented in three countries: the UK, Norway, and the Netherlands. Their examination of the effect of implementing governance frameworks for public projects in these countries indicates that efforts to improve major projects are giving rewards: Even if complex public projects, the ‘trolls’, become more challenging, efforts to ‘tame’ them are improving. The results of the study show that project planning has improved and cost overruns are reduced. However, recent observations indicate that the effect may wear off remarkably quickly. Hence, the need for continuous improvement and change is prominent. There are fundamental limitations in the use of formal systems as they cannot detect all problems and there are limitations to humans' ability in terms of optimism bias that cannot be eliminated

Double Whammy - How ICT Projects are Fooled by Randomness and Screwed by Political Intent

The cost-benefit analysis formulates the holy trinity of objectives of project management - cost, schedule, and benefits. As our previous research has shown, ICT projects deviate from their initial cost estimate by more than 10% in 8 out of 10 cases. Academic research has argued that Optimism Bias and Black Swan Blindness cause forecasts to fall short of actual costs. Firstly, optimism bias has been linked to effects of deception and delusion, which is caused by taking the inside-view and ignoring distributional information when making decisions. Secondly, we argued before that Black Swan Blindness makes decision-makers ignore outlying events even if decisions and judgements are based on the outside view. Using a sample of 1,471 ICT projects with a total value of USD 241 billion - we answer the question: Can we show the different effects of Normal Performance, Delusion, and Deception? We calculated the cumulative distribution function (CDF) of (actual-forecast)/forecast. Our results show that the CDF changes at two tipping points - the first one transforms an exponential function into a Gaussian bell curve. The second tipping point transforms the bell curve into a power law distribution with the power of 2. We argue that these results show that project performance up to the first tipping point is politically motivated and project performance above the second tipping point indicates that project managers and decision-makers are fooled by random outliers, because they are blind to thick tails. We then show that Black Swan ICT projects are a significant source of uncertainty to an organisation and that management needs to be aware of

Owner challenges on major projects: The case of UK government

Many studies agree that owner organisations are important for successful project organising, but they tend to focus on particular aspects of project organising rather than providing a holistic analysis of owners as organisations. Our objective is to collect evidence of the full range of challenges public sector owners face in managing their major projects. After reviewing the literature on owner organisations, we carry out a case survey of 26 major projects to identify the principal challenges using a content analysis of UK National Audit Office Value for Money reports. Our original contribution is that the findings provide the first comprehensive picture of the full range of challenges of project organising faced by owner organisations. These findings push us theoretically to extend the scope of research in project organising to identify an extended core set of dynamic capabilities for project owner organisations to address these challenges

Managing uncertainty:financial, actuarial and statistical modelling.

present value; Value; Actuarial;

Costs, Benefits and Value Distribution – Ingredients for Successful Cross-Organizational ES Business Cases

This paper introduces my PhD research project on developing guidelines for creating successful business cases for Enterprise System implementations in network settings. Three important aspects that were found to be important in such business cases are: the costs, benefits and the value distribution within a network. Each of the three aspects is addressed in this paper and the relationships between them are pointed out. A research model is presented showing how all three aspects contribute to the main goal of defining successful business case guidelines

Decision support for firm performance by real options analytics

This paper develops a real options decision support tool for raising the performance of the firm. It shows how entrepreneurs can use our intuitive tool quickly to assess the nature and type of action required for improved performance. This exploits our estimated econometric relationship between precipitators of entrepreneurial opportunities, time until exercise, and firm performance. Our 3D chromaticity plots show how staging investments, investment time, and firm performance support entrepreneurial decisions to embed, or to expedite, investments. Speedy entrepreneurial action is securely supported with this tool, without expertise in econometric estimation or in formulae for real options valuation

Export diversification and resource-based industrialization: the case of natural gas

For resource-rich economies, primary commodity specialization has often been considered to be detrimental to growth. Accordingly, export diversification policies centered on resource-based industries have long been advocated as effective ways to moderate the large variability of export revenues. This paper discusses the applicability of a mean-variance portfolio approach to design these strategies and proposes some modifications aimed at capturing the key features of resource processing industries (presence of scale economies and investment lumpiness). These modifications help make the approach more plausible for use in resource-rich countries. An application to the case of natural gas is then discussed using data obtained from Monte Carlo simulations of a calibrated empirical model. Lastly, the proposed framework is put to work to evaluate the performances of the diversification strategies implemented in a set of nine gas-rich economies. These results are then used to formulate some policy recommendations

Issues in front-end decision-making on projects

The importance of the front-end decision-making phase in projects is being increasingly recognized - the need to do the right project is on a par with doing the project right. This area is underrepresented in the literature, but there are a number of key themes that run throughout, identifying key issues or difficulties during this stage. This article looks at some of these themes and includes: the need for alignment between organizational strategy and the project concept; dealing with complexity, in particular the systemicity and interrelatedness within project decisions; consideration of the ambiguity implicit in all major projects; taking into account psychological and political biases within estimation of benefits and costs; consideration of the social geography and politics within decision-making groups; and preparation for the turbulence within the project environment, including the maintenance of strategic alignment

An Assessment of PIER Electric Grid Research 2003-2014 White Paper

This white paper describes the circumstances in California around the turn of the 21st century that led the California Energy Commission (CEC) to direct additional Public Interest Energy Research funds to address critical electric grid issues, especially those arising from integrating high penetrations of variable renewable generation with the electric grid. It contains an assessment of the beneficial science and technology advances of the resultant portfolio of electric grid research projects administered under the direction of the CEC by a competitively selected contractor, the University of California’s California Institute for Energy and the Environment, from 2003-2014