Reference class forecasting - Revision history

Samah: /* Abstract */

2021-02-28T21:34:14Z

Abstract

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	==Abstract ==		==Abstract ==
	The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope.<ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time and within the estimated budget is a challenging aspect of project management.		The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope.<ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time and within the estimated budget is a challenging aspect of project management.
	On that matter, a research was conducted by the Danish professor Bent Flyvbjerg to study the reasons for ~~the delayed~~ time ~~of completion and the exceeding the budget of~~ megaprojects. Flyvbjerg proposed the so-called Reference Class Forecasting to overcome these challenges. Reference class forecasting (RCF) is a method that studies the overall view of a certain project by forecasting similar projects rather than focusing solely on the considered project. <ref name="Flyvbjerg 2005"/> This method assists managers to make decisions under uncertainties by assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The big idea which is the RCF technique and its three-step approach will be presented. That will be followed by a case study to get a better understanding of the RCF application. Lastly, the problem of using the RCF method will be presented.		On that matter, a research was conducted by the Danish professor Bent Flyvbjerg to study the reasons for cost and time overrun in megaprojects. Flyvbjerg proposed the so-called Reference Class Forecasting to overcome these challenges. Reference class forecasting (RCF) is a method that studies the overall view of a certain project by forecasting similar projects rather than focusing solely on the considered project. <ref name="Flyvbjerg 2005"/> This method assists managers to make decisions under uncertainties by assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The big idea which is the RCF technique and its three-step approach will be presented. That will be followed by a case study to get a better understanding of the RCF application. Lastly, the problem of using the RCF method will be presented.

	== Root causes of poor performance ==		== Root causes of poor performance ==

Samah: /* Abstract */

2021-02-28T21:29:28Z

Abstract

← Older revision		Revision as of 21:29, 28 February 2021
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	==Abstract ==		==Abstract ==
	The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope. <ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time ~~following a planned framework~~ and budget is a challenging aspect of project management. ~~To overcome these challenges~~, the Danish professor Bent Flyvbjerg ~~initiated a research~~ to study the ~~overrun cost~~ of ~~major projects~~. Flyvbjerg proposed ~~a solution for these challenges which is~~ called Reference Class Forecasting. ~~The~~ Reference class forecasting (RCF) is a method that studies the overall view of certain ~~projects~~ by forecasting similar projects rather than focusing solely on the considered project~~. This method allows a project manager to avoid errors by basing the forecast on similar projects~~. <ref name="Flyvbjerg 2005"/> ~~It also~~ assists to ~~take~~ decisions under uncertainties ~~through~~ assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The RCF technique will be presented ~~and that~~ will be followed by ~~clear guidance on how to use the method. In the application part,~~ a case study ~~will be used for the seek of highlighting a possible framework~~ to ~~apply such~~ a ~~method~~. Lastly, the problem of using the RCF method will be presented ~~so the readers will be aware of the pros and cons of using the reference class forecasting technique~~.		The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope.<ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time and within the estimated budget is a challenging aspect of project management.
			On that matter, a research was conducted by the Danish professor Bent Flyvbjerg to study the reasons for the delayed time of completion and the exceeding the budget of megaprojects. Flyvbjerg proposed the so-called Reference Class Forecasting to overcome these challenges. Reference class forecasting (RCF) is a method that studies the overall view of a certain project by forecasting similar projects rather than focusing solely on the considered project. <ref name="Flyvbjerg 2005"/> This method assists managers to make decisions under uncertainties by assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The big idea which is the RCF technique and its three-step approach will be presented. That will be followed by a case study to get a better understanding of the RCF application. Lastly, the problem of using the RCF method will be presented.

	== Root causes of poor performance ==		== Root causes of poor performance ==

Samah: /* Three steps approach */

2021-02-28T20:58:07Z

Three steps approach

← Older revision		Revision as of 20:58, 28 February 2021
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	* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution. The empirical data is then utilized to establish the required optimism bias uplift. The uplift corresponds to the acceptable risk of cost and time overrun. <ref name="Flyvbjerg 2005"/>		* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution. The empirical data is then utilized to establish the required optimism bias uplift. The uplift corresponds to the acceptable risk of cost and time overrun. <ref name="Flyvbjerg 2005"/>
	* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>		* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>

	~~After applying the three-step approach, the empirical data is then utilized to establish the required optimism bias uplift. The uplift corresponds to the acceptable risk of cost and time overrun.~~

	== Application==		== Application==

Samah: /* Refrence Class Forecasting */

2021-02-28T20:57:37Z

Refrence Class Forecasting

← Older revision		Revision as of 20:57, 28 February 2021
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	[[File:RCFM.png\|300px\|thumb\|right\|Figure 1, What reference class forecasting does, in statisticians' language.<ref name= "Flyvbjerg 2013"/>]]		[[File:RCFM.png\|300px\|thumb\|right\|Figure 1, What reference class forecasting does, in statisticians' language.<ref name= "Flyvbjerg 2013"/>]]
	Project managers should eliminate cognitive biases and reduce inaccuracy when making decisions, one method that is being used in infrastructure projects is Reference Class Forecasting. <ref name=" Chemical Industry" >"Walczak, R. and Majchrzak, T., 2018. Implementation of the Reference Class Forecasting Method for Projects Implemented in a Chemical Industry Company. Acta Oeconomica Pragensia. https://www.researchgate.net/publication/324337008_Implementation_of_the_Reference_Class_Forecasting_Method_for_Projects_Implemented_in_a_Chemical_Industry_Company" </ref> In this section, the RCF model will be explained followed by the three-steps implementation		Project managers should eliminate cognitive biases and reduce inaccuracy when making decisions, one method that is being used in infrastructure projects is Reference Class Forecasting. <ref name=" Chemical Industry" >"Walczak, R. and Majchrzak, T., 2018. Implementation of the Reference Class Forecasting Method for Projects Implemented in a Chemical Industry Company. Acta Oeconomica Pragensia. https://www.researchgate.net/publication/324337008_Implementation_of_the_Reference_Class_Forecasting_Method_for_Projects_Implemented_in_a_Chemical_Industry_Company" </ref> In this section, the RCF model will be explained followed by the three-steps implementation
	===~~Refrence~~ Class Forecasting===		===Reference Class Forecasting===
	The reference class forecast provided an external point of view and act as an enabler of better planning based on historical data of projects that have similar attributes. By doing so, the project managers can reduce biases that are caused due to assessing available information "inside views" and neglecting unknown unknowns or other considerations "outside views".<ref name="Flyvbjerg 2005"/> RCFM is recommended by the American Planning Association which “encourages planners to use reference class forecasting in addition to traditional methods as a way to improve accuracy“. <ref name="Flyvbjerg 2005">" Flyvbjerg, B., 2007. Policy and planning for large-infrastructure projects: problems, causes, cures. Environment and Planning B: planning and design. http://documents1.worldbank.org/curated/en/968761468141298118/pdf/wps3781.pdf"</ref> This method of enhancing decision-making in light of un-certainties has proved to be effective. It allows for adjustments to be made in the original cost-benefit analysis (CBA) so the plan includes margin errors. <ref name="sciencedirect hydroelectric"> "Awojobi, O. and Jenkins, G.P., 2016. Managing the cost overrun risks of hydroelectric dams: An application of reference class forecasting techniques. Renewable and Sustainable Energy Reviews. https://www.sciencedirect.com/science/article/pii/S1364032116301162/" </ref>		The reference class forecast provided an external point of view and act as an enabler of better planning based on historical data of projects that have similar attributes. By doing so, the project managers can reduce biases that are caused due to assessing available information "inside views" and neglecting unknown unknowns or other considerations "outside views".<ref name="Flyvbjerg 2005"/> RCFM is recommended by the American Planning Association which “encourages planners to use reference class forecasting in addition to traditional methods as a way to improve accuracy“. <ref name="Flyvbjerg 2005">" Flyvbjerg, B., 2007. Policy and planning for large-infrastructure projects: problems, causes, cures. Environment and Planning B: planning and design. http://documents1.worldbank.org/curated/en/968761468141298118/pdf/wps3781.pdf"</ref> This method of enhancing decision-making in light of un-certainties has proved to be effective. It allows for adjustments to be made in the original cost-benefit analysis (CBA) so the plan includes margin errors. <ref name="sciencedirect hydroelectric"> "Awojobi, O. and Jenkins, G.P., 2016. Managing the cost overrun risks of hydroelectric dams: An application of reference class forecasting techniques. Renewable and Sustainable Energy Reviews. https://www.sciencedirect.com/science/article/pii/S1364032116301162/" </ref>
	This method attempts to fit a certain event into a probability of distribution of comparable class reference. However, from a statistical perspective, the reference class means prediction higher than the ordinary forecast estimate as it can see in figure 1. Also, the reference class prediction spreads the estimate of the conventional forecast interval. The reference class distribution is indicated by the dotted curve while the project promoters’ forecast, indicated by the dashed curve. <ref name="Flyvbjerg 2013"/>		This method attempts to fit a certain event into a probability of distribution of comparable class reference. However, from a statistical perspective, the reference class means prediction higher than the ordinary forecast estimate as it can see in figure 1. Also, the reference class prediction spreads the estimate of the conventional forecast interval. The reference class distribution is indicated by the dotted curve while the project promoters’ forecast, indicated by the dashed curve. <ref name="Flyvbjerg 2013"/>

	=== Three steps approach ===		=== Three steps approach ===
	RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.		RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.

Samah: /* Big idea */

2021-02-28T20:57:09Z

Big idea

← Older revision		Revision as of 20:57, 28 February 2021
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	== Big idea ==		== Big idea ==
	[[File:RCFM.png\|300px\|thumb\|right\|Figure 1, What reference class forecasting does, in statisticians' language.<ref name= "Flyvbjerg 2013"/>]]		[[File:RCFM.png\|300px\|thumb\|right\|Figure 1, What reference class forecasting does, in statisticians' language.<ref name= "Flyvbjerg 2013"/>]]
	Project managers should eliminate cognitive biases and reduce inaccuracy when making decisions, one method that is being used in infrastructure projects is Reference Class ~~forecasting~~. <ref name=" Chemical Industry" >"Walczak, R. and Majchrzak, T., 2018. Implementation of the Reference Class Forecasting Method for Projects Implemented in a Chemical Industry Company. Acta Oeconomica Pragensia. https://www.researchgate.net/publication/324337008_Implementation_of_the_Reference_Class_Forecasting_Method_for_Projects_Implemented_in_a_Chemical_Industry_Company" </ref> The reference class forecast provided an external point of view and act as an enabler of better planning based on historical data of projects that have similar attributes. By doing so, the project managers can reduce biases that are caused due to assessing available information "inside views" and neglecting unknown unknowns or other considerations "outside views".<ref name="Flyvbjerg 2005"/> RCFM is recommended by the American Planning Association which “encourages planners to use reference class forecasting in addition to traditional methods as a way to improve accuracy“. <ref name="Flyvbjerg 2005">" Flyvbjerg, B., 2007. Policy and planning for large-infrastructure projects: problems, causes, cures. Environment and Planning B: planning and design. http://documents1.worldbank.org/curated/en/968761468141298118/pdf/wps3781.pdf"</ref> This method of enhancing decision-making in light of un-certainties has proved to be effective. It allows for adjustments to be made in the original cost-benefit analysis (CBA) so the plan includes margin errors. <ref name="sciencedirect hydroelectric"> "Awojobi, O. and Jenkins, G.P., 2016. Managing the cost overrun risks of hydroelectric dams: An application of reference class forecasting techniques. Renewable and Sustainable Energy Reviews. https://www.sciencedirect.com/science/article/pii/S1364032116301162/" </ref>		Project managers should eliminate cognitive biases and reduce inaccuracy when making decisions, one method that is being used in infrastructure projects is Reference Class Forecasting. <ref name=" Chemical Industry" >"Walczak, R. and Majchrzak, T., 2018. Implementation of the Reference Class Forecasting Method for Projects Implemented in a Chemical Industry Company. Acta Oeconomica Pragensia. https://www.researchgate.net/publication/324337008_Implementation_of_the_Reference_Class_Forecasting_Method_for_Projects_Implemented_in_a_Chemical_Industry_Company" </ref> In this section, the RCF model will be explained followed by the three-steps implementation
			===Refrence Class Forecasting===
			The reference class forecast provided an external point of view and act as an enabler of better planning based on historical data of projects that have similar attributes. By doing so, the project managers can reduce biases that are caused due to assessing available information "inside views" and neglecting unknown unknowns or other considerations "outside views".<ref name="Flyvbjerg 2005"/> RCFM is recommended by the American Planning Association which “encourages planners to use reference class forecasting in addition to traditional methods as a way to improve accuracy“. <ref name="Flyvbjerg 2005">" Flyvbjerg, B., 2007. Policy and planning for large-infrastructure projects: problems, causes, cures. Environment and Planning B: planning and design. http://documents1.worldbank.org/curated/en/968761468141298118/pdf/wps3781.pdf"</ref> This method of enhancing decision-making in light of un-certainties has proved to be effective. It allows for adjustments to be made in the original cost-benefit analysis (CBA) so the plan includes margin errors. <ref name="sciencedirect hydroelectric"> "Awojobi, O. and Jenkins, G.P., 2016. Managing the cost overrun risks of hydroelectric dams: An application of reference class forecasting techniques. Renewable and Sustainable Energy Reviews. https://www.sciencedirect.com/science/article/pii/S1364032116301162/" </ref>
	This method attempts to fit a certain event into a probability of distribution of comparable class reference. However, from a statistical perspective, the reference class means prediction higher than the ordinary forecast estimate as it can see in figure 1. Also, the reference class prediction spreads the estimate of the conventional forecast interval. The reference class distribution is indicated by the dotted curve while the project promoters’ forecast, indicated by the dashed curve. <ref name="Flyvbjerg 2013"/>		This method attempts to fit a certain event into a probability of distribution of comparable class reference. However, from a statistical perspective, the reference class means prediction higher than the ordinary forecast estimate as it can see in figure 1. Also, the reference class prediction spreads the estimate of the conventional forecast interval. The reference class distribution is indicated by the dotted curve while the project promoters’ forecast, indicated by the dashed curve. <ref name="Flyvbjerg 2013"/>
			=== Three steps approach ===
	RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.		RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.
	* Identify a reference class that has similar attributes to the project on hand. There is no role of thumbs when choosing a reference class. However, the reference class can not be narrow to get a reliable result if the categories were too small. The reference class can not be too wide either. Furthermore, the organization must also decide whether they want to create reference classes based on their projects within the programs or do they want to include reference classes from other organizations. <ref name="De-risking">"Pindy Bhullar, 2018, De-risking the programme portfolio with reference class forecasting. https://www.apm.org.uk/news/de-risking-the-programme-portfolio-with-reference-class-forecasting/"</ref>		* Identify a reference class that has similar attributes to the project on hand. There is no role of thumbs when choosing a reference class. However, the reference class can not be narrow to get a reliable result if the categories were too small. The reference class can not be too wide either. Furthermore, the organization must also decide whether they want to create reference classes based on their projects within the programs or do they want to include reference classes from other organizations. <ref name="De-risking">"Pindy Bhullar, 2018, De-risking the programme portfolio with reference class forecasting. https://www.apm.org.uk/news/de-risking-the-programme-portfolio-with-reference-class-forecasting/"</ref>

Samah: /* Big idea */

2021-02-28T20:04:01Z

Big idea

← Older revision		Revision as of 20:04, 28 February 2021
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	RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.		RCFM requires a large amount of work and should be implemented before initiating a project in order to get a unique opportunity on reflecting on the budget and planned duration. Implementing the RCFM requires a three-step approach, these steps are shown in figure 1 and explained thoroughly in the text below.
	* Identify a reference class that has similar attributes to the project on hand. There is no role of thumbs when choosing a reference class. However, the reference class can not be narrow to get a reliable result if the categories were too small. The reference class can not be too wide either. Furthermore, the organization must also decide whether they want to create reference classes based on their projects within the programs or do they want to include reference classes from other organizations. <ref name="De-risking">"Pindy Bhullar, 2018, De-risking the programme portfolio with reference class forecasting. https://www.apm.org.uk/news/de-risking-the-programme-portfolio-with-reference-class-forecasting/"</ref>		* Identify a reference class that has similar attributes to the project on hand. There is no role of thumbs when choosing a reference class. However, the reference class can not be narrow to get a reliable result if the categories were too small. The reference class can not be too wide either. Furthermore, the organization must also decide whether they want to create reference classes based on their projects within the programs or do they want to include reference classes from other organizations. <ref name="De-risking">"Pindy Bhullar, 2018, De-risking the programme portfolio with reference class forecasting. https://www.apm.org.uk/news/de-risking-the-programme-portfolio-with-reference-class-forecasting/"</ref>
	* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution		* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution. The empirical data is then utilized to establish the required optimism bias uplift. The uplift corresponds to the acceptable risk of cost and time overrun. <ref name="Flyvbjerg 2005"/>
	* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>		* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>

Samah: /* Big idea */

2021-02-28T20:02:48Z

Big idea

← Older revision		Revision as of 20:02, 28 February 2021
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	* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>		* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>

	After applying the three step approach		After applying the three-step approach, the empirical data is then utilized to establish the required optimism bias uplift. The uplift corresponds to the acceptable risk of cost and time overrun.

	== Application==		== Application==

Samah: /* Big idea */

2021-02-28T19:57:17Z

Big idea

← Older revision		Revision as of 19:57, 28 February 2021
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	* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution		* Determine a probability of distribution for the chosen reference classes. This requires trustful historical data from several projects within the reference class. The result of the probability distribution of the historical data will be used to estimate the level of uncertainty. From a statistical perspective, regression models are an essential tool in deriving the probability distribution
	* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>		* Comparing the project on hand with the reference class distribution in order to determine the desired outcome such as budget and project duration.<ref name="Flyvbjerg 2005"/>

			After applying the three step approach

	== Application==		== Application==

Samah: /* Abstract */

2021-02-28T19:27:44Z

Abstract

← Older revision		Revision as of 19:27, 28 February 2021
Line 1:		Line 1:
	==Abstract ==		==Abstract ==
	The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope. <ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time following a planned framework and budget is a challenging aspect of project management. To overcome these challenges, the Danish professor Bent Flyvbjerg initiated a research to study the overrun cost of major projects. Flyvbjerg proposed a solution for these challenges which is called Reference Class Forecasting. The Reference class forecasting is a method that studies the overall view of certain projects by forecasting similar projects rather than focusing solely on the considered project. This method allows a project manager to avoid errors by basing the forecast on similar projects. <ref name="Flyvbjerg 2005"/> It also assists to take decisions under uncertainties through assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The RCF technique will be presented and that will be followed by clear guidance on how to use the method. In the application part, a case study will be used for the seek of highlighting a possible framework to apply such a method. Lastly, the problem of using the RCF method will be presented so the readers will be aware of the pros and cons of using the reference class forecasting technique.		The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope. <ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time following a planned framework and budget is a challenging aspect of project management. To overcome these challenges, the Danish professor Bent Flyvbjerg initiated a research to study the overrun cost of major projects. Flyvbjerg proposed a solution for these challenges which is called Reference Class Forecasting. The Reference class forecasting (RCF) is a method that studies the overall view of certain projects by forecasting similar projects rather than focusing solely on the considered project. This method allows a project manager to avoid errors by basing the forecast on similar projects. <ref name="Flyvbjerg 2005"/> It also assists to take decisions under uncertainties through assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The RCF technique will be presented and that will be followed by clear guidance on how to use the method. In the application part, a case study will be used for the seek of highlighting a possible framework to apply such a method. Lastly, the problem of using the RCF method will be presented so the readers will be aware of the pros and cons of using the reference class forecasting technique.

	== Root causes of poor performance ==		== Root causes of poor performance ==

Samah: /* Abstract */

2021-02-28T19:21:58Z

Abstract

← Older revision		Revision as of 19:21, 28 February 2021
Line 1:		Line 1:
	==Abstract ==		==Abstract ==
	The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope. <ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time following a planned framework and budget is a challenging aspect of project management. To overcome these challenges, the Danish professor Bent Flyvbjerg initiated a research to study the overrun cost of major projects. Flyvbjerg proposed a solution for these challenges which is called Reference Class Forecasting. The Reference class forecasting is a method that studies the overall view of certain projects by forecasting similar projects rather than focusing solely on the considered project. This method allows a project manager to avoid errors by basing the forecast on similar projects. <ref name="Flyvbjerg 2005"/> It also assists to take decisions under uncertainties through assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular~~, the~~ RCF technique will be presented and that will be followed by clear guidance on how to use the method. In the application part, a case study will be used for the seek of highlighting a possible framework to apply such a method. Lastly, the problem of using the RCF method will be presented so the readers will be aware of the pros and cons of using the reference class forecasting technique.		The definition of project success according to the standard published by the project management institute is meeting customers' expectations without exceeding the desired requirement such as cost, duration, and scope. <ref name="PMBOK"> "Project Management Institute (PMI),2017, Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)" </ref> However, executing projects on time following a planned framework and budget is a challenging aspect of project management. To overcome these challenges, the Danish professor Bent Flyvbjerg initiated a research to study the overrun cost of major projects. Flyvbjerg proposed a solution for these challenges which is called Reference Class Forecasting. The Reference class forecasting is a method that studies the overall view of certain projects by forecasting similar projects rather than focusing solely on the considered project. This method allows a project manager to avoid errors by basing the forecast on similar projects. <ref name="Flyvbjerg 2005"/> It also assists to take decisions under uncertainties through assessing the risk of the planned project. <ref name="PMBOK"/> In this article, the root causes of the managerial problem will be presented based on statistical studies on project failures in terms of budget and time of completion, after highlighting the need for improvement in this particular. The RCF technique will be presented and that will be followed by clear guidance on how to use the method. In the application part, a case study will be used for the seek of highlighting a possible framework to apply such a method. Lastly, the problem of using the RCF method will be presented so the readers will be aware of the pros and cons of using the reference class forecasting technique.

	== Root causes of poor performance ==		== Root causes of poor performance ==