Performance of Risk-Based Estimating for Capital Projects

Risk-based approaches to capital project cost and schedule estimation have been adopted by many public agencies in recent years. Such techniques are intended to produce more reliable cost and schedule forecasts, enhance risk management, and improve project management and project delivery outcomes. However, limited research has been conducted in relation to the true effectiveness of such risk assessment programs. The impact of process change must be measured to appraise the value differential. Where a high-value proposition exists, it is the duty of public servants to disseminate the opportunity to the industry for the good of the public. This paper measures and compares the cost and schedule performance of 28 highway projects completed in Washington state between 2016 and 2019. Results from a group of projects that deployed a formal cost/schedule risk assessment with risk management (referred here as "CRA") are compared with a second group that did not. The data reveal that projects that completed a CRA were more likely to be completed with a total contract cost at or below the engineer's estimate, experience lower post-award cost and schedule growth, and experience more predictable outcomes than those projects that did not deploy a CRA. Additional observed benefits of a CRA process are also discussed.