18 November 2016
On Thursday 17th November, the Advisian team in Hong Kong held a special event to discuss the many benefits Reference Class Forecasting (RCF) can bring to major projects. The invitation only event was attended by numerous industry players, and focused on how RCF can improve budgeting, scheduling accuracy, and overall risk transparency on large-scale infrastructure projects.
Speaking at the event was Professor Bent Flyvbjerg from Oxford University, England, who works in an exclusive partnership with Advisian to offer RCF advisory services to infrastructure projects throughout the Asia Pacific region. Professor Flyvbjerg explained to those at the event, that all too often mega-projects encounter issues because project developers are too optimistic in their forecasts, usually due to overconfidence and an inability to understand all possible outcomes. This in turn can lead developers to underestimate costs, completion times, and risks, and overestimate the benefits of those same actions; a condition known as ‘optimism bias’.
RCF helps to de-risk projects by factoring in ‘unknown unknowns’, essentially removing optimism bias from project budget and schedule forecasts. It is an incredibly useful tool for project owners, developers and portfolio owners, as it works to provide greater accuracy by establishing forecasts that are based on the actual performance of a reference class of comparable projects.
Professor Flyvbjerg provided examples where RCF had helped get projects back on schedule and budget, including the Hong Kong Express Rail Link, which ended up almost two years behind its original schedule. A number of those in attendance said they could definitely see the benefits of RCF, particularly in a country like Hong Kong, where if infrastructure projects have cost overruns or delays, the Government has to declare this to the public and ask for extra funding.
For more information about RCF, please contact: WH Fok firstname.lastname@example.org