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Ref No: 1988

Project Over Run

Introduction

Project Over Run: The assignment aims to highlight the reasons behind project cost over-run for two of the fifteen world’s biggest cost over-run projects. Two projects have been selected randomly out of those fifteen projects; only criteria used for short listing of projects for this report is availability of data related to projects. Two projects selected for this assignment are Dublin Port Tunnel built in Ireland and Sydney Opera House Construction.

Part – A

Project # 1: Dublin Port Tunnel in Ireland

The Dublin Port Tunnel was three years behind its planned schedule when it opened in the December 2006, and it also cost almost three times of the budgeted cost (261% of the budget). One of the core reasons behind the cost overrun of the project was due to the inflation rate in Irish economy as the project was not completed on the expected date and was delayed for three years, so the cost was also hit by inflation (Browne, 2007). However, as stated by The Irish Times (2005), even if we take inflation out of the equation, still there was at least 20% overrun in the cost of construction only which suggests there were other reasons behind the overrun of the project costs. However, it was further argued by contractor / builder that globally construction projects went over the cost by a significant amount during the same period. This was termed as one of the core reasons behind the project cost overrun from the builders’ point of view (The Irish Times, 2005).

In the view of Browne (2007), there were political reasons behind the delay of Dublin Port Tunnel as well. These political reasons are referred to as election scandals because it was firstly initiated with the estimate of €100 million in 1991 and was continuously delayed due to which the budgeted cost also changed over the time and was still over the budgeted cost when it was completed at the end of the year 2006. This is termed as an election scandal due to the fact that politicians were using the project as an agenda to get votes in their favour. Another reason behind the higher project cost as compared to budgeted cost is that all the events of the project were scheduled on a particular date. This means that every event had a proper start date planned, but not a single step started at the right time which also affected the costing and other activities pertaining to the project (The Irish Times, 2005).