Lessons learned from CBD and South East light rail project (Transport

for NSW).

1. Inadequate planning

Planning plays such an important role in infrastructure project. An proper project plan should
have been carefully prepared and approved to prevent the uncertainty in scope, mispricing
and increase bid price and ongoing increase in cost.

a. Independent assurance
Employing independent assurance review for planning should have helped TfNSW discover
hidden and potential risk that had been missed. Even though the NSW strengthened the
assurance process from 2015, having independent review from early start would improve the
cost estimate result, project timelines, project governance, which then would reduce the
sequent scope creep and omission in cost estimate

b. Scope creep
The uncertainty in setting project scope led to the increase in cost and benefit, bidding price
and the quality of tender process due to the influence of bidders. Project scope should have
been studied, consulted and set firmly from the start so that project manager can clearly
define what included in projects and what excluded, and to go through every requests for
changes and examine their effects on the original scope, cost and benefit of the project. As a
result, project cost would have been calculated more accurately, less pressure put on project
timeline, improve communication with project teams, public and stakeholders.

2. Cost estimating

Cost estimate should have been explicitly estimated for the light rail project before it was
approved at the first stage and periodically reviewed throughout the project. TfNSW
estimated total capital cost of the project with roughly $1.555 billions in 2013 and
experienced 5 times changes by 2016. The reason behind was said to be mispricing and
omission, which led to the drop in cost-to-benefit ratio from 2.4 to 1.4. This could be prevent
by using different methods of estimations for comparison including peer review, using third
party estimate before approving, and periodically reviews and adjustment for more accurate
cost estimate.
Challenges in transferring lessons learned to future projects

1. Project planning

a. Time consuming

An independent assurance review is said to be sufficient in ensuring process sequences,

functional integration of project products, improving project decision as well as controlling
risk (National Research Council, 2002). However, in order to employ independent assurance
review, it is necessary for project management to conduct clear goals and scope for the
project; early review cadence, health chart and escalation plan are also required. It will cost
good amount of time to prepare all process and document for the review. In addition, more
time is required for auditing and approval from the independent parties, which may put more
pressure on project that has tight schedule.

b. Challenging in managing uncertainty scope change

For big infrastructure project, it is challenging and unrealistic to avoid modification in scope .
There will be demanding requests from customers, new attractive proposals from bidders
and the pressure from time frame and tight budget that leads to the change in scope. Scope
creep is inevitable and it is unrealistic to prevent any scope change in any project, especially
infrastructure projects. It takes project management to clearly understand the scope and
communicate it to project members.

2. Cost estimating

a. Unavailable of data
For most new infrastructure project, historical data is unavailable to count on. Due to the
differences in planning, implementing times, the technologies used, pricing for material,
wages, salary, public relation cost will changes and affect significantly on project cost. Using
historical data or comparing cost with completed project may not be sufficient methods to
estimate cost for new project. It may lead to serious mispricing and omission in calculate
project cost without using other methods and techniques for evaluation.

b. The complexity and uniqueness of the project

Due to the complexity and the uniqueness of each project, it is impossible to apply the same
method of cost estimate for every project (Kujala, 2014). Complex project with longer
duration requires more effort to estimate and follow cost changes due to the inflation, pricing
and other effects from other parties. As a result, the wider the project scope, the more
challenging the cost estimating process get. Moreover, public own project is claimed to have
more chance of misleading cost escalation (Flyvbjerg, 2007)

c. Human resource

The lack of qualified professionals account for large proportion why project cost estimate
fails in early stage (Al-Kharashi, 2009). It takes experienced and qualified professionals to
estimate cost for big projects that are complex and have long durations. The lack of those
professionals in project team affect the quality of cost estimate at the planning stage as team
may not aware of all the possible costs and events that may influence costs. Thus, project
costs have to be recalculated more frequently during the projects than it should be and there
are more chance for mispricing and omission for cost estimate.

Suggestions to facilitate transferring lessons learned to future projects.

1. Project planning

a. Time consuming

Although independent assurance review cost more time and effort in preparing and maintain,
it is critical for project managers to employ such assurance to ensure the quality of cost
estimate, project sequences, resources, as well as risk management. Managers need to
take independent assurance as a critical part of the project from start to set time for it, which
then help to prevent many unfavourable events that could have been noticed by independent
party.

b. Preventing scope creep

Scope plays an important role identify the project objectives, performance outcomes, key
constraints and assumption (Commonwealth of Australia, 2017). Suggestions are made by
Kuntal Thakore (2010) in order to avoid or minimize scope creep. It is necessary to involve
end users of the project and all related stakeholders early in the project to gather all
requirements and set a decent project scope from initial stages. As a results, project
managers can have clear line of what include and not include in scope. Moreover, a change
control board is suggested to have in infrastructure projects team to assess the requests and
ensure original scope is assured. Lastly, in extreme case, managers are suggested to stop
the project to properly add new requirement to scope rather than tackle them on.
 2. Cost estimating

a. Carefully preparing for cost estimate

Data to be used for cost estimate is very important in making project cost estimate. Historical
data may be irrelevant for infrastructure projects but it will give a quite proper checklist of
what costs must be calculated in doing cost estimate. Moreover, market pricing of material,
labour cost and other costs must be studied carefully and be aware for any changes during
the project duration. By carefully prepare for cost estimate, it is more efficient to choose cost
estimate methodologies and techniques which has a positive relationship with level of
accuracy of the estimation (Simion-Melinte, 2016)

b. Use different cost estimate methods for evaluation

It is necessary for a project team to have qualified professionals to calculate and follow cost
estimate using different methods, techniques and tools to increase the accuracy of cost
estimate. It is undeniable that new projects is challenging to estimate. By using different way
of calculating project cost, project managers can see the advantages and disadvantages of
each way. Comparing those results, moreover, gives a more credible cost estimate.

c. Independent outside view before approvals

Outside view is suggested to produce more realistic cost estimate with equal level of skill
and using same method (Flyvbjerg, 2012). This is due to the fact that outside view is more
capable of prevent bias, emotions and confusion in cost. Even though it is more time
consuming and may be costly, it is believed to produce more accurate cost estimate. Future
project should use outside view in estimating cost for better comparison of results, avoiding
cost mispricing and omission.

Reference
Al-Kharashi, Adel and Skitmore, Marktin (2009). Causes of delays in Saudi Arabian public
sector construction project. Construction Management and Economics, 27(1). Pp. 3-23
Commonwealth of Australia (2017). Guidance Note 1: Project scope. Retrieved from
http://investment.infrastructure.gov.au/publications/administration/pdf/Guidance_Note_1_Pro
ject_Scope.pdf

Flyvbjerg, B (2012). Quality control and due diligence in project management: getting
decisions right by taking the outside view. International Journal of Project management, 31
(5). Pp. 760-774

Flyvbjerg. B, Holm. M.S, Buhl.S (2007). Underestimating costs in public works projects:
error or lie?

Kujala, Jaakko, Brady, Tim and Putila (2014). Challenges of cost management in complex
project. International journal of business and management.

Kuntal Thakore (2010). How should the project managers deal with scope creep. Retrieved
from https://www.projectsmart.co.uk/how-should-the-project-manager-deal-with-scope-
creep.php

National Research Council (2002). Review procedures for Water resources project planning.
Retrieved from https://doi.org/10.17226/10468.

Simion-Melinte. C (2016). Factors influencing the choice of cost estimates types and the
accuracy of estimates for construction projects.