W12.0 – Ahmed AL-Abri- Root cause Analysis of Low Cost Estimate


1. Problem Definition
Experts Team members have been selected to study the root caused low estimates for the cost of the projects.

2. Identify the Feasible Alternative
The team had determined the major problems which caused the low cost estimation and they are as following:-
• Inaccuracy of cost estimate.
• Unrealistic basis of drawing and standard.
• Variation orders.
• Unrealistic plan.
• Poor project management
• Insufficient use of material and resources
3. Development of the Outcome for Alternative
To identify root cause analysis the team found, the analysis should be established by analyzing each of the causes of the wrong estimate and by keep asking why until getting the main reason for causing the low estimate.

Figure -1-Main reason of low Estimates of costs

Figure-1

4. Selection Criteria
The team adopted the root cause analysis by using 5Whys technique until they get to the root of the problem.
5. Analysis and Comparison of the Alternative
The below figure is the implementation of Route cause analysis by using 5 whys in order to get the main reason of low estimates of the cost for the projects.

Figure -2-Implementations of 5 Whys
Figure-2

6. Selection of the Preferred Alternative
From the above figure-2 it is very obvious that the unqualified technical team is the main cause for low estimates.
Selection expert technical team will be resulted to the following:-
• Writing accurate scope of work.
• Estimate the cost of the project precisely.
• Selection the best contactor to execute the project.
• Selection the right management team to control the project.
• The delays in the works and the variation orders will be limited.
• The drawing and the specification will be designed and written accurately.
• The schedule of the projects will be planned realistically
• The material and recourses will be used in proper way.
7. Performance Monitoring and the Post Evaluation of Result
The selection the technical team who prepared the scope of the project is the factor number one to avoid the cost overrun but this is not always the main factor it depends on the projects and the root cause analysis.
Root cause analysis by using 5whys is a good technique to be implemented but it is very important that the answers come from people who have hands-on experience of the process being examined. It is remarkably simple: when a problem occurs, you uncover its nature and source by asking “why” no fewer than five times.
8. Reference:

1. Asq. (n.d.). Root Cause Analysis Processes & Methods – ASQ. Retrieved August 7, 2014, from http://asq.org/learn-about-quality/root-cause-analysis/overview/conducting-root-cause.html
2. Markgraf, B. E., & Media, D. E. (2011, April 5). What Are Reasons for Cost Overruns in Project Management? | Chron.com. Retrieved August 7, 2014, from http://smallbusiness.chron.com/reasons-cost-overruns-project-management-63225.html
3. Mindtools. (n.d.). Root Cause Analysis – Problem Solving from MindTools.com. Retrieved August 7, 2014, from http://www.mindtools.com/pages/article/newTMC_80.htm
4. Thornberry, S. U. (2002, June 19). Prevent project cost overruns with these four essential processes – TechRepublic. Retrieved August 7, 2014, from http://www.techrepublic.com/article/prevent-project-cost-overruns-with-these-four-essential-processes/

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