This paper reviews over 50 years of empirical cost estimate accuracy research andcompares this reality to common but unrealistic management expectations. The empirically-basedaccuracy research of John Hackney, Edward Merrow, Bent Flyvbjerg and others on large projects inthe process industries is summarized. The paper then highlights risk analysis methods documentedin recent AACE Recommended Practices that yield outputs based upon and comparable toempirical reality. Tragically, many cost engineers are facilitating management’s collective andsometimes willful biases regarding accuracy by using flawed, unreliable risk analysis methods;those who use empirically valid practices face the fate of Cassandra. The paper is intended as afundamental reference on the topic of accuracy as well as a call for our profession to use reliablepractices and speak the truth to management. Attendees will gain an understanding of estimateaccuracy reality, the risks that drive it, management’s biases about it, and methods that analyzerisks and address the biases in a way that results in more realistic accuracy forecasts, bettercontingency estimates and more profitable investments.
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