Reference Class Forecasting for Hong Kong's Major Roadworks Projects

TL;DR

This paper evaluates the application of reference class forecasting to improve cost and duration estimates for Hong Kong's major roadworks, aiming to reduce optimism bias and enhance project planning accuracy.

Contribution

It introduces a regional feasibility study applying reference class forecasting to Hong Kong infrastructure projects, establishing statistical benchmarks and methods for bias reduction.

Findings

Forecast accuracy improves with stage-specific adjustments

Benchmarking against 863 projects enhances reliability

De-biasing early estimates reduces cost and schedule overruns

Abstract

Reference class forecasting is a method to remove optimism bias and strategic misrepresentation in infrastructure projects and programmes. In 2012 the Hong Kong government's Development Bureau commissioned a feasibility study on reference class forecasting in Hong Kong - a first for the Asia-Pacific region. This study involved 25 roadwork projects, for which forecast costs and durations were compared with actual outcomes. The analysis established and verified the statistical distribution of the forecast accuracy at various stages of project development, and benchmarked the projects against a sample of 863 similar projects. The study contributed to the understanding of how to improve forecasts by de-biasing early estimates, explicitly considering the risk appetite of decision makers, and safeguarding public funding allocation by balancing exceedance and under-use of project budgets.