This case study outlines an analysis of the contingency associated with building a new gas-fired power station that was well into the delivery phase. The analysis drew attention to areas where additional effort was needed to ensure longer-term success. The case demonstrates the importance of addressing schedule uncertainty when estimating the capital costs of a project.
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Broadleaf Capital International is a specialist risk management consultancy. Our expert team brings decades of experience, leading methods and a deep understanding of uncertainty and how it can be understood and managed. We operate around the world.
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This case study outlines a quantitative analysis of the contingency required to address cost and schedule uncertainty associated with building a new gas-fired power station. The project was well into the delivery phase, when attention had shifted from planning and forecasting the work to day-to-day execution. The analysis was a means of reviewing whether the established cost and schedule targets remained realistic. It drew the team’s attention away from immediate pressures to identify areas where additional effort and attention were needed to ensure longer-term success. Among other things, the case demonstrates the importance of addressing schedule uncertainty when estimating the capital costs of a project.
This tutorial is drawn from Broadleaf’s long experience with project range analysis, also referred to as quantitative risk analysis or probabilistic risk analysis. It describes some key lessons about project range analysis, and what constitutes good practice. The material covers the analysis of both costs and schedules; the same principles apply to both.