Megaproject Management: Lessons on Risk and Project Management from the Big Dig

Chapter 7

Cost History

Murphy's Law, enhanced: “Anything that can go wrong will go wrong…at the most inopportune time…and with the most damaging results.” And from Murphy's more realistic relative comes O'Toole's Law: “Murphy was an optimist.”

Introduction

The characteristics of megaprojects are unique, involving complex technology and numerous uncertainties, diverse stakeholder management, abundant claims and changes, political realities, and significant public concerns. Therefore, megaprojects require specialized knowledge of cost estimation and cost estimation management, which are critical to the project's success. Training in such specialties often comes after major problems have arisen, when it is far too late to be effective.

The Big Dig, as with most megaprojects, is well known for its numerous cost escalations and its rapidly increasing budget, with a final cost of approximately $14.8 billion. This chapter breaks down the project's cost elements and explains the reality behind them.

Megaproject Cost Estimation Research

On admitting program management failure I would say that what we've gotten for a half billion dollars is an unpronounceable acronym [DIMHRS].

—Robert Gates, 22nd U.S. secretary of defense

The preceding quote from former U.S. defense secretary Robert Gates highlights the impact of the massive failure of a major government program. The Defense Integrated Military Human Resources System (DIMHRS) was an enterprise program within the U.S. Department of Defense ...