IMPLEMENTATION OF THE REFERENCE CLASS FORECASTING METHOD FOR PROJECTS IMPLEMENTED IN A CHEMICAL INDUSTRY COMPANY

Renata Walczak and Tomasz Majchrzak

Acta Oeconomica Pragensia, 2018, vol. 2018, issue 1, 25-33

Abstract: The purpose of this article is to present an industrial application of the Reference Class Forecasting Method (RCFM) developed by Kahneman and Tversky for planning and decision-making under uncertainty. Project plans are usually prepared on the basis of detailed calculations and arrangements according to selected project management methodology. Undertakings that are planned in this manner often fail and do not achieve their goals. However, the American Planning Association recommends using the RCFM as an additional method. The article presents four groups of projects implemented by a chemical industry company over four years. A few of the projects were accomplished according to the plan in terms of triple constraint i.e. time, cost, and scope. The cost aspect was taken into account in the paper. During the study, the planned and implemented costs of 222 projects were analysed. On the basis of the distribution of cost overruns, according to RCFM, new patterns of planned costs were prepared. The Reference Class Forecasting Method, which was effective for large homogeneous projects turned out to be completely useless for various projects implemented by the chemical company.

Keywords: risk management; quantitative methods & models; technology management; Reference Class Forecasting (search for similar items in EconPapers)
JEL-codes: D81 G32 (search for similar items in EconPapers)
Date: 2018
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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DOI: 10.18267/j.aop.593

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