A review on appropriate tool to predict profitability of building projects using established significant cash flow factors

Abstract

The vast sums of money involved in megaprojects, and the perceived lack of public benefit, create controversy. Flyvberg’ s iron law asserts that megaprojects are over budget, over time, under benefits, over and over again (Flyvberg, 2018). More recent research suggests that this focus on cost overruns is based on highly misleading data (Love & Ahiaga-Dagbui, 2017). This research seeks to examine live megaprojects and examine Flyvberg’s theories in practice, through an investigation of current megaprojects in the Middle East. The research provides three case studies for two recently completed and one on-going megaproject, to examine these claims further. The research questions whether the right comparisons are made between the initial offerings and final product, through consultation with professionals. Based on the findings, it is suggested that an increase of over 100% of the Contract price, may not constitute an over-budget megaproject. Professional Cost Consultants in the built environment can provide greater insight into the complexity that adds cost in the transitions from initial to final costs for megaprojects, although the validity of this insight may be reduced by a lack of distance from or overview of the megaproject. This paper investigates some of the familiar sources of megaproject cost overrun and considers the findings of Cost Consultants engaged in monitoring megaprojects in the state of Qatar. Time and Cost considerations are just two of the characteristics evident in megaprojects. This research suggests that reporting of time and cost overruns is frequently based on limited, misunderstood or misreported data, and that in order to provide higher fidelity, such ‘headline claims’ need to be careful considered in the context of the original project scope. This paper recognises that cost is just one element of a megaproject, and that megaprojects warrant more holistic considerations including acknowledgement of other significant characteristics such as their embodiment of large components of risk, political influences, organisational pressures and management complexitie