Guidelines to Improve the Material Cost Change Forecasting Process in Projects
Silpo, Tiia (2023)
2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202305108922
https://urn.fi/URN:NBN:fi:amk-202305108922
Tiivistelmä
In the past years, the unit of the case company that is responsible for delivering the largest projects has suffered unexpected changes in its financial results due to rapid material cost changes. Due to the long lead time of these projects, there could be a significant change in cost between the tender and delivery. There seems to be no clear process for forecasting project material cost changes. The objective of this study is to create guidelines on how to improve the material cost change forecasting process for projects.
The research approach of the study is design research, and it is divided into four stages. The first stage focused on identifying the strengths and weaknesses of the current forecasting process by interviewing the stakeholders involved with the process. The findings from the current state analysis were categorised under three main themes: data processing, forecasting models, and accuracy evaluation. These themes were used in the second stage to collect ideas and best practises from the literature for improving the weaknesses under each theme. Ideas from the literature were summarised as a conceptual framework, which was then used as the basis for co-creation workshops in stage 3. The proposals received in stage 3 workshops were summarised as an initial proposal of guidelines, and they were presented in the fourth stage to the unit management for feedback. Based on the feedback received from the management validation, the initial guidelines were adjusted to become the final guidelines.
The outcome of this study, the final guidelines on how to improve material cost change forecasting for projects, are generated from the summary of proposals and transformed to the operative level using the existing project framework process. It includes a comprehensive set of recommended actions for stakeholders involved to perform in each project framework phase. Following these recommended actions provides an improved forecast for the project result and, therefore, improved visibility for the financial result of the unit to the unit management.
The research approach of the study is design research, and it is divided into four stages. The first stage focused on identifying the strengths and weaknesses of the current forecasting process by interviewing the stakeholders involved with the process. The findings from the current state analysis were categorised under three main themes: data processing, forecasting models, and accuracy evaluation. These themes were used in the second stage to collect ideas and best practises from the literature for improving the weaknesses under each theme. Ideas from the literature were summarised as a conceptual framework, which was then used as the basis for co-creation workshops in stage 3. The proposals received in stage 3 workshops were summarised as an initial proposal of guidelines, and they were presented in the fourth stage to the unit management for feedback. Based on the feedback received from the management validation, the initial guidelines were adjusted to become the final guidelines.
The outcome of this study, the final guidelines on how to improve material cost change forecasting for projects, are generated from the summary of proposals and transformed to the operative level using the existing project framework process. It includes a comprehensive set of recommended actions for stakeholders involved to perform in each project framework phase. Following these recommended actions provides an improved forecast for the project result and, therefore, improved visibility for the financial result of the unit to the unit management.