Reference Class Forecasting for Hong Kong's Major Roadworks Projects

Reference Class Forecasting (RCF) is a method to remove optimism bias and strategic misrepresentation in cost and time to completion forecasting of projects and programmes. In September 2012, the Development Bureau of the Government of the Hong Kong Special Administrative Region commissioned a study to test the feasibility of using RCF in Hong Kong, the first of its kind in the Asia-Pacific region. This study comprises 25 roadwork projects. For these projects cost and time to completion forecast and actual data were retrieved. The analysis established and verified the statistical distribution of the forecasting accuracy at various stages of project development and benchmarked the projects against a sample of 863 similar projects. The study contributes to the understanding of how to improve forecasts by (1) de-biasing early estimates, (2) explicitly consider the risk appetite of decision makers, and (3) safeguard public funding allocation by balancing exceedance and under-use of project budgets