Risks Into the Budget

In June 2015, the federal reform commission on the construction of large projects presented its final report. It explained why such projects so often cost more than planned. Cost estimates neglect existing risks and are often well below the costs that can really be expected. The regular underestimation of costs and time is often politically motivated. Even where risks were assessed, they usually did not enter the budget approved for the project. A study it cited of 170 large projects found an average cost increase of 73 percent, although the report noted that the study was not representative. Its third recommendation is titled Risikomanagement und Erfassung von Risiken im Haushalt, risk management and recording risks in the budget. Risks should be named when funds are requested. Identifying and assessing them, and planning countermeasures, should be a condition for receiving money. Transport Minister Alexander Dobrindt summed it up: risk buffers and professional risk management make cost and time plans more reliable.

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