Let's Stop Behaving Like Ostriches

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Let's Stop Behaving Like Ostriches
Innocent Kudu, Project Manager, Ghana

Most funds controllers for projects in developing countries refuse to accept projections for final cost by making estimates for price fluctuations. The result is that projects with durations of about a year or more end up mostly over budget

With most developing economies not being strong and stable, prices tend to rise fairly rapidly. Therefore in order to have an accurate estimate for project costs, estimators need to make projections for price fluctuations over which no one has control. My experience has been that most finance people or accountants and decision makers refuse to accept these projections and insist on the cost of the project as estimated at prevailing prices as the budget. This situation has forced some professionals to present estimates without any allowance for price fluctuation because in a lot of cases clients might consider the costs too high and therefore not start a project at all. The effect is projects get started which are doomed to overrun budgets right from the start and the finance/ accounts people hope that all will end well as far as costs are concerned. To me this is 'ostrich' behaviour since there exists tons of evidence that price stability is still a dream to be achieved in the developing economies. So let us get our clients to understand the price dynamics and make better budgets for projects by including the necessary allowances for price fluctuations.

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