Reduction lists as tool for cost control in public building projects

The purpose of this paper is to study the use of potential scope reductions in major construction projects for special-purpose buildings. Scope reductions may result in buildings that are less fit for purpose; this will be negative according to a facilities management perspective. The paper discuses to what extent this is the case. Potential reductions of project scope have been a tool for cost control of governmental investments in Norway since 2001.

The study is based on lists of possible reductions that were identified in the early phase of the projects. Information about the outcome of these possible reductions is collected from eleven public building projects.

In the studied projects, reduction lists were equivalent to 2.7 per cent of projects budgets, ranging from 0 to 9 per cent. Contingencies for these projects were 9.5 per cent on average, ranging from 5 to 13 per cent. The reduction lists were typically smaller than the contingencies’ lists. Seven of 11 studied projects had reduction lists established during the front-end phase. Only two projects implemented some of the reductions. These reductions were general reductions of the quality of spaces.

Empirical research results are based on Norwegian experiences. Results are compared to international practices. Future research can include comparisons between facilities projects and other types of investments.

The Norwegian reduction lists can be seen as a type of value engineering. The studied potential reductions are based on an unusually high degree of specification of the potential actions for cost control. International best practice is more concerned with general approaches. The practice of identifying specific potential reductions has little use as an active tool for controlling costs. General reduction options work better than specific reductions. The potential scope reductions do not appear to be a threat in a facilities management perspective.

This is the first study of how potential reductions have been used in public building projects. The findings are of interest related to cost control of major investments in facilities.