Question

What is the relationship between phases of the project life cycle and cost escalation?

Answer 1

There is a direct relationship between the project life cycle phase and the cost escalation. As the project progresses, the cost to identify and correct errors increase exponentially. There are two categories that lead to cost escalation – cost of identifying the errors and the associated cost of correction. According to some studies, if errors are identified early during the requirements phase, the cost of fixing the errors is 3 to 8 times. In the manufacturing or implementation stage, it is 21 to 78 times, and at the operating stage the cost for fixing errors can range from 29 to more than 1500 times.