1. COST MANAGEMENT ANALYSIS Dr. Fereshteh Mafakheri
BURJ KHALIFA
COST MANAGEMENT ANALYSIS
CASE STUDY
Presented to
Dr. Fereshteh Mafakheri
TEAM MEMBERS
Ahmed Nour Uldin
Ali Reza Zadissa
Oluwaseye Ayobami
Osama Khan
Temitope Adetula

2. WHICH IS THE TALLEST BUILDING IN THE WORLD?

3. BURJ KHLAIFA @ 828M
It’s the

4. OUTLINE Introduction Facts and Figures Project Cost Management
Cost Evaluation & Analysis
Project Success or Failure
Lessons Learned
Conclusion

5. 1. INTRODUCTION
Burj Khalifa is the tallest building in the world located in Dubai
Designed to be a milestone of ingenuity, inspiration and achievement
It was planned by the Dubai government with the aim of becoming a hub for finance, trade and tourism in Middle East
It was designed by Skidmore, Owings and Merrill Architecture of Chicago
It was built by EMAAR Properties with total investments of USD 1.5 billion.
The primary contractor was Samsung C&T of South Korea

6. 2. FACTS AND FIGURES
At over 828 meters (2,717 feet) and more than 160 stories,
Burj Khalifa holds the following world records:
Tallest building in the world
Tallest free-standing structure in the world
Highest number of stories in the world
Highest occupied floor in the world
Highest outdoor observation deck in the world
Elevator with the longest travel distance in the world
Tallest service elevator in the world

7. 3. PROJECT COST MANAGEMENT
The initial planned costs of the project was $876 million dollars
The final cost, however, was approximately $1.5 billion dollars
$624 million dollars
difference between the initial planned and the final project cost
Cost overrun of 72 %

9. 3. PROJECT COST MANAGEMENT
Reasons for cost overruns
1. Changes in the final height
A change of design was responsible for the cost increase.
The Emaar property decided to change the final height of building: the final construction was 100 meters higher than the original design.
Thus, unexpected costs were incurred.
“EMAAR” decided to change the final height of building
Change in Scope, which means additional work
COST INCREASE

10. 3. PROJECT COST MANAGEMENT
Reasons for cost overruns
2. Changes in interior design planning
The Burj aimed at being the world's best building
Wished for the building to have the best facilities
Emaar made a contract with luxury hotel chain Armani
“Armani Hotels” requested a change in the interior design
Changes in the design of the lobby, and adding more luxurious fittings to the rooms
COST INCREASE

11. 3. PROJECT COST MANAGEMENT
Reasons for cost overruns
3. Downturn of the Global economy in 2008
A rise in prices of raw materials had gone up significantly
This was due to the downturn of the global economy in 2008
Downturn of the Global economy in 2008
A rise in price of raw materials
Price of iron had increased by 75% within a year. Other materials such as aluminum and cement also increased
Construction cost increased

12. 4. COST EVALUATION AND ANALYSIS
The project spent more money than initially planned
Due to the overrun of its budget
The project's earned value is decreased compare to initial plan and cost
The project's cost management did not perform well
WHAT WENT WRONG
WHAT WENT RIGHT
In one year just after finishing the project.
The net profit increased about 10 times.
The portion of revenue which came from external customers
Sales of residence also dramatically increased

13. this is not enough to assume that the project was a failure
5. PROJECT SUCCESS OR FAILURE
Standard measures: Scope, time, cost and quality
SCOPE
Did the project meet its initial main scope?
YES
COST
Was it finished within the the estimated budget? NO
TIME
Was it finished on time? NO
QUALITY
Did the project meet requirement of its stakeholders?
YES
Although the Burj Khalifa project spent more money and time that initially planned,
this is not enough to assume that the project was a failure

14. 5. PROJECT SUCCESS OR FAILURE
Other Performance indicators that should be considered
REVENUE
Does it create revenue?
YES
SOCIETY
Does it contribute to Dubai society?
YES
Consequently, in a number of respects, overall outcomes of Burj Khalifa met its objectives. Hence, the project can be regarded as a successfully completed project.

16. 6. LESSONS LEARNED
Success of large scale projects should not be measured simply
Such as being finished within the estimated budget or on time.
It is crucial to evaluate project success not by cost only
Also by the kind of benefits brought to its stakeholders
How it contributes to the society
Repeated changes of plan eventually increase costs and risk
Maximize the effectiveness of the project by thoroughly reviewing the plan
Also by involving the stakeholders at every stage of the project
We believe high estimate was implemented

17. 7. CONCLUSION
Success factors of Burj Khalifa reside within the value created
The added value to the stakeholders with interests in the project
Its success in its record-breaking fame as the tallest building in the world
Bringing attention to Dubai and potential influx of dollars
This is via tourism, real estate and investment

18. BURJ KHALIFA MAJOR STAKEHOLDERS