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CitationLove PED, Ahiaga-Dagbui DD and Irani Z (2016) Cost overruns in transportation infrastructure projects: Sowing the seeds for a probabilistic theory of causation. Transportation Research Part A: Policy and Practice. 92: 184-194. RightsAbstract: Understanding the cause of cost overruns in transportation infrastructure projects has been a topic that has 4 received considerable attention from academics and the popular press. Despite studies providing the essential building 5 blocks and frameworks for cost overrun mitigation and containment, the problem still remains a pervasive issue for 6 Governments worldwide. The interdependency that exists between 'causes' that lead to cost overruns materializing 7 have largely been ignored when considering the likelihood and impact of their occurrence. The vast majority of the 8 cost overrun literature has tended to adopt a deterministic approach in examining the occurrence of the phenomenon; 9 in this paper a shift towards the adoption of pluralistic probabilistic approach to cost overrun causation is proposed. 10The establishment of probabilistic theory incorporates the ability to consider the interdependencies of causes so to 11 provide Governments with a holistic understanding of the uncertainties and risks that may derail the delivery and 12 increase the cost of transportation infrastructure projects. This will further assist in the design of effective mitigation 13 and containment strategies that will ensure future transportation infrastructure projects meet their expected costs as 14 well as the need of taxpayers. 15 16 17 18 20growing needs of an increasing population, as well as to sustain a competitive advantage in the 21 global marketplace. For an economy to position itself to capitalize on growth and increased 22 investment due to a burgeoning population and increasing international demand for goods and 23 services, greater investment in transportation infrastructure is needed. In Australia, for example, 24it has been forecasted that over the next two decades the number of trucks on its roads will increase 25 by 50%, rail freight by two-thirds and shipping containers through ports will double; international 26 and domestic travel through capital city airports will double; and technology will play a significant 27 role in meeting the needs of transport, while also improving safety (Australian Federal 28 Government, 2014a). Yet history explicitly indicates the capital expenditure (CAPEX) of 29 transportation infrastructure projects routinely overrun their initial cost estimates leaving asset 30 owners, financiers, contractors and the public dissatisfied (Flyvbjerg et al., 2005; Flyvbjerg, 2007; 31 Love et al., 2015). This is not an unusual situation for infrastructure projects, as it has been 32 observed that on average, 48% of them fail to meet their baseline time, cost and quality objectives 33 2 (Caravel Group, 2013). Well-known Australian projects that have attracted the attention of the 34 popular press due to cost overruns include the Melbourne's Southern ...

Infrastructure cost overruns receive a significant amount of attention in the academic literature as well as the popular press. The methodological weaknesses in the dominant approaches adopted to explain cost overrun causation on infrastructure projects are explored in this article. A considerable amount of cost overrun research is superficial, replicative, and thus has stagnated the development of a robust theory to mitigate and contain the problem. Future research should move from single-cause identification and the traditional net-effect correlational analysis to a search for causal recipes through systems thinking and retrospective sensemaking to address the high-level interactions between multiple factors.

Purpose – Drawing on mainstream arguments in the literature, the paper presents a coherent and holistic view on the causes of cost overruns, and the dynamics between cognitive dispositions, learning and estimation. A cost prediction model has also been developed using data mining for estimating final cost of projects. The paper aims to discuss these issues. Design/methodology/approach – A mixed-method approach was adopted: a qualitative exploration of the causes of cost overrun followed by an empirical development of a final cost model using artificial neural networks. Findings – A conceptual model to distinguish between the often conflated causes of underestimation and cost overruns on large publicly funded projects. The empirical model developed in this paper achieved an average absolute percentage error of 3.67 percent with 87 percent of the model predictions within a range of ±5 percent of the actual final cost. Practical implications – The model developed can be converted to a desktop package for quick cost predictions and the generation of various alternative solutions for a construction project in a sort of what-if analysis for the purposes of comparison. The use of the model could also greatly reduce the time and resources spent on estimation. Originality/value – A thorough discussion on the dynamics between cognitive dispositions, learning and cost estimation has been presented. It also presents a conceptual model for understanding two often conflated issues of cost overrun and under-estimation.

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