Exogenous determinants of cost deviations and overruns in local infrastructure projects

Catalão, Francisco Pinheiro; Cruz, Carlos Oliveira; Sarmento, Joaquim Miranda

doi:10.1080/01446193.2019.1576915

Cited by 35 publications

(9 citation statements)

References 57 publications

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“…Labour strikes and shortages contribute greatly to project delays and cost overruns [110,111]. Additional uncontrollable socioeconomic factors such as the global financial crisis, economic business cycles [6,112] and exploitation [113] have negatively affected construction projects' costs and overall performance. Table 3 summarises critical socioeconomic factors applicable to the Caribbean SIDS.…”

Section: -3-socioeconomic Root Cause and Causative Factorsmentioning

confidence: 99%

Rationalizing Critical Cost Overrun Factors on Public Sector Housing Programmes

et al. 2022

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The cost overrun phenomenon on projects worldwide creates a major source of risk that warrants investigation. The prevailing factor school of thought provides strong empirical evidence that critical factors contributing to cost overruns are both context-specific and project-specific. Although many studies have been conducted identifying factors and causes of cost overruns, very few studies have investigated root causes. Additionally, a limited body of knowledge is available within the context of Small Island Development States (SIDS). To fill this gap, the objectives of this study were to identify and determine the main critical factors contributing to the cost overrun phenomenon in public sector social housing programmes (PSSHPs). These selected factors were thereafter categorized under leading root causes, and their severity was determined based on primary stakeholders’ perspectives. One hundred and twenty-three factors were identified from the literature, of which forty-one critical factors were extracted and grouped under four root causes based on a pilot survey of relevant public sector housing experts in the Trinidadian and Jamaican construction sectors. These refined factors and root causes were formulated into a questionnaire survey. One hundred and five responses were obtained from professionals who had a minimum of five years’ experience in various phases of public housing delivery. The severity of these critical factors was evaluated, ranked, and categorized using the relative importance index (RII) approach. The findings uncovered the leading root cause, which is political in nature. The top five critical factors are the selection of politically aligned contractors, the intentional design of inadequate contracts, the project actors' deliberately underestimating costs, the partisan project management team, and strategic misrepresentation. These findings are unique to SIDS and contribute to knowledge to reframe contemporary project management practices, which focus mainly on technical causes. Finally, as existing technical solutions are ineffective in curbing cost overruns in PSSHPs, these findings also inform public sector policymakers to focus on prioritization, control, and mitigation of political risks in formulating effective governance mechanisms. Doi: 10.28991/ESJ-2022-06-03-016 Full Text: PDF

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Section: -3-socioeconomic Root Cause and Causative Factorsmentioning

confidence: 99%

Rationalizing Critical Cost Overrun Factors on Public Sector Housing Programmes

et al. 2022

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“…This trend is, however, different per country, and Cavalieri et al (2019) show that Italian transport infrastructure projects have mostly cost overrun in the execution phase. The magnitude of cost overrun can also be different depending on whether it is carried out by the local or central government (Pinheiro Catalão et al 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The second category has received criticisms such as not considering scope changes or overstating the physiological reasons (Love and Ahiaga-Dagbui 2018). Pinheiro Catalão et al (2019) and Catalão et al (2019) mention that the current literature has mostly focused on the endogenous project characteristics and exogenous characteristics are not widely discussed. Building upon the most recent literature, this research focuses on the second category to explain cost overruns in projects, benefitting from the work of Flyvbjerg and his colleagues.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Current literature on cost estimates acknowledges the development of methods and techniques to estimate project costs and cost contingency (Baccarini and Love 2014; Barraza and Bueno 2007;Hammad et al 2016;Kim and Pinto 2019;Mak and Picken 2000;De Marco et al 2016). Even this development has not improved the cost estimate practices, and projects still suffer from cost overrun (Pinheiro Catalão et al 2019). Despite the consensus on the importance of cost contingency, many projects fail to address the uncertainties in their cost estimates (Reilly et al 2004) and, as a result, end up with cost overruns (Baloi and Price 2003;Brunes 2015;Bruzelius et al 2002;De Marco et al 2016;Gharaibeh 2014;Hollmann 2012;Khamooshi and Cioffi 2013;Lovallo and Kahneman 2003).…”

Section: Introductionmentioning

confidence: 99%

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Cost Performance and Cost Contingency during Project Execution: Comparing Client and Contractor Perspectives

et al. 2020

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Current literature shows that poor cost performance in projects has become routine. Research on cost performance has mostly focused on one of the involved parties, either the client or the contractor. Not many research efforts discuss the cost contingency performance of projects. This research discusses the cost performance and cost contingency of projects in the execution phase from the perspective of a client as well as a contractor. Using a case study approach, 95 projects are investigated: 44 client projects and 51 contractor projects. The results show that depending on the perspective, projects can have cost overruns or cost underruns. Comparing the total realized and estimated costs, projects experienced on average about 16% underrun from a client perspective. From a contractor perspective, projects experienced on average up to 2% overrun. The estimated cost contingency in the client's projects was on average 2.64% more than the required cost contingency. The estimated cost contingency in the contractor's projects was on average 5.41% less than the required cost contingency. These differences are explained by pessimism bias and technical reasons on the client's side. On the contractor side, optimism bias and technical and political reasons play a role, resulting in opportunistic behavior. The findings help practitioners to enhance their cost estimates by avoiding both pessimistic bias and optimism bias behavior-for example, by using historical data from earlier projects. Further investigation into the influence of market conditions on cost estimates is suggested.

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“…The plethora of uncompleted and abandoned projects across the globe have been largely attributed to the incidence of cost overruns. Suffice to state that 'cost overruns have continued to pose a challenge to successful construction project delivery [4][5][6]. As such, effective cost management remains a panacea for curbing the incidence of abandoned projects and unsatisfied construction clients whilst boosting the productivity of the industry.…”

Section: Introductionmentioning

confidence: 99%

An Artificial Neural Network Approach to Predicting Most Applicable Post-Contract Cost Controlling Techniques in Construction Projects

2020

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The post-contract phase of the construction process remains critical to cost management. Several techniques have been used to facilitate effective cost management in this phase. However, the deployment of these techniques has not caused a reduction in the incidence of cost overruns hence casting doubts on their utility. The seeming underwhelming performance posted by these post-contract cost control techniques (PCCTs), has been traced to improper deployment by construction project managers (CPM) and quantity surveyors (QS). Utilizing the perspectives of CPM and QS professionals, as elicited through a survey, produced 135 samples. The instrumentality of the artificial neural networks (ANN) in this study enabled the development of a structured decision-support methodology for analysing the most appropriate PCCTs to be deployed to different construction process phases. Besides showcasing the utility of the emergent ANN-based decision support methodology, the study’s theoretical findings indicate that CPM and QS professionals influence decisions pertaining to PCCTs choice in distinct phases of the construction process. Whereas QS professionals were particularly responsible for the choice of PCCTs during the initial and mid-level phases, CPM professionals assumed responsibility for PCCTs selection during the construction process close-out phase. In construction cost management practice, the crucial PCCTs identifies more with the application of historical data and all cost monitoring approaches.

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Exogenous determinants of cost deviations and overruns in local infrastructure projects

Cited by 35 publications

References 57 publications

Rationalizing Critical Cost Overrun Factors on Public Sector Housing Programmes

Rationalizing Critical Cost Overrun Factors on Public Sector Housing Programmes

Cost Performance and Cost Contingency during Project Execution: Comparing Client and Contractor Perspectives

An Artificial Neural Network Approach to Predicting Most Applicable Post-Contract Cost Controlling Techniques in Construction Projects

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