Five things you should know about cost overrun

Flyvbjerg, Bent; Ansar, Atif; Budzier, Alexander; Buhl, Søren L.; Cantarelli, Chantal C.; Garbuio, Massimo; Glenting, Carsten; Holm, Mette K. Skamris; Lovallo, Dan; Lunn, Daniel; Molin, Eric; Rønnest, Arne; Stewart, Allison; Wee, Bert van

doi:10.1016/j.tra.2018.07.013

Cited by 117 publications

(106 citation statements)

References 53 publications

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“…Wachs concluded that political criteria dominated public infrastructure projects because assumptions made in forecasting are continually adjusted to favour 'politically attractive outcomes'. Cantarelli et al [12] and Flyvbjerg et al [18] agreed that political explanations best account for cost overruns. Deliberately manipulating cost, typically underestimating the true cost, and overestimating benefits to increase the chances that such projects are accepted, is termed strategic misrepresentation.…”

Section: Literature Reviewmentioning

confidence: 99%

“…By examining the multiple rationalities within public housing, this research offers reinforcement to the current heated debate on the root causes of cost overruns in transport projects [18,19], i.e., political stakeholders strategically limit technical designs. This obstruction leads to 'lock-in', or the over-commitment to complete the project, knowing that it will lead to a failing course of action.…”

Section: Introductionmentioning

confidence: 99%

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Implications of ‘Lock-in’ on Public Sector Project Management in a Small Island Development State

Chadee

Mwasha

et al. 2021

Buildings

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The concept of ‘Lock-In’, or the escalating cost of overcommitment on a project to a failing course of action, has unforeseeable implications in project management. This paper presents a case study on the occurrence and consequences of lock-in within the context of public sector housing projects in a small island developing state (SIDS). It demonstrates that cost overruns continue beyond the commissioning phase and throughout the project’s lifecycle, even though technical contingencies were implemented to deliver the intended project benefits. The findings unpack the implications of political expediency as a strategic tool mobilised to supersede proper technical decision-making prior to project execution. It concludes that project practitioners’ commitment to select and continue with a sub-optimal project can lead to the implementation of ineffective solutions to justify their actions, resulting in failed outcomes with negative social consequences. This research helps to advance project management knowledge in the us-er/operation phase, because previous scholarly work was limited to investigating lock-in from project conceptualisation to the commissioning phase.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Implications of ‘Lock-in’ on Public Sector Project Management in a Small Island Development State

Chadee

Mwasha

et al. 2021

Buildings

View full text Add to dashboard Cite

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“…Flyvbjerg agreed that the psychological aspect accounted for optimism bias while the political-economic impact accounts for the elements of strategic misrepresentation encountered. This combination of these elements can effectively explain why large-scale transportation infrastructure project costs are consistently higher than forecast while actual benefits are considerably lower (Flyvbjerg, 2007;Flyvbjerg et al, 2018).…”

Section: What Causes Cost Overruns and Benefit Deficits?mentioning

confidence: 99%

What Causes Optimism Bias in Transportation Projects?

Hasani¹

2019

ELP

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The design, planning and implementation of large-scale infrastructure, particularly about transportation projects has proven to be an inherently difficult task due to several factors. The often-incorrect information provided for predicted costs and benefits has a significant impact on the economic feasibility of a project. This paper aims at examining the evidence and flow on effect of cost overruns and underperforming benefits in large-scale transportation projects. The causation for these elements will be analysed as well as methods aimed at alleviating these impacts to advance the overall delivery of projects of this nature.

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“…Due to complexity, large-scale, long duration, high investment and longitudinal site conditions, infrastructure projects are exposed to higher risks than traditional construction projects which could lead to cost overruns (Wang & Yuan, 2011). The definition of cost overrun provided by Flyvbjerg et al (2018) is following: "Cost overrun is the amount by which actual cost exceeds estimated cost, with cost measured in the local currency, constant prices and against a consistent baseline". The current literature indicates that cost overruns have occurred in a significant number of infrastructure projects, such as Norwegian roadway projects (Odeck, 2004), road projects in the USA (Ellis, Pyeon, Herbsman, Minchin, & Molenaar, 2007), transport projects in Slovenia (Makovšek, Tominc, & Logožar, 2012), highway projects in Australia (Terrill & Danks, 2016), railway projects in Australia (Love, Zhou, Edwards, Irani, & Sing, 2017), and others.…”

Section: Introductionmentioning

confidence: 99%

The Cost Performance and Causes of Overruns in Infrastructure Development Projects in Asia

Andrić

Mahamadu

Wang

et al. 2019

Journal of Civil Engineering and Management

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Infrastructure plays a major role in the economic development of countries, especially in Asia which has experienced tremendous growth in recent years. The procurement of infrastructure continues to be characterized by cost overruns resulting in significant academic interest and theoretical propositions on the influential factors. This study contributes to this issue through adoption of pragmatic research methodology involving deterministic statistical analysis of real project data from reports as well as a qualitative analysis of these reports to unearth underlying issues from a thematic analysis. Furthermore, the study design takes a multi-country view towards establishing the role of contextual and geographical influences on cost overrun. An evaluation of 102 major infrastructure projects was performed covering railways, roadways and energy sectors in different regions in Asia. Findings reveal that differences in the propensity for cost overrun are mostly dependent on a type of infrastructure with rail projects being the most likely to overrun budget. Theoretically, propositions on the influence of project contextual factors are tested highlighting the influence of project size, project type, geographical locations, and the length of implementation period of a project as well as factors related to political, economic, strategic, and competence in infrastructure delivery which vary across countries.

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Five things you should know about cost overrun

Cited by 117 publications

References 53 publications

Implications of ‘Lock-in’ on Public Sector Project Management in a Small Island Development State

Implications of ‘Lock-in’ on Public Sector Project Management in a Small Island Development State

What Causes Optimism Bias in Transportation Projects?

The Cost Performance and Causes of Overruns in Infrastructure Development Projects in Asia

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