ArticlePDF Available

Toward a Systemic View to Cost Overrun Causation in Infrastructure Projects: A Review and Implications for Research

Authors:

Abstract and Figures

Infrastructure cost overruns receive 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 paper. A considerable amount of cost overrun research is superficial, replicative and thus 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.
Content may be subject to copyright.
A preview of the PDF is not available
... Fluctuations in material prices are acknowledged as a significant contributor to cost overruns in construction projects (Ahiaga-Dagbui et al., 2017). This study highlights market monopolies held by a few suppliers as a major factor contributing to price escalations within African megaproject supply chains. ...
Article
Full-text available
Purpose -Megaproject supply chains involve multiple layers of stakeholders, leading to complex relationships and risks. The role of social interactions within these networks is unexplored. Therefore, an analysis of construction supply chain risk management from the perspective of social networks is essential to identify related stakeholders, their relationships, and the social network risk factors. Design/methodology/approach – Sixty-five risk factors, identified from literature and interviews, informed the development of a questionnaire for the study. Online questionnaires administered in Ghana and South Africa produced 120 valid responses. Feedback from the responses were ranked and assessed to determine the overall social network risk levels using the Normalised Mean and Fuzzy synthesis analysis methods. Findings – Twenty-four risk factors were identified and classified into six groups: Client/Consultant-related, Community-related, Government-related, Industry Perception-related, Supplier-related, and Stakeholder Opportunism. The top five social network risks identified include bribery, supplier monopoly, incomplete design teams, poor communication, and lack of collaboration. Originality - This study contributes to the literature on supply chain risk management by offering context-specific insights into the social network perspective of megaprojects in Africa, which differs from those in developed countries. Practical implications - The study provides detailed evaluations of social network risks in Africa. The findings will help in developing strategies to mitigate supply chain disruptions caused by the identified challenges.
... Other factors such as communication, increased working hours and technical plant and equipment failures were identified as the least common factors contributing to project cost overruns. It is shown that cost overrun is not a linear cause; but a plausible causal combination and it is crucial to get to the root causes of cost overruns (Ahiaga-Dagbui et al., 2017). However, without the identification of the recurring problems based on observation, whilst using the existing and collated data it would be a challenging process to overcome issues to project overrun. ...
Conference Paper
Full-text available
Over budgeting is a recurring issue in projects. One of the main issues of over budgets is the mismanagement of risks. Risks and uncertainty should have been established, quantified and included in the cost limit of a project. Recognising the challenges of COVID posed to the current economy, it is ever more crucial for public clients to ensure the facilities are delivered with added value by eliminating the inefficient expenditure and delays, which affects the value delivery to end user. Although there are many approaches in studying cost overruns in projects, this study aims to uncover the factors driving the cost overruns and its relation towards the risks. This paper will report the first stage findings of ongoing research. A total of 14 public facility projects, all delivered through traditional procurement were selected, unpacked, and analysed. The cost/m2 of each project were then compared to client's developed cost plan at the selected project stage, including further investigation for factors driving the cost changes. The study revealed that most of over budgeting were contributed to misallocation of risk. Lacked quantification and identification of risk caused over budgets and delays. Traditional procurement allow certainty but less innovative platform for contractor and client to collaborate.
... Buildings 2024, 14, 478 2 of 33 detrimental consequences of this phenomenon [5][6][7][8][9][10][11]. The governance of megaprojects is a complex and dynamic field, that requires a multidisciplinary approach and collaborative efforts across sectors and borders. ...
Article
Full-text available
Integration of 5D Building Information Modeling (BIM) into large rail projects has the potential to significantly enhance cost management and control. Nevertheless, 5D-BIM implementation has encountered difficulties stemming from technical, functional, and governance-related factors. This paper builds a conceptual framework to support financial decision making, enhances project management, and promotes efficient project delivery. The framework encompasses a set of interrelated elements that include project governance, BIM policies and standards, digital platforms, BIM LOD, cost-estimation classification, and continuous improvement. The proposed framework acknowledges the significance of project governance in guiding and organizing the implementation of 5D-BIM. Additionally, BIM policies and standards ensure the adherence to quality standards for the produced BIM models. Digital platforms serve as the basis for multiple users to generate, access, share, and exchange project information. BIM LOD promotes collaboration and coordination among all project stakeholders. Cost-estimation classification aligns the estimation process with the development of project scope and financial decision making. Continuous improvement plays a vital role in optimizing processes, enhancing efficiency, and achieving higher-quality outcomes. Moreover, it fosters stakeholder satisfaction, improves project performance, and nurtures a conducive environment for innovation and learning. The study analyzes the framework utilization in Victorian rail projects and identifies key implementation challenges. The main technical hurdles encountered were the lack of current horizontal infrastructure standards for data exchange and the lack of compatibility with current cost-management standards. Increased project complexity and the absence of clear project governance strategies and processes also posed organizational challenges. A further validation of the framework in real-world rail projects was recommended to achieve the implementation goals.
... Getting them right improves the chance of a successful project and getting them wrong has the potential for a vicious cycle of project overruns. Taking a systems approach to project management therefore may provide valuable insights and take cognizance of researchers suggesting that those in the project management field consider a more integrative and systemic approach [15,30,31]. ...
Article
Full-text available
Adopting system thinking concepts within the realm of project management may assist in avoiding or at least reducing the significant overruns being experienced by projects across the globe. This chapter examines this premise and considers this from three aspects. The first is actively incorporating the views of a range of project stakeholders. This inclusion not only ensures the capture of a wide array of risks but also enables ‘buy in’ and alignment of direction, thus attending to arguments that stakeholder management is a critical component of successful projects. In addition, the chapter considers how systems thinking can add significant value through attending to the capture of the interactive nature of risks and the dynamics of risk – the continuous changing of composition and salience over time.The chapter briefly notes the evolution of tools and techniques for assisting project managers in taking a systemic view focusing on one particular technique, causal mapping, to provide illustration. The chapter concludes with the view that not only is it important to capture i) a wide array of risks, ii) interactions between risks and iii) breadth of stakeholders but that each of these aspects impact one another adding a further systemic factor.
... 2) Implementing a methodological exercise analyzing all probable causes for cost overruns on each type of project. Ahiaga-Dagbui et al. (2017) indicated that understanding cost overrun is not the ability to list or rank factors, but the capacity to analyze connections, interactions, and plausible causal combinations. 3) Forecasts should be made subject to independent peer reviews and made available to the public as they are produced, including all relevant documentation (Flivbjerg 2007a). ...
Article
Full-text available
This paper shows and analyzes the deterioration of net social benefits from Line 3 of the Light Rail in Guadalajara, Mexico, which took place even before Line 3 began its operational life. According to this ex-post evaluation, this light rail project has performed worse than the average international figures reported by several authors concerning the two most critical issues related to this kind of project: cost overruns and overestimated demand. Scenarios analyzed in this work show that failures in managing and executing Line 3 resulted, at least, in a loss of 431 million dollars in net social benefits (in present value), but if we compare the ex-post results to ex-ante studies, this loss can escalate to almost 1 billion dollars. These figures expose wasteful use of scarce social resources. In essence, there is a shortage of ex-post evaluations on major transportation projects in countries like Mexico. The analysis produced here represents a step towards improving the execution of this type of project in developing countries, particularly in Latin America.
Chapter
A construction project will be successful when it is delivered on time, is executed within the estimated budget, is according to required specifications, and satisfies the client or project owner. No matter how detailed the pre-planning phase of any construction project is, there should be stumbling in one way or another during the construction phase, for example, cost overruns, delivery and handover timing amendments, difficulties in providing resources, and qualitative deficiencies. Failure in construction projects is of high risk due to the large amount of finances invested and the involvement of different partners. The risk is mainly due to delays in delivery and cost overruns, which are considered the most common and damaging factors. In this research, seven risk factors are chosen to investigate their effects on project cost overrun. They are related to (1) the project, (2) the client or owner, (3) the design, (4) the contractor, (5) the materials and equipment, (6) the manpower, and (7) external factors. This chapter studies the identified risk factors that affect the accuracy of cost estimation. It also discusses best practices in calculating cost estimates. A mixed methodology is conducted; the empirical part in the form of a survey questionnaire examines the identified factors among those who are experts in different fields of specialties. An ordered logit probability model is estimated based on the seven main risk factors. To support the empirical findings, a qualitative study is performed in the form of interviews with five experts in the construction industry. The findings report that the highest risk causing cost overruns is contractor-related factors, followed by design-related factors. On the other hand, project-related factors, materials-related factors, and external factors tend to have the lowest risk of cost overrun.
Article
This scoping review aims to enhance construction project management practices by identifying the key factors contributing to time and cost overruns. More than 300 articles were studied, out of which 73 were relevant to this review scope. Following the methodological recommendations proposed by the Joanna Briggs Institute (JBI) and the PRISMA checklist, this scoping review explores research trends regarding the geographical and temporal contexts, the nature of projects analyzed, the research approach, and the main causes of time and cost overruns. Moreover, current research gaps within the field have been identified. Findings suggest that the volume and breadth of research on causes of time and cost overruns have grown over the years. Regarding geographical contexts, Asia and Africa have consistently contributed to the literature, while a notable absence of research is observed in Europe, America, and Oceania. In addition, a tendency among articles to replicate research approaches and methods has been identified. Lastly, this study reveals that the project execution phase emerges as the primary stage where cost and time deviations occur, emphasizing the crucial role of project management practitioners. Hence, results attest to the critical role of prioritizing more effective project management practices to mitigate unexpected time and cost overruns in construction projects.
Article
Full-text available
Construction activity requires major investment outlays in most developing countries; moreover, most construction projects in these countries are characterised by overruns in cost. In an attempt to identify the factors for such overruns, a descriptive survey was carried out in a typical developing country, Turkey. Relative Importance Index method was used to analyse the quantitative data. The analysis of 40 sub-factors considered in a survey indicates that the main factors affecting cost overruns in the construction of residential projects of Turkey are, improper planning, inaccurate project cost estimation, high cost of needed resources (money, men, materials and machinery), lack of skilled workforce, price of construction materials and high land prices. The relative levels of impact of the identified are expected to guide the project team and owners / clients in addressing the factors in a cost-effective manner.
Chapter
Management of knowledge in project environments is a unique text that brings together contributions from leading academic practitioners, to demonstrate how the management of knowledge can lead to project success in today's complex and changing business environment. The work examines how the management of knowledge, particularly the sharing of knowledge and the importance of learning through reflection, can lead to project success and improved business performance. This book is written by an international contributor team and offers practical applications, models and case studies from a variety of international perspectives.