An Analysis of Cost Overruns and Time Delays of INDOT Projects

Abstract

Prepared in cooperation with the Indiana Department of Transportation and Federal Highway Administration. AbstractA commonality among state Departments of Transportation is the inability to complete projects on time and within budget. This project assessed the extent of the problem of cost overruns, time delays, and change orders associated with Indiana Department of Transportation (INDOT) construction projects, identified the reasons for such problems, and finally developed a set of recommendations aimed at their future reduction. For comparison purposes, data from other states were collected and studied using a questionnaire instrument. The analysis of the cost overrun, time delay and change order data was done using an array of statistical methods. The literature review and agency survey showed that time delays, cost overruns and change orders are generally due to factors such as design, unexpected site conditions, increases in project scope, weather conditions, and other project changes. The results of the agency survey showed that with regard to the problem of cost overruns, INDOT has an average rank compared to other states. Between 1996 and 2001, the overall rate for cost overrun amounts for INDOT projects was determined as 4.5%, and it was found that 55% of all INDOT contracts experienced cost overruns. It was determined that the average cost overrun amount and rate, as well as the contributory cost overrun factors differ by project type. The average cost overrun rates were as follows: bridge projects --8.1%, road construction --5.6%, road resurfacing --2.6%, traffic projects --5.6%, maintenance projects --7.5%. With regard to time delays, it was found that 12% of all INDOT contracts experience time delays, and the average delay per contract was 115 days. With regard to change orders, the study found that the dominant category of reasons for change orders is "errors and omissions", a finding which is suggestive of possible shortcomings in current design practices The statistical analyses in the present study showed that the major factors of cost overruns, time delays, and change orders in Indiana are contract bid amount, difference between the winning bid and second bid, difference between the winning bid and the engineer's estimate, project type and location by district. Besides helping to identify or confirm influential factors of cost overruns, time delay and change orders, the developed regression models may be used to estimate the extent of future cost overruns, time delay and change orders of any future project given its project characteristics and any available contract details. Such models can therefore be useful in long-term budgeting and needs assessment studies. Finally, the present study made recommendations for improving the management of projects and the administration of contracts in order to reduce cost overruns, time delays and change orders.

Development of a Framework for Ex Post Facto Evaluation of Highway Project Costs in Indiana

“…Some of these studies are described as follows. Bordat et al (2004) found that project type, location, weather, difference between first and second lowest bids, difference between engineer's estimate and lowest bid, and project duration were significant factors that explained cost overrun in Indiana during the period 1996-2001. In a subsequent study, ordinary least square regression models were developed to predict cost overrun as a function of these projectspecific factors.…”

“…Non-preventable change orders occur due to changed field conditions, failed materials, or changes in standards or specifications. Bordat et al (2004) analyzed 822 contracts implemented in 1996-2001 and found that of the total amount associated with change orders ($65 Million), the design-related errors and omissions were responsible for 15% ($9.5 Million) and the constructability of the design was found responsible for approximately 5% ($3.4 Million). Inadequate time to produce quality designs and no accountability for project's construction performance are the two reasons that were cited as root causes for design errors and omissions.…”

Project Discrepancies in Roadway Construction and Preservation: A Statistical Analysis of Public–Private Partnership Contract Types in the US

“…A significant amount of past research in PPP projects for roadway construction and preservation has focused on the identification of factors affecting cost savings, cost overrun, time delays, and change orders (Rowland, 1981;Hester et al, 1991;Majid and McCaffer, 1998;Jacoby, 2001;Ellis and Thomas, 2003;Fimpong et al, 2003;Flyvbjerg et al, 2003;Bordat et al, 2004;Odeck, 2004;Assaf and Al-Hejji, 2006;Gkritza and Labi, 2008;Anastasopoulos et al, 2010aAnastasopoulos et al, ,b,c, 2011Anastasopoulos et al, , 2014Serag et al, 2010;Ambituuni, 2011;Irfan et al, 2011;Cantarelli et al, 2012). For example, Odeck (2004) formulated a regression framework to investigate the factors affecting cost overrun in roadway construction projects and found that small-scale projects are more vulnerable to cost overrun.…”

“…Project cost and time discrepancies constitute contractual aberrations of high interest to both public and the private entities, and typically include cost overrun, cost savings, change orders, and time delays (Bordat et al, 2004). Previous research has been devoted on the investigation of the influential factors for each of the aforementioned project discrepancies, independently of the PPP type.…”

Equity issues in land acquisition: A source of delays in large construction projects in Vietnam

“…Delay is defined as the difference between the estimated scheduled final date and the actual final date of project stages (Bordat, McCullouch, & Sinha, 2004). Delays in construction projects have been a research topic for a long time.…”