Explaining cost overruns in infrastructure projects: a new framework with applications to Sweden

Abstract

The aim is to both develop a new theory-based framework for analysing cost overruns, and to use this for an empirical study of cost overruns in infrastructure projects in Sweden. The conceptual part is based on a literature review and the empirical part is primarily based on a questionnaire to project managers. The framework has a descriptive part comprising two dimensions: when, during the process, the cost overrun arose and what part of the cost function was responsible: change in the product, change in quantities of the inputs and change in price of inputs. The explanatory part is a development of Flyvbjerg's theories and identifies four possible explanations: political/strategic aspects, psychological aspects, competence-related aspects and bad luck. The result from the empirical study is that most cost overruns occur in the initiation and planning stages up to the final design and are related to design changes and increases in the amount of inputs needed because of technical and administrative problems. Of the explanatory factors, there is most support for lack of competence and optimism bias.

A Hybrid Fuzzy TOPSIS – Best Worst Method for Risk Prioritization in Megaprojects

“…As mentioned earlier a small part of this research stream has been devoted to the ranking of risk factors. These studies are generally prioritized risk elements by considering only one project constraint such as cost [16][17][18][19][50][51][52] or time of project [20,[21][22][23]53,54]. This study aims to investigate and rank risk factors considering all three constraints of project success including time, cost and quality of the project.…”

“…There are few studies that investigate the impact of risk elements on project implementation considering all time, cost and quality constraints simultaneously. Most of the previous researches about risk management in megaprojects have investigated the impact of risk elements on project cost overrun [16][17][18][19] or time overrun [20][21][22][23]. A practical implementation of the proposed approach in the Iranian railway construction context is another practical contribution of our study.…”

Cost Development Over-time at Construction Planning Phase: Empirical Evidence from Norwegian Construction Projects

“…[9] found that most of the cost escalation happens in the planning phase. Similarly, [10] showed large cost departure between the planning and up to the final design stages. The reason why planning and its processes have become a real concern is, the cost estimates and cost related activities which are made at this stage largely affects the final cost of the project [11].…”

“…[12] also argue the need to research the planning phase because it guarantee the economic efficiency and it determines how will the construction concept and estimated cost affect future operating costs. [9,10,11,12], emphasized that planning is the most crucial project phase where high cost deviation occurs. Now the question here is how we can effectively manage cost development in the planning phase.…”

Cost Overruns Helping to Define What They Really Mean

“…Moreover, Lind & Brunes (2015) have also summarized the causes of scope changes (i.e. changes in the design, in the production function, in the price of the factors of production, and due to inefficiencies), highlighting the importance of clustering them according to the different phases of the project development in which they occur and the cost overruns that they cause.…”