Evaluation of risk factors leading to cost overrun in delivery of highway construction projects

Garry D. Creedy, Martin Skitmore, Johnny K.W. Wong

Research output: Contribution to journalArticleResearchpeer-review

104 Citations (Scopus)
4 Downloads (Pure)

Abstract

Accurate owner budget estimates are critical to the initial decision-to-build process for highway construction projects. However, transportation projects have historically experienced significant construction cost overruns from the time the decision to build has been taken by the owner. This paper addresses the problem of why highway projects overrun their predicted costs. It identifies the owner risk variables that contribute to significant cost overrun and then uses factor analysis, expert elicitation, and the nominal group technique to establish groups of importance ranked owner risks. Stepwise multivariate regression analysis is also used to investigate any correlation of the percentage of cost overrun with risks, together with attributes such as highway project type, indexed cost, geographic location, and project delivery method. The research results indicate a correlation between the reciprocal of project budget size and percentage cost overrun. This can be useful for owners in determining more realistic decision-to-build highway budget estimates by taking into account the economies of scale associated with larger projects.

Original languageEnglish
Pages (from-to)528-537
Number of pages10
JournalJournal of Construction Engineering and Management
Volume136
Issue number5
DOIs
Publication statusPublished - 2010
Externally publishedYes

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