IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v92y2016icp184-194.html
   My bibliography  Save this article

Cost overruns in transportation infrastructure projects: Sowing the seeds for a probabilistic theory of causation

Author

Listed:
  • Love, Peter E.D.
  • Ahiaga-Dagbui, Dominic D.
  • Irani, Zahir

Abstract

Understanding the cause of cost overruns in transportation infrastructure projects has been a topic that has received considerable attention from academics and the popular press. Despite studies providing the essential building blocks and frameworks for cost overrun mitigation and containment, the problem still remains a pervasive issue for Governments worldwide. The interdependency that exists between ‘causes’ that lead to cost overruns materialising have largely been ignored when considering the likelihood and impact of their occurrence. The vast majority of the cost overrun literature has tended to adopt a deterministic approach in examining the occurrence of the phenomenon; in this paper a shift towards the adoption of pluralistic probabilistic approach to cost overrun causation is proposed. The establishment of probabilistic theory incorporates the ability to consider the interdependencies of causes so to provide Governments with a holistic understanding of the uncertainties and risks that may derail the delivery and increase the cost of transportation infrastructure projects. This will further assist in the design of effective mitigation and containment strategies that will ensure future transportation infrastructure projects meet their expected costs as well as the need of taxpayers.

Suggested Citation

  • Love, Peter E.D. & Ahiaga-Dagbui, Dominic D. & Irani, Zahir, 2016. "Cost overruns in transportation infrastructure projects: Sowing the seeds for a probabilistic theory of causation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 184-194.
  • Handle: RePEc:eee:transa:v:92:y:2016:i:c:p:184-194
    DOI: 10.1016/j.tra.2016.08.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856415302871
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cantarelli, C.C. & Flyvbjerg, B. & Buhl, S.L., 2012. "Geographical variation in project cost performance: the Netherlands versus worldwide," Journal of Transport Geography, Elsevier, vol. 24(C), pages 324-331.
    2. Verweij, Stefan & van Meerkerk, Ingmar & Korthagen, Iris A., 2015. "Reasons for contract changes in implementing Dutch transportation infrastructure projects: An empirical exploration," Transport Policy, Elsevier, vol. 37(C), pages 195-202.
    3. Odeck, James, 2004. "Cost overruns in road construction--what are their sizes and determinants?," Transport Policy, Elsevier, vol. 11(1), pages 43-53, January.
    4. Feduzi, Alberto & Runde, Jochen, 2014. "Uncovering unknown unknowns: Towards a Baconian approach to management decision-making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 124(2), pages 268-283.
    5. Judea Pearl, 2014. "Comment: Understanding Simpson's Paradox," The American Statistician, Taylor & Francis Journals, vol. 68(1), pages 8-13, February.
    6. Cantarelli, C.C. & Molin, E.J.E. & van Wee, B. & Flyvbjerg, B., 2012. "Characteristics of cost overruns for Dutch transport infrastructure projects and the importance of the decision to build and project phases," Transport Policy, Elsevier, vol. 22(C), pages 49-56.
    7. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    8. Paolo Tombesi, 2000. "Modelling the dynamics of design error induced rework in construction: comment," Construction Management and Economics, Taylor & Francis Journals, vol. 18(7), pages 727-732.
    9. Yang Miang Goh & Peter E. D. Love & Helen Brown & Jeffery Spickett, 2012. "Organizational Accidents: A Systemic Model of Production versus Protection," Journal of Management Studies, Wiley Blackwell, vol. 49(1), pages 52-76, January.
    10. Reichelt, Kimberly & Lyneis, James, 1999. "The dynamics of project performance: benchmarking the drivers of cost and schedule overrun," European Management Journal, Elsevier, vol. 17(2), pages 135-150, April.
    11. Dominic D. Ahiaga-Dagbui & Simon D. Smith, 2014. "Dealing with construction cost overruns using data mining," Construction Management and Economics, Taylor & Francis Journals, vol. 32(7-8), pages 682-694, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Love, Peter E.D. & Ahiaga-Dagbui, Dominic & Welde, Morten & Odeck, James, 2017. "Light rail transit cost performance: Opportunities for future-proofing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 27-39.
    2. Giorgio Locatelli, 2018. "Why are Megaprojects, Including Nuclear Power Plants, Delivered Overbudget and Late? Reasons and Remedies," Papers 1802.07312, arXiv.org.
    3. James Odeck, 2019. "Variation in cost overruns of transportation projects: an econometric meta-regression analysis of studies reported in the literature," Transportation, Springer, vol. 46(4), pages 1345-1368, August.
    4. Love, Peter E.D. & Zhou, Jingyang & Edwards, David J. & Irani, Zahir & Sing, Chun-Pong, 2017. "Off the rails: The cost performance of infrastructure rail projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 99(C), pages 14-29.
    5. Love, Peter E.D. & Sing, Michael C.P. & Ika, Lavagnon A. & Newton, Sidney, 2019. "The cost performance of transportation projects: The fallacy of the Planning Fallacy account," Transportation Research Part A: Policy and Practice, Elsevier, vol. 122(C), pages 1-20.
    6. Love, Peter E.D. & Ahiaga-Dagbui, Dominic D., 2018. "Debunking fake news in a post-truth era: The plausible untruths of cost underestimation in transport infrastructure projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 357-368.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Love, Peter E.D. & Zhou, Jingyang & Edwards, David J. & Irani, Zahir & Sing, Chun-Pong, 2017. "Off the rails: The cost performance of infrastructure rail projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 99(C), pages 14-29.
    2. Chong, Uven & Hopkins, Omar, 2016. "An international experience on the evolution of road costs during the project life cycle," Transport Policy, Elsevier, vol. 48(C), pages 60-66.
    3. Dejan Makovšek & Marian Moszoro, 2018. "Risk pricing inefficiency in public–private partnerships," Transport Reviews, Taylor & Francis Journals, vol. 38(3), pages 298-321, May.
    4. Cavalieri, Marina & Cristaudo, Rossana & Guccio, Calogero, 2019. "On the magnitude of cost overruns throughout the project life-cycle: An assessment for the Italian transport infrastructure projects," Transport Policy, Elsevier, vol. 79(C), pages 21-36.
    5. Love, Peter E.D. & Ahiaga-Dagbui, Dominic D., 2018. "Debunking fake news in a post-truth era: The plausible untruths of cost underestimation in transport infrastructure projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 357-368.
    6. Makovšek, Dejan, 2014. "Systematic construction risk, cost estimation mechanism and unit price movements," Transport Policy, Elsevier, vol. 35(C), pages 135-145.
    7. Verweij, Stefan & van Meerkerk, Ingmar & Korthagen, Iris A., 2015. "Reasons for contract changes in implementing Dutch transportation infrastructure projects: An empirical exploration," Transport Policy, Elsevier, vol. 37(C), pages 195-202.
    8. Paul Terna Gbahabo & Oluseye Samuel Ajuwon, 2017. "Effects of Project Cost Overruns and Schedule Delays in Sub-Saharan Africa," European Journal of Interdisciplinary Studies Articles, European Center for Science Education and Research, vol. 3, EJIS Janu.
    9. Love, Peter E.D. & Sing, Michael C.P. & Ika, Lavagnon A. & Newton, Sidney, 2019. "The cost performance of transportation projects: The fallacy of the Planning Fallacy account," Transportation Research Part A: Policy and Practice, Elsevier, vol. 122(C), pages 1-20.
    10. Miranda Sarmento, J.J., 2014. "Public private partnerships," Other publications TiSEM c7d4c978-234c-4f88-83ed-1, Tilburg University, School of Economics and Management.
    11. Steininger, Bertram & Groth, Martin & Weber, Birgitte, 2020. "Cost overruns and delays in infrastructure projects: the case of Stuttgart 21," Working Paper Series 20/11, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    12. Edyta Plebankiewicz, 2018. "Model of Predicting Cost Overrun in Construction Projects," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-14, November.
    13. Hugo Priemus & Bert van Wee (ed.), 2013. "International Handbook on Mega-Projects," Books, Edward Elgar Publishing, number 14791.
    14. Derbyshire, James, 2017. "Potential surprise theory as a theoretical foundation for scenario planning," Technological Forecasting and Social Change, Elsevier, vol. 124(C), pages 77-87.
    15. Adriana Gómez-Cabrera & Amalia Sanz-Benlloch & Laura Montalban-Domingo & Jose Luis Ponz-Tienda & Eugenio Pellicer, 2020. "Identification of Factors Affecting the Performance of Rural Road Projects in Colombia," Sustainability, MDPI, Open Access Journal, vol. 12(18), pages 1-1, September.
    16. Chantal C. Cantarelli & Bent Flyvbjerg, 2013. "Mega-projects’ cost performance and lock-in: problems and solutions," Chapters, in: Hugo Priemus & Bert van Wee (ed.),International Handbook on Mega-Projects, chapter 15, pages 333-355, Edward Elgar Publishing.
    17. Edyta Plebankiewicz & Damian Wieczorek, 2020. "Prediction of Cost Overrun Risk in Construction Projects," Sustainability, MDPI, Open Access Journal, vol. 12(22), pages 1-1, November.
    18. Osmundsen, Petter & Roll, Kristin Helen, 2016. "Rig rates and drilling speed: reinforcing effects," UiS Working Papers in Economics and Finance 2016/4, University of Stavanger.
    19. Awojobi, Omotola & Jenkins, Glenn P., 2016. "Managing the cost overrun risks of hydroelectric dams: An application of reference class forecasting techniques," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 19-32.
    20. C. Guccio & G. Pignataro & I. Rizzo, 2012. "Determinants of adaptation costs in procurement: an empirical estimation on Italian public works contracts," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1891-1909, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:92:y:2016:i:c:p:184-194. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.