Avoiding Highway Construction Cost Overruns and Associated Claims and Disputes Using Insights from International Project Management Experience and Methodological Advances

Avoiding highway infrastructure construction cost overruns and reducing associated claims and disputes continues to be a challenge in many countries. Research is needed in identifying notable project planning and management deficiencies that are likely to cause cost overruns. Literature sources suggest numerous potential causes of cost overrun but clustering of cause variables and relative importance of clusters has not been researched. Research reported here addresses this knowledge gap using predictive models developed with data contributed by several agencies in participating countries and suggests mitigation measures. Following a review of methods and data sources, a methodological framework is advanced that encompasses statistical methods well suited for providing a scientific basis for identifying important clusters of cost overrun variables. A questionnaire study enabled data acquisition from Canadian, United States, Middle East, and Australian sources. Starting from many variables, the principal component-supported factor analysis method identified clusters of cost overrun variables and their relative importance was inferred with developed logistic regression models. Deeper insights in causes of cost overruns obtained from this research suggest mitigation measures that are within reach of managers. The results can potentially enhance infrastructure planning and management practice including reduction of claims and disputes.