Causes of cost overruns in transport infrastructure projects in Asia

Abstract

PurposeOne of the world's largest construction markets is in Asia where construction activity is boosted by investment on transport infrastructure. This paper aims to identify and analyse causes of cost overruns in transport infrastructure projects in Asia and assess their importance and statistical relationship with project size.Design/methodology/approachThe paper pursues the following objectives. First, it identifies factors contributing to cost overruns. Second, using case data and regression analysis, it establishes the statistical relationship between project size and cost overruns. Third, it analyses questionnaire data to rank causes of cost overruns according to their frequency, severity and significance. Last, the paper identifies contract types mostly associated with cost escalation.FindingsThe findings confirm a moderate correlation between cost overruns and one indicator of project size. Awarding contracts to the lowest bidder is identified as the most significant cause of cost overruns. Lump‐sum contracts were found to have the greatest influence on the occurrence of cost overruns.Research limitations/implicationsStratified sampling would allow the evaluation of how cost overruns are perceived by different professional groups. Further research can focus on measures for the prevention of cost overruns.Originality/valueThe causes of cost overruns have been at the focal point of research however, most studies consider cost overruns in specific Asian countries. Moreover, transport infrastructure projects have received little attention or been underrepresented in datasets comprising general construction projects. The paper seeks to fill this gap by carrying out in‐depth investigation of cost overruns in transport infrastructure in the broader context of Asia.