Risk Assessment in Sustainable Infrastructure Development Projects: A Tool for Mitigating Cost Overruns

Abstract

The persistent decline in infrastructure spending, notably within the transportation sector, raises concerns about governments’ capacity to meet the demands of a sustainable growing economy. The incorporation of risk assessment in the analysis and computation of potential cost overruns emerges as an effective and efficient tool, underpinning the economic and financial sustainability of infrastructure expansions. Focusing on the “State Road No. 51 of Alemagna Vittorio Veneto” (SSv-51) variant, this study analyzes and proposes a model to forecast the possible cost overruns of an infrastructure project. The application of the risk assessment tool proposed by the National Anti-Corruption Authority (ANAC) offers valuable insights into potential risks associated with project costs and their valuation. The matrix developed in the current study draws from the ANAC Matrix, which comprises four categories of risk divided into 21 risk types. The selection is based on the project’s characteristics, and a matrix is compiled that forecasts the combination of the probability of risk occurrence and the cost impacts on the project. The proposed risk matrix serves as a practical tool for managing uncertainties and estimating potential cost overruns, estimating ex ante a possible cost increase of 7.53%. This projected increase differs only by 1.34% from the final execution costs, mitigating the unforeseen cost overruns not estimated by the initial project. The proposed risk assessment tool emphasizes the importance of integrating risk management into project planning and execution. The research investigated an applied case utilizing an easily adaptable tool, suitable for potential future implementation, further advancement, and broader testing across various project samples in the future. The study provides a framework to assess and mitigate risks linked to cost overruns. As nations navigate infrastructure development complexities, proactive risk management practices are indispensable for efficient resource management, ensuring the economic and financial sustainability of these complex projects.