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1992•Transportation Research Record Journal of the Transportation Research BoardRequires access

COST OVERRUNS ON STATE OF WASHINGTON CONSTRUCTION CONTRACTS

Jimmie Hinze, Gregory Selstead, Joe P. Mahoney

Open publisher page 43 citations

Abstract

The completion of construction projects within budget is of paramount importance to most owners. Yet, it is common knowledge that numerous factors can cause the costs of construction to exceed the budget. Understanding the specific causes of cost overruns can serve as the beginning stage for controlling costs. Research was conducted to evaluate construction cost overruns on projects completed for the Washington State Department of Transportation. The objective was to identify factors that have the strongest association with construction cost overruns. Results of the analysis, which examined information from 468 construction projects, indicated that cost overruns, expressed as a percentage of the original contract amount, tend to increase with the size of the project. Evidence also suggests that the cost overrun rate increases with the number of bidders and with the increased dispersion of the various bids submitted per project.

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What this paper is about

The completion of construction projects within budget is of paramount importance to most owners. Yet, it is common knowledge that numerous factors can cause the costs of construction to exceed the budget. Understanding the specific causes of cost overruns can serve as the beginning stage for controlling costs. Research was conducted to evaluate construction cost overruns on projects completed for the Washington State Department of Transportation. The objective was to identify factors that have the strongest association with construction cost overruns. Results of the analysis, which examined information from 468 construction projects, indicated that cost overruns, expressed as a percentage of the original contract amount, tend to increase with the size of the project. Evidence also suggests that the cost overrun rate increases with the number of bidders and with the increased dispersion of the various bids submitted per project.

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OpenAlex reports 43 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

The completion of construction projects within budget is of paramount importance to most owners. Yet, it is common knowledge that numerous factors can cause the costs of construction to exceed the budget. Understanding the specific causes of cost overruns can serve as the beginning stage for controlling costs. Research was conducted to evaluate construction cost overruns on projects completed for the Washington State Department of Transportation. The objective was to identify factors that have the strongest association with construction cost overruns. Results of the analysis, which examined information from 468 construction projects, indicated that cost overruns, expressed as a percentage of the original contract amount, tend to increase with the size of the project. Evidence also suggests that the cost overrun rate increases with the number of bidders and with the increased dispersion of the various bids submitted per project.

Key concepts: Cost overrun, Cost estimate, Transport engineering, Construction management, Constructability, Cost analysis, Engineering, Operations management

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