Evaluation of Cost Growth Factors in Design-Build Highway Projects Using Structural Equation Modeling
Publication: Journal of Construction Engineering and Management
Volume 147, Issue 7
Abstract
Design-build (DB) project delivery is often used to overcome limitations of the traditional design-bid-build delivery method. Identification of project performance influencing factors is important for selecting a project delivery method. The measurement of project performance is typically attributed to the cost, schedule, and quality dimensions, where the cost growth typically plays a substantial role. The cost growth in a project is influenced by multiple project characteristics, including project size, project complexity, project type, delivery risks, and other variables. This study identifies multiple directly or indirectly related determinants and their effects on the cost growth of a DB project. A total of 118 DB highway projects across the US were examined. An empirical investigation was conducted using structural equation modeling (SEM) to examine the effect of project complexity, delivery risk, project types, and facility types on project cost growth. An exploratory factor analysis was initially conducted to identify the critical risk factors related to DB construction projects. Results of the SEM analysis indicated that project complexity had a statistically significant direct effect on the cost growth of a DB project. Other factors, including delivery risks, facility type, and project type, demonstrated an indirect effect on the project cost growth. The findings contribute to the project delivery body of knowledge by identifying both direct and indirect factors affecting cost growth of DB highway projects. The results of this study may help practitioners create more accurate estimates and better manage risk for DB projects by identifying the critical risk factors and including the required contingency funds for the project.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Data generated or analyzed during the study are available from the corresponding author by request. Information about the Journal’s data sharing policy can be found here: http://ascelibrary.org/doi/10.1061/%28ASCE%29CO.1943-7862.0001263.
Acknowledgments
The authors would like to gratefully acknowledge the Federal Highway Administration (FHWA) and Dr. Keith Molenaar from the University of Colorado Boulder for helping with data collection used in this paper.
References
Abdelgawad, M., and A. Fayek. 2010. “Risk management in the construction industry using combined fuzzy FMEA and fuzzy AHP.” J. Constr. Eng. Manage. 136 (9): 1028–1036. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000210.
Abd El-Karim, M. S. B. A., O. A. M. Nawawy, and A. M. Abdel-Alim. 2017. “Identification and assessment of risk factors affecting construction projects.” HBRC J. 13 (2): 202–216. https://doi.org/10.1016/j.hbrcj.2015.05.001.
Bakhshi, J., V. Ireland, and A. Gorod. 2016. “Clarifying the project complexity construct: Past, present and future.” Int. J. Project Manage. 34 (7): 1199–1213. https://doi.org/10.1016/j.ijproman.2016.06.002.
Baumgartner, H., and B. Weijters. 2017. “Structural equation modeling.” In Advanced methods for modeling markets, 335–360. Cham, Switzerland: Springer.
Bhargava, A., S. Labi, S. Chen, T. Saeed, and K. Sinha. 2017. “Predicting cost escalation pathways and deviation severities of infrastructure projects using risk-based econometric models and Monte Carlo simulation.” Comput.-Aided Civ. Infrastruct. Eng. 32 (8): 620–640. https://doi.org/10.1111/mice.12279.
Bypaneni, S., and D. Tran. 2018. “Empirical identification and evaluation of risk in highway project delivery methods.” J. Manage. Eng. 34 (3): 04018007. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000602.
Chan, L., and N. Idris. 2017. “Validity and reliability of the instrument using exploratory factor analysis and Cronbach’s alpha.” Int. J. Acad. Res. Bus. Soc. Sci. 7 (10): 400–410. https://doi.org/10.6007/IJARBSS/v7-i10/3387.
Chandra, H. P. 2015. “Structural equation model for investigating risk factors affecting project success in Surabaya.” Proceedia Eng. 125: 53–59. https://doi.org/10.1016/j.proeng.2015.11.009.
Cho, K. M., T. Hong, and C. T. Hyun. 2009. “Effect of project characteristics on project performance in construction projects based on structural equation modeling.” Expert Syst. Appl. 36 (7): 10461–10470. https://doi.org/10.1016/j.eswa.2009.01.032.
Creedy, G. D., M. Skitmore, and J. K. Wong. 2010. “Evaluation of risk factors leading to cost overrun in delivery of highway construction projects.” J. Constr. Eng. Manage. 136 (5): 528. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000160.
Dao, B., S. Kermanshachi, J. Shane, and S. Anderson. 2017. “Exploring and assessing project complexity.” J. Constr. Eng. Manage. 143 (5): 04016126. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001275.
Diab, M., A. Varma, and K. Nassar. 2012. “Using risk assessment to improve highway construction project performance.” In Proc., 48th ASC Annual Int. Conf. Fort Collins, CO: Associated Schools of Construction.
Eybpoosh, M., I. Dikmen, and M. T. Birgonul. 2011. “Identification of risk paths in international construction projects using structural equation modeling.” J. Constr. Eng. Manage. 126 (4): 1164–1175. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000382.
FHWA (Federal Highway Administration). 2006. Design-build effectiveness study. Washington, DC: USDOT.
FHWA (Federal Highway Administration). 2018. Tech-brief: Alternative contracting method performance in U.S. highway construction. Washington, DC: FHWA.
Franz, B., R. Leicht, and K. Molenaar. 2017. “Impact of team integration and group cohesion on project delivery performance.” J. Constr. Eng. Manage. 143 (1): 04016088. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001219.
Gerow, J. E., V. Grover, N. Roberts, and J. B. Thatcher. 2010. “The diffusion of second-generation statistical techniques in information systems research from 1990–2008.” J. Inf. Technol. Theory Appl. 11 (4): 1–77.
Habibi, M., and S. Kermanshachi. 2018. “Phase-based analysis of key cost and schedule performance causes and preventive strategies.” Eng. Constr. Archit. Manage. 25 (8): 1009–1033. https://doi.org/10.1108/ECAM-10-2017-0219.
Hair, J., R. Anderson, B. J. Babin, and W. Black. 2009. Multivariate data analysis. 7th ed. Englewood Cliffs, NJ: Prentice Hall.
Han, S. H., D. Y. Kim, H. Kim, and W. S. Jang. 2008. “A web-based integrated system for international project risk management.” Autom. Constr. 17 (3): 342–356. https://doi.org/10.1016/j.autcon.2007.05.012.
Hasanzadeh, S., B. Esmaeili, S. Nasrollahi, G. Gad, and D. Gransberg. 2018. “Impact of owners’ early decisions on project performance and dispute occurrence in public highway projects.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 10 (2): 04518004. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000251.
Hoyle, R. H. 2012. Handbook of structural equation modeling. London: Guilford Press.
Johnson, R., and R. Babu. 2018. “Time and cost overruns in the UAE construction industry: A critical analysis.” Int. J. Constr. Manage. 20 (5): 402–411. https://doi.org/10.1080/15623599.2018.1484864.
Kaliba, C. M., M. Muya, and K. Mumba. 2009. “Cost escalation and schedule delays in road construction projects in Zambia.” Int. J. Project Manage. 27 (5): 522–531. https://doi.org/10.1016/j.ijproman.2008.07.003.
Kline, R. 2016. Principles and practice of structural equation modeling. 4th ed. 262–300. New York: Guilford Publications.
Leon, H., H. Osman, M. Georgy, and M. Elsaid. 2018. “System dynamics approach for forecasting performance of construction projects.” J. Manage. Eng. 34 (1): 04017049. https://doi.org/10.1061/%28ASCE%29ME.1943-5479.0000575.
Liu, J., Q. Xie, B. Xia, and J. B. Adrian. 2017. “Impact of design risk on the performance of design-build projects.” J. Constr. Eng. Manage. 143 (6): 04017010. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001299.
Mahamid, I., and N. Dmaidi. 2013. “Risks leading to cost overrun in building construction from consultants’ perspective.” Org. Technol. Manage. Constr. 5 (2): 860–873. https://doi.org/10.5592/otmcj.2013.2.5.
Molenaar, K., and A. Songer. 1998. “Model for public sector design-build project selection.” J. Constr. Eng. Manage. 124 (6): 467–479. https://doi.org/10.1061/(ASCE)0733-9364(1998)124:6(467).
Molenaar, K., S. Washington, and J. Diekmann. 2000. “Structural equation model of construction contract dispute potential.” J. Constr. Eng. Manage. 126 (4): 268–277. https://doi.org/10.1061/(ASCE)0733-9364(2000)126:4(268).
Molenaar, K. R., S. Anderson, and C. Schexnayder. 2010. Guidebook on risk analysis tools and management practices to control transportation project costs.. Washington, DC: Transportation Research Board.
Mueller, R. O. 2012. Basic principles of structural equation modeling: An introduction to LISREL and EQS. New York: Springer.
Nguyen, L., L. Le-Hoai, D. Tran, C. Dang, and C. Nguyen. 2018. “Effect of project complexity on cost and schedule performance in transportation projects.” Constr. Manage. Econ. 37 (7): 384–399. https://doi.org/10.1080/01446193.2018.1532592.
Nguyen, P., D. Tran, and B. Lines. 2020. “Fuzzy set theory approach to classify highway project characteristics for delivery selection.” J. Constr. Eng. Manage. 146 (5): 04020044. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001829.
Pandit, D., S. M. Yadav, and S. Vallabhbhai. 2015. “Factors affecting efficient construction project design development: A perspective from India.” Int. J. Constr. Supply Chain Manage. 5 (2): 52–67. https://doi.org/10.14424/ijcscm502015-52-67.
Park, J., and Y. H. Kwak. 2017. “Design-bid build vs. design-build in the U.S. public transportation projects: The choice and consequences.” Int. J. Project Manage. 35 (3): 280–295. https://doi.org/10.1016/j.ijproman.2016.10.013.
Park, Y. I., and T. C. Papadopoulou. 2012. “Causes of cost overruns in transport infrastructure projects in Asia: Their significance and relationship with project size.” Built Environ. Project Asset Manage. 2 (2): 195–216. https://doi.org/10.1108/20441241211280873.
Pehlivan, S., and A. Öztemir. 2018. “Integrated risk of progress-based costs and schedule delays in construction projects.” Eng. Manage. J. 30 (2): 108–116. https://doi.org/10.1080/10429247.2018.1439636.
Puth, M., M. Neuhäuser, and G. Ruxton. 2015. “On the variety of methods for calculating confidence intervals by bootstrapping.” J. Anim. Ecol. 84 (4): 892–897. https://doi.org/10.1111/1365-2656.12382.
Ramabodu, M. S., and J. J. P. Verster. 2010. “Factors contributing to cost overruns of construction projects.” In Proc., 5th Built Environmental Conf., 131–143. New York: Association for Computing Machinery.
Raykov, T., and G. Marcoulides. 2012. A first course in structural equation modeling, 1–52. Hoboken, NJ: Taylor and Francis.
Sardeshmukh, S., and R. Vandenberg. 2017. “Integrating moderation and mediation.” Org. Res. Methods 20 (4): 721–745. https://doi.org/10.1177/1094428115621609.
Shane, J., K. Molenaar, S. Anderson, and C. Schexnayder. 2009. “Construction projects cost escalation factors.” J. Manage. Eng. 25 (4): 221–229. https://doi.org/10.1061/(ASCE)0742-597X(2009)25:4(221).
Shrestha, P., and M. Fathi. 2019. “Impacts of change orders on cost and schedule performance and the correlation with project size of DB building projects.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 11 (3): 04519010. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000311.
Shrestha, P., and R. Maharjan. 2018. “Effects of change orders on cost growth, schedule growth, and construction intensity of large highway projects.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 10 (3): 04518012. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000264.
Sinesilassie, E., S. Tabish, and K. Jha. 2017. “Critical factors affecting cost performance: A case of Ethiopian public construction projects.” Int. J. Constr. Manage. 18 (2): 108–119. https://doi.org/10.1080/15623599.2016.1277058.
Tran, D., K. Molenaar, and L. Alarcön. 2016. “A hybrid cross-impact approach to predicting cost variance of project delivery decisions for highways.” J. Infrastruct. Syst. 22 (1): 04015017. https://doi.org/10.1061/(ASCE)IS.1943-555X.0000270.
Tran, D., and K. R. Molenaar. 2014. “The impact of risk on design-build selection for highway design and construction projects.” ASCE J. Manage. Eng. 30 (2): 153–162. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000210.
Tran, D., and K. R. Molenaar. 2015. “Risk-based project delivery selection model for highway design and construction.” J. Constr. Eng. Manage. 141 (12): 04015041. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001024.
Tsai, T. C., and M. L. Yang. 2010. “Risk assessment of design bid build and design-build building projects.” J. Oper. Res. Soc. Jpn. 53 (1): 20–39. https://doi.org/10.15807/jorsj.53.20.
Wood, H., and P. Ashton. 2009. “Factors of complexity in construction projects.” In Proc., 25th Annual ARCOM Conf., edited by A. Dainty, 857–866. Nottingham, UK: Association of Researchers in Construction Management.
WSDOT (Washington State DOT). 2016. Project delivery method selection guidance. Olympia, WA: WSDOT.
Xia, B., B. Xiong, M. Skitmore, P. Wu, and F. Hu. 2016. “Investigating the impact of project definition clarity on project performance: Structural equation modeling study.” J. Manage. Eng. 32 (1): 04015022. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000386.
Zhang, X., and V. Savalei. 2016. “Bootstrapping confidence intervals for fit indexes in structural equation modeling.” Struct. Equation Modell. Multidiscip. J. 23 (3): 392–408. https://doi.org/10.1080/10705511.2015.1118692.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 147 • Issue 7 • July 2021
Copyright
© 2021 American Society of Civil Engineers.
History
Received: Jun 11, 2020
Accepted: Jan 15, 2021
Published online: May 12, 2021
Published in print: Jul 1, 2021
Discussion open until: Oct 12, 2021
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.