Predictors of Cost‐Overrun Rates
Publication: Journal of Construction Engineering and Management
Volume 116, Issue 3
Abstract
An investigation was conducted concerning the influence of the following items on construction project cost-overrun rates: project size, construction type, number of bidders, and the percent difference between the government estimate and the award amount. The cost-overrun rate is defined as the total dollar amount of change orders and claims divided by the award amount. The analysis was conducted on 1,576 Navy construction projects that were in progress from 1984 to 1987. It was found that the shape of the frequency distribution for the cost-overrun rate changed with the size of the project. Cost overruns occurred more frequently for larger projects. The cost-overrun rate was also influenced by the percent difference between the government estimate and the award amount. Cost overruns were more likely when the award amount was less than the government estimate.
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References
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De Neufville, R., Hani, E. N., and Lesage, V. (1977). “Bidding models: Effects of bidder risk aversion.” J. Constr. Div., ASCE, 103(2), Mar., 57–70.
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Randolph, D. A., Rajandra, K., and Campfield, J. J. (1987). “Using risk management techniques to control construction contract costs.” J. Constr. Engrg. and Mgmt., ASCE, 3(4), 314–324.
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Rosemond, J. R. (1984). “Analysis of low bidding and change order rates for navy facilities construction contracts,” thesis presented to the Naval Postgraduate School, at Monterey, Calif., in partial fulfillment of the requirements for the degree of Master of Science.
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Rowland, H. J. (1981). “The causes and effects of change orders on the construction process,” thesis presented to the Georgia Institute of Technology, at Atlanta, Ga., in partial fulfillment of the requirements for the degree of Master of Science.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 116 • Issue 3 • September 1990
Pages: 548 - 552
Copyright
Copyright © 1990 ASCE.
History
Published online: Sep 1, 1990
Published in print: Sep 1990
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