Three-Stage Least-Squares Analysis of Time and Cost Overruns in Construction Contracts
Publication: Journal of Construction Engineering and Management
Volume 136, Issue 11
Abstract
Construction cost overrun and time overrun (delay) are a significant problem in highway-construction project delivery. Previous research studies have provided insight into the factors that affect overruns; however the findings may have been limited because they do not explicitly consider the simultaneous relationship between cost and time overruns. In this paper, we use data from Indiana highway projects to provide empirical evidence that a simultaneous relationship exists between cost and time overruns and that analysis of these two contractual outputs need to take due cognizance of such simultaneity. Using the three-stage least-squares technique, we identify a number of factors that significantly affect cost overrun and time overrun and we show how the effect of these variables vary by attributes such as project type and results of the bidding process. The models developed in this paper can help agencies enhance the estimation of the expected overruns of final cost and the delay in completion time for their planned projects.
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Acknowledgments
The writers would like to acknowledge the contribution of Claire Bordat and Bobby McCullouch in their efforts for data collection for a previous study that spawned this paper.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 136 • Issue 11 • November 2010
Pages: 1207 - 1218
Copyright
© 2010 ASCE.
History
Received: Dec 9, 2008
Accepted: Apr 3, 2010
Published online: Apr 24, 2010
Published in print: Nov 2010
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