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http://dx.doi.org/10.6106/KJCEM.2017.18.3.105

Cause Analysis of Cost Overruns in International Infrastructure Project Conducted by Korean Contractors  

Jung, Wooyong (Department of Civil & Environmental Engineering, Yonsei University)
Han, Seungheon (Department of Civil and Environmental Engineering, Yonsei University)
Publication Information
Korean Journal of Construction Engineering and Management / v.18, no.3, 2017 , pp. 105-116 More about this Journal
Abstract
In recent years, large Korean construction companies have suffered serious losses in their overseas business. Many practitioners and researchers have analyzed causes of cost overrun in these projects. However, these arguments have not been empirically verified based on acutal project cases. This study investigated cost overrun rate, contingency, allowance, predicted risk before bidding, and actual and residual risk after award in the 67 international infrastructure projects conducted by 13 large construction companies. The causes of cost overruns are derived as follows. First, they identified the possibility of cost overrun to some extent before the bidding, but did not reflect the enough risk money to bid price. In particular, this behavior was more severe in badly cost-overrun projects. Second, the causes of cost overrun were more influenced by external environmental risk than internal capability risk. However, the internal risk in badly cost-overrun projects was relatively high compared to cost-underrun projects. Third, badly cost-overrun projects failed to mitigate risk. However, cost underrun projects were affected more by low exterior risk conditions than by well mitigated risk. This study provides more informed knowledge in controlling project costs in international infrastructure projects.
Keywords
Cost Overrun; Risk; Contingency; Allowance; International Infrastructure Project;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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