Causes of cost overrun and financial impact on public works from risk management perspective

Abstract

This paper aims to analyse the main causes for contracting additional services in public construction works, from a risk management perspective. A systematic literature review led to a new categorisation of the causes of cost overrun based on risk taxonomy. The field study involved an analysis of contracts for new and completed works at a public higher education institution. The Iramuteq software performed a lexical analysis of the justifications for the additions. The categorisation of the causes resulting from the literature review supported the definition of each risk category. The financial impact for each risk category was measured by quantitative analysis. The results indicate that the highest risk index corresponds to the project category, with 53% of addition frequency and 56% of financial impact. The contributions of this study involve the proposed model for analysis of the causes of cost overrun based on risk taxonomy and the association of lexical and documentary analyses to reduce subjectivity and improve the risk mitigation process.

Keywords:
Cost overrun; Risk management; Public works