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Drivers of cost and time overruns: A client and contractor perspective
Mälardalen University, School of Business, Society and Engineering, Industrial Economics and Organisation.ORCID iD: 0000-0003-0826-7052
Mälardalen University, School of Business, Society and Engineering, Industrial Economics and Organisation.ORCID iD: 0000-0002-9707-7068
2021 (English)In: Organization, Technology and Management in Construction: an International Journal, ISSN 1847-6228, Vol. 13, no 1, p. 2374-2382Article in journal (Refereed) Published
Abstract [en]

Large infrastructure investments are expected to create sustained values for society fora long time. Such investment projects include, for instance, hospitals, tunnels, sportarenas, power plants, roads, railways, and bridges. They involve a complexorganization of contracts and agreements. The client is expected to plan, procure, anddetermine the critical steps of a project while the contractor should solve issues raisedby the client. Many of these agreements are path-dependent and reflect past routines,experiences, and contacts. As such, many investments tend to return to similarsources instead of replacing routines and collaborations that did not work. This cancause change orders that furthermore reflect consequences such as cost and timeoverruns. While much is known about effects in construction projects, this paper shedslight on drivers of change orders. We build upon a sample of 234 observationsresponding to a survey on investment planning. The results show that projectassumptions are often wrong and inadequate in large investments. Such wrongassumptions are caused by interpersonal and leadership issues, poor planning, orsometimes even intentional profit-seeking. Our results show that clients andcontractors have different perceptions and enter contractual obligations differently. Theimplication is, therefore, that better routines of documentation, more frequent feedback,and more accurate or precise standards may close the gap between planning and whatis actually achieved. More precise contractual agreements may also create a betterprocess to procure, manage projects, and allocate resources.

Place, publisher, year, edition, pages
2021. Vol. 13, no 1, p. 2374-2382
Keywords [en]
change orders; cost and time overrun; client-contractor differences; projects
National Category
Business Administration
Research subject
Industrial Economics and Organisations
Identifiers
URN: urn:nbn:se:mdh:diva-50230DOI: 10.2478/otmcj-2021-0006Scopus ID: 2-s2.0-85106994622OAI: oai:DiVA.org:mdh-50230DiVA, id: diva2:1468791
Available from: 2020-09-18 Created: 2020-09-18 Last updated: 2021-12-02Bibliographically approved

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Dahlin, PeterPesämaa, Ossi

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