Working Paper Series, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin), Royal Institute of Technology
Policies to avoid cost overruns: Critical evaluation and recommendations
() and Hans Lind
Abstract: Many infrastructural projects have cost overruns and there
has been a lot of research both on why these cost overruns occur and what
can be done to reduce cost overruns. Bent Flyvbjerg is the leading
researcher in the area and in this article his proposals are also the
starting point. Beside a literature review a questionnaire was also sent
out to experienced Swedish project managers to find out what they thought
could reduce cost overruns. This has been the foundation for the proposals
formulated in this article. Proposals concerns three areas 1.
Organizational macro-structure, e.g. using more PPPprojects but also
decentralization of budgets where cost-overruns in one project in a region
leads to less other projects in the specific region. 2. Organizational
quality: It should be easy to see when and where cost overruns occur and
who was responsible. There should be an well-developed knowledge management
system in the organization and an organization culture of openness and a
focus on improvements. 3. Organizational processes, e.g. a systematic use
of external reviewers in different stages of a project.
Keywords: Cost-overruns; infrastructural projects; policy measures; (follow links to similar papers)
JEL-Codes: H41; H44; H54; L38; (follow links to similar papers)
16 pages, August 7, 2014
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