Scandinavian Working Papers in Economics

Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

No 14/6: Policies to avoid cost overruns: Critical evaluation and recommendations

Fredrik Brunes () and Hans Lind ()
Additional contact information
Fredrik Brunes: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Department of Real Estate and Construction Management , Royal Institute of Technology, Brinellvägen 1, 100 44 Stockholm, Sweden
Hans Lind: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Department of Real Estate and Construction Management , Royal Institute of Technology, Brinellvägen 1, 100 44 Stockholm, Sweden

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

JEL-codes: H41; H44; H54; L38

16 pages, August 7, 2014

Full text files

FULLTEXT01.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Cecilia Hermansson ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:12:31.