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Publication
Cost and time overruns in public investment projects: an exogenous determinants model, theory and practice
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| 4.52 MB | Adobe PDF |
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Abstract(s)
The original contribution to knowledge of this research is overtaking the absence of an exogenous variables model in the analysis of cost and time deviations in public projects in the existing literature. This is achieved through the construction of a model that includes exogenous (political, governance, and economic) and endogenous (project-related) determinants. This model aims to help public decision makers develop public policies that seek to minimise cost and time overruns in public infrastructure projects. Cost and time overruns are often perceived to be a sign of project failure, and several past studies have identified potential causes and explanatory factors for the occurrence of such deviations. Governments devote significant resources to public projects, which thus makes cost and time overruns a critical issue for public management.
The research presents a theoretical underpinning based on Opportunistic Behaviour, Institutional, Economic Cycles, and Incomplete contracts theories and provides an empirical analysis of 4,305 public projects developed in Portugal between 1980 and 2014. We used as dependent variables the cost/time deviation (the percentual difference between the final and initial cost/time) and the cost/time overruns (assuming one if the cost/time deviation is positive and zero if the cost/time deviation is zero or negative).
The analysis suggests that these exogenous determinants have been under-valued in the existing literature and that they do, indeed, play a relevant role in understanding cost and time deviations.
Description
Keywords
Public projects Transport projects Local government Cost deviations Cost overruns Time deviations Time overruns Endogenous models Exogenous variables