Analysis of Risks and Cost Overruns in Design-Bid-Build Highway Infrastructure Projects in Ontario
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Date
2017-09-27
Authors
Chahrour, Lara
Journal Title
Journal ISSN
Volume Title
Publisher
University of Waterloo
Abstract
Cost overruns commonly occur in infrastructure projects, and when the owner is a government entity, these overruns may disrupt the funding available for other projects. Research on large projects indicates that actual project costs are on average 20% higher than estimates for road projects and 34% higher than estimates for tunnel and bridge projects. Other studies that reiterate the presence of cost overruns report values between 3.9 and 10 percent.
Risk management can be used to identify and assess risks that may cause overruns and develop risk response plans to address them. The objective of this research is to use risk management knowledge to identify and assess project risks and their expected impacts on highway infrastructure projects in Ontario. The studied Ministry of Transportation of Ontario (MTO) projects have an average cost overrun of 5.2% of tender value for new construction projects, and 11.5% for rehabilitation projects.
The risk identification and analysis is followed by a comparison between MTO’s risk management experience and other typical North American organizations that are involved in transportation infrastructure such as Infrastructure Ontario and the California Department of Transportation, as well as other contract delivery methods such as design-build and public- private partnerships.
From analyzing 986 risk events, this research identifies design scope changes, material, and latent conditions as the main risks that appear to influence cost overruns for rehabilitation projects. For new construction, the main risks are design scope changes, latent conditions, and permits and regulations.
Once the risks are identified and analyzed, action is required to manage the risks that are considered most important. This thesis touches lightly on possible risk management actions for the identified risks.
Description
Keywords
highway infrastructure, risk identification, cost overrun, design-bid-build, risk management