The main concern of a construction client is to procure a facility that is able to meet its functional requirements, of the required quality, and delivered within an acceptable budget and timeframe. The cost aspect of these key performance indicators usually ranks highest. In spite of the importance of cost estimation, it is undeniably neither simple nor straightforward because of the lack of information in the early stages of the project. Construction projects therefore have routinely overrun their estimates. Cost overrun has been attributed to a number of sources including technical error in design, managerial incompetence, risk and uncertainty, suspicions of foul play and even corruption. Furthermore, even though it is accepted that factors such as tendering method, location of project, procurement method or size of project have an effect on likely final cost of a project, it is difficult to establish their measured financial impact. Estimators thus have to rely largely on experience and intuition when preparing initial estimates, often neglecting most of these factors in the final cost build-up. The decision-to-build for most projects is therefore largely based on unrealistic estimates that would inevitably be exceeded. The main aim of this research is to re-examine the sources of cost overrun on construction projects and to develop final cost estimation models that could help in reaching more reliable final cost estimates at the tendering stage of the project. The research identified two predominant schools of thought on the sources of overruns – referred to here as the PsychoStrategists and Evolution Theorists. Another finding was that there is no unanimity on the reference point from which cost performance could be assessed, leading to a large disparity in the size of overruns reported. Another misunderstanding relates to the term “cost overrun” itself. The experimental part of the research, conducted in collaboration with two industry partners, used a combination of non-parametric bootstrapping and ensemble modelling with artificial neural networks to develop final project cost models based on about 1,600 water infrastructure projects. 92% of the validation predictions were within ±10% of the actual final cost of the project. The models will be particularly useful at the pre-contract stage as they will provide a benchmark for evaluating submitted tenders and also allow the quick generation of various alternative solutions for a construction project using what-if scenarios. The original contribution of the study is a fresh thinking of construction “cost overruns”, now proposed to be more appropriately known as “cost growth” based on a synthesises of the two schools of thought into a conceptual model. The second contribution is the development of novel models of construction cost estimation utilising artificial neural networks coupled with bootstrapping and ensemble modelling.

abstract: This thesis presents a literature research analyzing the cost overrun of the construction industry worldwide, exploring documented causes for cost overrun, and documented parties responsible for the inefficiency. The analysis looks at a comparison between the metrics of construction projects in different continents and regions. Multiple publication databases were used to look into over 300 papers. It is shown that although construction demands are increasing, cost overrun on these projects is not decreasing at the same rate around the world. This thesis also presents a possible solution to improve cost overrun in the construction industry, through the use of the Best Value Performance Information Procurement System (BV PIPS). This is a system that has been utilized in various countries around the world, and has documented evidence that it may be able to alleviate the overrun occurring in the construction industry. / Dissertation/Thesis / Masters Thesis Construction 2017

Yes / Understanding the cause of cost overruns in transportation infrastructure projects has been a topic that has received considerable attention from academics and the popular press. Despite studies providing the essential building blocks and frameworks for cost overrun mitigation and containment, the problem still remains a pervasive issue for Governments worldwide. The interdependency that exists between ‘causes’ that lead to cost overruns materialising have largely been ignored when considering the likelihood and impact of their occurrence. The vast majority of the cost overrun literature has tended to adopt a deterministic approach in examining the occurrence of the phenomenon; in this paper a shift towards the adoption of pluralistic probabilistic approach to cost overrun causation is proposed. The establishment of probabilistic theory incorporates the ability to consider the interdependencies of causes so to provide Governments with a holistic understanding of the uncertainties and risks that may derail the delivery and increase the cost of transportation infrastructure projects. This will further assist in the design of effective mitigation and containment strategies that will ensure future transportation infrastructure projects meet their expected costs as well as the need of taxpayers. / Australian Research Council (DP160102882)

Yes / Governments in Australia place great emphasis on the development and expansion of their rail networks to improve productivity and service the increasing needs and demands from businesses and commuters. A case study approach is used to analyze the cost performance of 16 rail projects constructed by a contractor between 2011 and 2014, which ranged from AU$3.4 to AU$353 million. Findings indicate that scope changes during construction were the key contributors that lead to the amendment of each project’s original contractual value. As a result, there is a need for public and private sector asset owners to establish a cost contingency using a probabilistic rather than a deterministic approach to accommodate the potential for scope changes during construction. To improve cost certainty during the construction of rail projects, it is suggested that use of collaborative forms of procurement juxtaposed with the use of Building Information Modelling and Systems Information Modelling are implemented. The utilization of such technological and process innovations can provide public and private sector asset owners charged with delivering and maintaining their rail networks with confidence projects can be delivered within budget and are resilient to unexpected events and adaptable to changing needs, uses or capacities. / The authors would like to acknowledge the financial support provided by the Australian Research Council (DP160102882).

Over-budget projects have become more common lately in the construction industry. This can lead to negative effects such as disputes between construction operators, closure of projects and reduced construction activity. In addition, increased construction costs risk financial strain for the entrepreneurs, which can lead to bankruptcy and a lower number of entrepreneurs in the market. With the recent large cost variations for, among other things, various building materials and fuels, it is of great interest as an entrepreneur to be able to protect yourself against cost increases. Therefore, it is important that an entrepreneur knows which financial instruments are available and what an effective financial risk management process can look like.The purpose of the study is to investigate which financial instruments are available that can protect a contractor against increased costs during the contract period. In addition, the study aims to investigate how the research believes that financial risk management should look like, both in tender phase and in the construction phase.The study's theory deals with which financial instruments an entrepreneur can use to protect themself against cost increases in a contract and how financial risk management should look like. The methods that the study covers are budget contingency, index regulation, General Regulations and the impact of inflation. The study also describes the Successive Principle as a method for managing uncertainties in a project. The study's theory regarding financial risks deals, among other things, with the four steps of identification, assessment, pricing and management of risks in the tender phase. In addition, how to deal with extern risks and risks in the construction phase are described.In order to compare the theory of the study linked to the research questions, BDX Företagen AB has been studied as a case company to see how a company in the industry works regarding financial risk management and protection against cost increases. In addition, interviews with the Swedish Transport Administration have been conducted to get the client's view on the matter. After the completed case study, some shortcomings were discovered with the methods described in the theory section, as well as opportunities for improvement regarding the case company's risk management and use of protection against cost increases. These are described as findings in the study. Some of the findings of the study are:-       A better index will be needed in the industry for an entrepreneur to be able to leave a fixed price.-       The Swedish Construction index is to be shut down and there is currently no substitute.-       There is no standardized way to interpret the General Regulations, which means that the assessment will be different from project to project.The study presents a number of recommendations the case company and other similar companies in the construction industry can make use of. The recommendations are based on the theory section and the shortcomings discovered in the case study. Some of the recommendations are:- Consider inflation when calculation projects.- Implement the Successive Principle when assessing risk and opportunities.- Develop a routine to transfer the risks from the tender phase to the construction phase.Financial risk management and protection against cost increases are of great importance to an entrepreneur in the construction industry. If these things are not taken into account, the entrepreneur risks financial losses, which in the worst case can lead to bankruptcy.

Infrastructure project delays and cost overrun are caused by ineffective use of organizational skills, processes, and resources by project managers in the construction industry. Cost overrun and schedule delay in Qatari infrastructure projects have had damaging effects on the national economy by way of claims and litigation, contractual disputes, delays in dependent projects, and project abandonment. The purpose of this qualitative case study was to explore the perceptions of project managers regarding how they utilize capacity-planning practices to mitigate project schedule delay and cost overrun in government-funded infrastructure projects in Qatar. This study was framed by three conceptual models developed by Gill to outline the capacity management needs within a construction company: (a) the time horizon model, (b) the individual-organization-industry levels model, and (c) the capacity development across components model. Date were collected from semistructured interviews with 8 participants, observational field notes, and archival data regarding Qatari infrastructure project managers' experiences in capacity-planning practices. Thematic analysis of textual data and cross-case synthesis analysis yielded 5 conceptual categories that encompassed 15 themes. The conceptual categories were (a) resources to meet performance capacity, (b) knowledgeable and skillful staff, (c) short- and long-term planning strategy, (d) cost overrun issue, and (e) time management. Findings may be used to promote timely completion of infrastructure projects, which may benefit citizens, construction companies, and the economy of Qatar.

Abstract Background Construction industry greatly affect the environment in the aspect of energy consumption and its contribution to global warming. Accordingly, green building construction is significantly growing, which makes it an interesting topic for researchers. Green buildings are defined as buildings constructed according to sustainability standards that keeps the natural environment healthy. However green construction is challenging in the economic aspect and the cost efficiency. Based on the researches, uncertainty is a main reason for cost overrun. In addition, procedures in early stages of the project is of great importance and have influence on the costs. However, further study is needed to identify the differences between conventional and green construction companies regarding uncertainties, cost overrun, and uncertainty mitigation techniques. Purpose The focus of this research is to compare two types of construction companies (conventional and sustainable) in the aspect of uncertainties as inevitable part of risks, it’s effect on cost overrun, and techniques being used in the pre-construction phase to mitigate them. Method Multiple-case study was conducted, and two construction companies were selected of each type. This research is a qualitative study with abductive approach. The empirical data were collected by conducting semi-structured interviews with several positions in each company. Also, secondary data were collected from companies’ archival reports and documents, and from scientific blogs. Conclusion The findings of this research indicate that sustainability creates fields of uncertainties extra to those existing in conventional construction. The study revealed the direct effect of uncertainties on cost, and the indirect effect by generating events which cause overruns in cost. Moreover, Companies work on improving managerial skills in the preconstruction phase to mitigate the effect of uncertainties and to reduce probability of cost overrun occurrence in both sustainable and convention construction companies. While in sustainable construction, additional techniques and efforts are needed as technology, artificial intelligence, and hiring external resources and staff.

Transport infrastructure projects, including tunneling, suffer from timedelays and cost overrun. A literature review shows that the effect ofuncertainty has been neglected in explaining time and cost overrunmeaning that technical explanations matter. Probabilistic estimations oftime and cost can be employed for dealing with uncertainty in transportinfrastructure projects.In this licentiate thesis, KTH’s probabilistic time and cost estimationmodel for tunneling projects (Isaksson and Stille, 2005, Rock Mech. RockEng., 38, 373-398) was improved. The improvements include breakingdown the production activities into their sub-activities, which form thebasis for assessing times (or costs) for tunnel construction. In addition, theexceptional time and the length of model’s geotechnical zones aredescribed as stochastic variables instead of deterministic values used in theoriginal model. Given its hierarchical structure, the model can be used fortime and cost estimation of all types of tunnels and all constructionmethods in various geological condition.The improved version of the model uses three types of input parametersthat are probabilities of occurrences of different geological condition andidentified undesirable events, production effort of sub-activities (i.e. timespent for performing the sub-activity per unit length of tunnel) andadditive delay time that is imposed as a result of occurrence of undesirableevents. The important issues in modeling the uncertainty in the productionefforts of sub-activities are also explained. / Transportinfrastrukturprojekt, inklusive tunnelbyggnad, lider ofta avförseningar och ökade kostnader. En litteraturgenomgång visar atteffekten av osäkerhet inte har beaktats när man försöker förklara orsakentill förseningar och kostnadsökningar, vilket betyder att osäkerheten omgeotekniska förhållanden mycket väl kan spela en stor roll. För att hanteradenna osäkerhet när man bedömer tid och kostnad för tunnelprojekt kansannolikhetsbaserade metoder användas.I denna licentiatuppsats förbättrades den sannolikhetsbaserade modellför tid och kostnadsskattning i tunnelprojekt som tidigare utvecklats påKTH (Isaksson och Stille, 2005, Rock Mech. Rock Eng., 38, 373-398). Denviktigaste förbättringen var att dela upp produktionsaktiviteterna idelaktiviteter, för vilka man sedan enklare kan bedöma tidsåtgång (ellerkostnader). Dessutom beskrivs exceptionella förseningar och längden påmodellens geotekniska zoner nu med stokastiska variabler istället för meddeterministiska värden. Modellen är flexibel nog att kunna användas förtids- och kostnadsskattning av alla typer av tunnelprojekt ochkonstruktionsmetoder i olika geologiska miljöer.Den förbättrade versionen av modellen använder tre typer avindataparametrar: sannolikheter för förekomster av olika geologiskatillstånd och identifierade oönskade händelser; produktionsinsats fördelaktiviteter (d.v.s. den tid som används för att utföra delaktiviteten permeter tunnel); samt försening som orsakas av oönskade händelser.Uppsatsen diskuterar även de viktigaste aspekterna vid modellering avosäkerheten i produktionsinsatsen för delaktiviteter. / <p>QC 20211102</p>

The purpose of this study is to identify main factors when cost estimate is being exceeded in the construction industry both nationally and globally. If the cost estimation is exceeded, it may result in losses for the company, which can be severe and cause extensive damage. Therefore, a study is necessary to see if it is possible to perform a more detailed cost calculation.Cost overruns occur in both bigger and smaller projects. Factors causing cost overruns do not always have to be of the same category. Identifying negative factors as a guideline is troublesome due to the fact that one project outcome might not necessarily be other projects result.In collaboration with Småa AB and our starting point in “The white city”, an examination was performed to identify the factors leading to the costs being exceeded. Study consisting of literature and interviews with the production manager for the White City. At the end of the study the purpose and questions will be answered. Suggestions and solutions will be provided.The work was ongoing during a prevailing pandemic, that has affected the entire world, Covid-19. The pandemic has limited our site visits and interviews. Most of the work has been done digitally.

A project can be defined as a temporary work that is within the scope of time and budget in terms of achieving a project goal. Due to the fact that construction projects are unique and usually very complex, project management therefore requires a working method that is adapted to the prerequisites of the project. The project manager's responsibility to follow up on the budget and ensure that resources such as working hours and consulting services are distributed correctly, is becoming increasingly challenging as the change paradox shows that flexibility decreases and costs for changes increase as the project progresses. Exceeding the project budget in construction projects has today become a global phenomenon and involves several negative social effects. Scientific studies show that the increased costs can be derived from deviations such as additions and changes during the construction project. On the other hand, there are perceived gaps in the literature for which factors affect the extent of these and thus became the study's area of ​​investigation. Based on the scientific gap, the study aims to analyze the startup process in smaller construction projects with regard to identifying the factors that have an impact on additions, but also to review how project managers can proactively manage these factors in order to reduce the risk of increased deviations. To answer the research questions and purpose, a qualitative case study has been applied to a global consulting company in the construction industry, where semi-structured interviews were conducted with five project managers at the company.   The result of the study shows that project managers do not take preventive measures or work to prevent deviations in the startup process. Based on a thematic analysis of the results, factors with an impact on deviations have been identified in three areas; systematics, communication and experience and competence. The study has shown that increased costs for additions and changes can be deduced from different approaches to project management and misleading information, inadequate requirement specification that leaves room for own interpretation, unspecified communication channels, conflicts, lack of competence and abrupt completions of the project. In order to achieve a more proactive startup process in order to prevent increased costs for additions and changes, project managers should ensure a clear requirement specification by discussing important issues and decisions, requirements and expectations with support from templates and checklists. To avoid misunderstandings and conflicts, a communication plan can be established. Finally, the choice of project model should be established and routines for final reporting should be introduced to create a learning organisation that increases the project managers' self-insight and competence regarding increased costs for additions and project changes. The theoretical contribution of the study is the identified factors within three areas as well as suggestions for how project managers can facilitate the management of additions in the startup process of construction projects. / Ett projekt kan definieras som ett tillfälligt arbete som förhåller sig inom ramarna för tid, budget och omfattning i avseende att uppnå ett projektmål. Med anledning av att byggprojekt är unika och vanligen mycket komplexa, är projektledare i behov av verktyg och arbetsmetoder som anpassas utifrån projektets förutsättningar. Projektledarens ansvar att följa upp budget och se till att resurser såsom arbetstid och konsulttjänster fördelas rätt, blir allt mer utmanande under projektets gång då ändringsparadoxen påvisar att flexibiliteten minskar och kostnader för ändringar ökar i takt med projektets fortgång. Överskridande av projektbudget inom byggprojekt har idag kommit att bli ett globalt fenomen och innebär flera negativa samhällseffekter. Vetenskapliga studier visar att de ökade kostnaderna kan härledas till tillägg och ändringar under byggprojektet. Däremot upplevs det finnas luckor i litteraturen för vilka faktorer som inverkar på omfattningen för dessa och detta blev således studiens undersökningsområde. Utifrån det vetenskapliga gapet syftar studien till att analysera uppstartsprocessen i mindre byggprojekt i avseende att identifiera de faktorer som har en inverkan på tillägg, men även till att se över hur projektledare kan hantera dessa faktorer för att minska risken för ökade kostnader vid tillägg. För att besvara rapportens frågeställningar och syfte har en kvalitativ fallstudie tillämpats hos ett globalt konsultbolag inom byggbranschen, där semistrukturerade intervjuer genomfördes med fem projektledare på företaget. Resultatet av studien visar att projektledare inte vidtar förebyggande åtgärder eller arbetar för att förhindra tillägg i uppstartsprocessen. Utifrån en tematisk analys av resultatet har faktorer med en påverkan på tillägg kunnat identifieras inom tre områden; systematik, kommunikation samt erfarenhet och kompetens. Studien har visat att ökade kostnader vid tillägg och ändringar går att härleda till olika tillvägagångssätt vid projektledning och vilseledande information, bristfällig kravspecifikation som lämnar utrymme för egen tolkning, ospecificerade kommunikationsvägar, konflikter, bristande kompetens hos projektledaren samt abrupta projektavslut. För att uppnå en mer proaktiv uppstartsprocess i syfte att förhindra ökade kostnader vid tillägg och ändringar bör projektledare säkerställa en tydlig kravspecifikation genom att diskutera viktiga frågor och beslut, krav och förväntningar med stöd från mallar och checklistor. För att undvika missförstånd och konflikter kan en kommunikationsplan upprättas. Avslutningsvis bör val av projektmodell fastställas och rutiner för slutrapportering införas för att skapa en lärande organisation som ökar projektledarnas självinsikt och kompetens vad gäller ökade kostnader för tillägg och ändringar. Studiens teoretiska bidrag är bidragsfaktorer som identifierats inom tre områden samt förslag till hur projektledare kan underlätta hantering av tillägg i uppstartsprocessen av byggprojekt.