Magnitude of Construction Cost and Schedule Overruns in Public Work Projects

This study analyzed 363 Clark County Department of Public Works (CCDPW) projects to determine construction cost and schedule overruns in various types and sizes of the projects. The sample projects were constructed from 1991 to 2008, with a total construction cost of $1.85 billion, equivalent to 2012 cost. A one-factor ANOVA test was conducted to determine whether construction cost and schedule overruns significantly varied based on types and sizes of the projects. The study showed that large, long-duration projects had significantly higher cost and schedule overruns than smaller, short-duration projects. 1. Introduction Consistent cost and time overruns of public works projects are not the best use of taxpayer money. In the current economic downturn where tax revenues are lagging, they are particularly detrimental. In the public sector, money spent on project change orders and increased construction time reduces the number and size of the projects that can be completed during any given fiscal year. Various reasons for construction cost and schedule overruns in any project include design error, inadequate scope, weather, project changes, and underestimating the time needed to complete the project. Items omitted from the engineer’s estimate of the projects due to design errors or inadequate scope frequently result in change orders, which increase cost as well as the time of delivery. Underestimating the construction time is detrimental because another important project may be delayed from going to bid until the current project is completed. Many public projects are extensions of a previous project, and inaccuracies in estimating project cost and construction time can result in improper sequencing of related projects or phasing within projects, thus delaying much needed improvements. Decisions on which projects are to put out for bids are based both on the need for improvement in a current facility or construction of a new facility, which is certainly the most important consideration, and on the engineer’s estimated cost and construction time. Underestimating a project’s cost and time is not in the public’s best interest, particularly in an urban area with a rate of growth such as the one recently experienced in Clark County, Nevada. Therefore, this study determined the magnitude of construction cost and schedule overruns in public projects of Clark County, Nevada, so that necessary actions can be taken to control these overruns in future projects. Further, the study investigated whether the magnitude of construction cost and schedule overruns varies