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Analysis of WSDOT Construction Cost Overruns

Description:

Like any other agency that funds construction projects, the Washington State Department of Transportation (WSDOT) would like to minimize cost overruns on each construction contract that is administered. A study was undertaken to investigate and identify those factors that significantly impact construction cost overruns on WSDOT projects. Cost overruns were measured by the cost overrun rate which is the percentage of difference between the low bid amount on WSDOT projects and the actual incurred cost on these projects. A total of 433 unit price, competitively bid contracts completed during fiscal years 1985 and 1989 were reviewed. The review involved a statistical analysis of each project, including design, bidding, and construction administration data. Specific factors that were identified to impact construction cost overruns included project size, project type, level of competition (measured by the number of bids and the range of those bids), geographic district, pre-contract engineering, and frequency with which a contractor is awarded WSDOT contracts. The study concluded that construction cost overruns are associated with projects that are more complex or have a large number of bidders. Projects with a high degree of complexity include large projects, new construction projects, bridge projects, and safety improvement projects.

 

  • Date Published: July, 1991
  • Publication Number: WA-RD 218.1
  • Last Modified: September 26, 2007
  • Authors: Jimmie Hinze, Gregory A. Selstead.
  • Originator: Washington State Transportation Center (TRAC)
  • # of Pages: 68 p., 1,499 KB (PDF)
  • Subject: Bids, Construction, Construction management, Contracts, Cost overruns, Costs, Estimates, Program management, Road construction, State departments of transportation, Statistical analysis.
  • Keywords: Budgeting, Construction costs, highway construction, claims, overruns, cost estimates, bids, contracts, construction management, dispute resolution, project administration.
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This abstract was last modified April 29, 2008