Delays and Cost Overruns in Infrastructure Projects -- An Enquiry into Extents, Causes and Remedies

Abstract

Media reports abound on instances of prolonged delays and excessive cost overruns in infrastructure projects. Only a small number of projects get delivered in time and within the budget. Examples of successful project implementation, like construction of the Delhi Metro Rail, are few and appear only far in between. Indeed, the problem of time and cost overruns in India is widespread and severe. Yet, very few empirical studies exist on the subject. Even rarer are the studies based on completed projects. As a result, the extents as well as the causes behind delays and cost overruns have remained under-researched. This study investigates the various issues related to delays and cost overruns in publically funded infrastructure projects. The following questions are posed and answered -- How common and how large are the time and the cost overruns? What are the essential causes behind these delays and cost overruns? Are the underlying causes statistically significant? Are Contractual and Institutional failures among the significant causes? What are the policy implications for planning, development and implementation of infrastructure projects? The study is based on, by far, the largest dataset of 894 projects from seventeen infrastructure sectors. Among other results, it shows that the contractual and the institutional failures are economically and statistically significant causes behind cost and time overruns.

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