External quality assurance of cost estimates in major public projects: empirical evidence on cost performance
International Journal of Managing Projects in Business
ISSN: 1753-8378
Article publication date: 20 May 2024
Abstract
Purpose
Value creation for society from public projects requires that the overall benefits exceed the use of taxpayers' money. At the same time, cost overruns in public projects are a well-documented feature in the literature, but practical guidance on reducing the extent and magnitude of overruns is rare. In 2000, Norway introduced a governance regime that includes mandatory external quality assurance (QA) of cost estimates for major public projects. This paper compares the cost performance of public projects on each side of this QA scheme.
Design/methodology/approach
We use an original dataset covering 1,704 projects from 2000 to 2021, reported first-hand from Norwegian public agencies. We apply quantitative methods in the form of descriptive statistics, regression models, and statistical testing of hypotheses to answer our research questions.
Findings
The mean cost overrun across projects in our dataset is smaller than several previous international studies have reported. We find no statistical support for different cost performances between QA and non-QA projects. Secondly, cost overruns seem to vary between different public sectors. A third finding is a small development with lower cost overruns over time for the non-QA projects, and we raise the question of whether the QA scheme has contributed to overall learning effects. The fourth finding is that cost deviations are quite independent of project size.
Originality/value
The paper offers novel insights for decision-makers and researchers on the effects of external quality assurance on cost performance in public projects.
Keywords
Acknowledgements
The authors would like to thank research colleague Ingri Bukkestein for her good ideas and initiation of this study. In addition, the authors thank two anonymous reviewers and the Editor of IJMPB for their constructive comments that helped improve this manuscript.
Funding: The Concept Research Program at the Norwegian University of Science and Technology supported the work, which again is funded by the Norwegian Ministry of Finance. The work was also supported by the Norwegian Defence Research Establishment, which in turn is funded by the Norwegian Ministry of Defence.
Citation
Berg, H. and Nyhus, O.H. (2024), "External quality assurance of cost estimates in major public projects: empirical evidence on cost performance", International Journal of Managing Projects in Business, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJMPB-12-2023-0276
Publisher
:Emerald Publishing Limited
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