Cost overrun in infrastructure projects: case study of Bangladesh roads & highways department

Abstract

Transportation infrastructure plays a vital role in every nation’s Socio-Economic development and hence the size of the road network in a country is often used to assess the extent of its national development. In Bangladesh, Roads and Highways Department (RHD) is responsible for the construction and the maintenance of the major road and bridge networks. Since establishment of RHD the size of the major road network in Bangladesh has grown from 2500 kms to the present network of 22,476 kms. To keep up with the growth of the economy, roads and bridges built and maintained under RHD plays a vital role, which also includes safety and reliability of the road network. A proper development of the transportation road network will reduce the cost of transportation, both in terms of money and time; will also help in the integration of various regions within the country and may also create opportunity to create international road network. Objective of the study includes collection of necessary information of road and bridge development projects ranges over previous 20 years, to analyse the data and corelate causes of cost overrun and key factors involved. In preliminary assessment for this study includes the key factors to be considered. The factors considered for this thesis are, type of projects; Key Personnel; source of Funding; requirement of changes in the original plan; project size in terms of value, utility relocation requirement may need to be considered. Within the scope of this thesis, corelations between cost overrun was considered over the factors that is discussed above and it was found that cost overrun is positively related with time overrun, contract revisions, land acquisition and projects which includes bridges. 'Project duration' has been found to have the greatest effect on cost overrun. This is followed by 'project with bridge', which again is followed by variable - 'land acquisition'. This ranking may help decision makers employ limited resources to execute project management more prudently. Further research and evaluation in this sector may also create further fundings and the appropriateness the outcome may be evaluated for the department. Impact of the prevention may play a vital role to cost saving and reduce the waste in form of potential national economic and financial losses. It could easily be understood that a minor improvement to the efficacy of the Roads development section may greatly impact improving the markets, production, jobs, health, education and other social services.