Reasons For Contract Changes In Implementing Dutch Transportation Infrastructure Projects: An Empirical Exploration

Abstract

An important contributor to cost overruns of infrastructure projects is contract changes after the construction contract has been concluded. Using mainly descriptive statistics and non-parametric tests, real project data were analyzed from forty-five Dutch transportation infrastructure projects with a total construction contract value of over € 8.5 billion. First it was explored if we could find evidence for the presumption that contractors bid low on contracts to recover the loss of bid profit by claiming contract change costs in the project implementation. We conclude that we could not find evidence for the opportunistic behavior of contractors. Second, the different sizes and reasons for the contract changes were explored. We conclude that: scope changes are the most significant reason for contract changes, followed by technical necessities; smaller projects tend to have higher relative contract change costs; and contract changes due to omissions in the contract are more present in smaller projects than in larger projects. The results of the analysis suggest among other things that policymakers and planners should pay more attention to flexible contracting, and to the contract management of smaller projects.