Enhancing the understanding of cost overrun drivers in highway projects in Nigeria through system dynamics modelling

Abstract

Highway projects in developing countries (and specifically in Nigeria) are beset with numerous implementation challenges, including delivery within the contracted budget. This particular problem can be attributed to poor understanding of the contextual interactions and overall dynamics of the factors which contribute to cost overrun. To overcome this challenge, efforts have been made to understand the drivers of cost overrun, but to date there has been insufficient focus on the intricate interactions and dynamics of the driving factors. Therefore, this study set out to assess how system dynamics approach could improve our understanding of the driving factors of cost overruns in highway projects in Nigeria, by developing a computer-based system dynamics model that incorporates the intricate and contextual dynamic processes of the drivers. Using a case study research strategy, a four-stage interview process was adopted. Firstly, 16 interviews with relevant stakeholders were conducted and analysed using a formulated data compatible coding framework to inform model conceptualisation. Secondly, 9 interviews were conducted to validate the developed conceptual model. Thirdly, 9 interviews were conducted to elicit the values of the parameters used in the formal modelling process. Lastly, 6 interviews were conducted to validate the simulation model by presenting the simulation results and the accompanying algorithms and documentation. The findings revealed that, amongst the numerous driving factors, the most significant were: delay in progress of work, political instability, adverse weather, social issues, modification of project scope, and delay in payment to contractors. Additionally, the multiple drivers were shown to exhibit causal relationships, which formed the basis for the development of a conceptual model, supported by identified causal relations from literature sources and a model evaluation process with the stakeholders. The results from the conceptual model indicated that the feedback structure of the contextual system is governed by seven feedback loops (3 reinforcing (positive) and 4 balancing (negative)), demonstrating the complexity and dynamics of the contextual system. Accordingly, key parts of the conceptual model (Loops R3 and B4) which described the dynamic interactions inherent in a typical highway infrastructure development in Nigeria were converted, expanded and numerically structured in terms of stock and flow diagram, and simulated in a 240-month time period. The simulation results suggested that the model is useful for its purpose and is consistent with the system’s observed contextual reality. As well as the business as usual (BAU) scenario, which assumed the status quo in contextual behavioural trends, three alternative scenarios were designed and simulated in order to assess their impact on improving the cost performance of highway projects in Nigeria. The results showed that scenario four (combination of all policies) would provide the maximum cost performance benefit, by ensuring that the delivery period of key economic projects improved by 15%. The evaluation results indicated that the processes and their outputs are vital instruments for enhancing and promoting a better understanding of the intricate and contextual dynamics of cost overrun drivers in highway projects. This new model will be of use to decision makers in the highway sector of the Nigerian construction industry, facilitating informed and pragmatic decisions regarding policies that will ensure cost effective delivery of highway projects.