Evaluating Cost Overruns of Asphalt Paving Project Using Statistical Process Control Methods

Abstract

While some projects will experience changes to the contracted cost by deduction or additions, construction cost overruns are becoming a common problem in the construction industry. Steps need to be taken to minimize cost overrun through cost and quality control techniques. This paper presents a study conducted to evaluate construction cost overruns of asphalt paving operations performed by the Illinois Department of Transportation (IDOT). The main objective is to analyze the main causes of cost overruns and evaluate the amount of cost overrun of asphalt paving operations, using statistical process control (SPC) techniques. Real data from projects in the year 2000 were collected from IDOT. These data contain cost information of 219 projects. The results indicate that the average cost overrun for the sample collected was 4% above the bid price. Reasons for cost overruns are analyzed and a Pareto chart and a cause and effect diagram are constructed. Individuals and Moving Range (MR) control charts are developed and their interpretation and use are discussed. Furthermore, the benefits and limitations of using the individuals and MR chart in cost control applications are pointed out. It is recommended that SPC analysis be an integral part in managing and controlling project costs.