Primary Risks for Delays and Cost Overruns in the Construction of Drinking Water Supply and Sanitation Projects in Peru

Abstract

Delays and cost overruns are common problems in construction projects that may jeopardize construction completion when actual construction times and costs substantially differ from estimates in the planning stage. This study examines the risks that contribute to delays and cost overruns in drinking water supply and sanitation projects in Peru. Descriptive statistics, logistic regressions, and Chi-square tests were applied to: (1) identify the primary risks; (2) analyze the influence of contracting characteristics on the occurrence of delays and cost overruns; and (3) explore the association between delays and cost overruns caused by these risks. The analysis of charge order documents from 318 projects in Peru found that 22 of the risks identified in the literature are present in the reviewed projects, along with five additional risks not described in the literature. The results indicate that the most significant risks in terms of frequency of occurrence include: delay in change orders approvals, adverse weather conditions, inaccurate site information, inaccurate cost estimates at the design stage, and land availability problems. Additionally, the contract amount is the most influential variable in the occurrence of delays and cost overruns. The higher the contract amount, the greater the probability of occurrence. This research provides valuable insights for professionals involved in project management, helping them better understand the primary risks contributing to delays and cost overruns. Delays and cost overruns frequently affect the number of projects that public administrations complete within a given period, ultimately affecting the population’s access to essential infrastructure for basic services such as drinking water and sanitation. Additionally, public administrators usually lack comprehensive information on the risks that may affect the project schedules and costs. This article identifies the frequency of occurrence of the main risks leading to delays and cost overruns on construction projects, highlighting the five most significant ones. The study also finds that the probability of occurrence of delays and cost overruns depends on the contracting characteristics. These findings enable risk managers to prioritize resources effectively. By focusing on the five most significant risks, they can develop more targeted risk management strategies, improving the overall predictability and stability of project outcomes. Furthermore, understanding how contracting characteristics affect project performance allows for the development of better contract procedures.