ABSTRACT
VII International Conference on Technological Innovation in Building
DESIGN OF A SURVEY AS A PART OF THE METHODOLOGY TO ESTABLISH
DELAYS AND COST OVERRUNS IN INDUSTRIAL TURNKEY PROJECTS
1
Antonio Héctor Álvarez Pozo; 2Miguel Ignacio Parma García;
Luis Fernando Bautista Santa Cruz; 1Evangelina Atanes Sánchez
2
Isabel Ortiz Marcos;
3
1
Escuela Técnica Superior de Ingeniería y Diseño Industrial, Universidad Politécnica de Madrid.
antoniohector.alvarez.pozo@alumnos.upm.es; evangelina.atanes@upm.es
2
Escuela Técnica Superior de Ingenieros Industriales, Universidad Politécnica de Madrid.
m.parma@alumnos.upm.es; isabel.ortiz@upm.es
3
Escuela Superior de Ciencias Experimentales y Tecnología, Universidad Rey Juan Carlos.
fernando.bautista@urjc.es
Keywords: Delays, Cost overruns, Power projects, Oil & Gas projects, Brown–Gibson model
Abstract
The execution of an industrial project is defined by three basic parameters (also called “triple
constraint”, “iron triangle”, or “project management triangle” according to the PMI [1]): scope,
time, and cost. A change in one of the three parameters will have an inverse impact on at least
one of the other two. For example, if for the same scope, it is required to reduce the execution
period (time), the budget of the works (cost) must be increased, as more resources must be
allocated.
In any financing scheme for a project, both the term (time) and the amount (cost) are key factors.
Incurring millionaire cost overruns and delays during the execution of these projects, without
adequate management between the parties, may lead to disputes, arbitrations, litigation, and
finally, a total project abandonment. In recent years, cost and performance benchmarks have
been redefined in many industries. Applying the same underlying principles to large investment
projects in large industries could achieve a similar step-change in performance, with the potential
to reduce project cost and actual time by 30 to 50%, which is more than double the returns of
the projects [2]. However, the sector has struggled to achieve even moderate productivity
improvement rates or deliver projects on time.
To make a more rigorous and scientific approach to this problem pointed out here and
considering its importance due to the size of the investments that this type of project supposes
to the Oil & Gas and Power sectors, this work aims to identify the most common causes of delays
and cost overruns in industrial projects. For that purpose, a representative number of Project
Managers in Engineering companies in the sector will be systematically surveyed. Based on the
results, a series of good practices will be proposed, whose application in the execution of the
projects will reduce the frequency and their impact.
A literature review has been executed as part of the developed methodology, where 893 causes
and 147 mitigating actions have been found. From the geographical point of view, there are large
areas where no bibliographical references have been identified [3]. To structure and facilitate
the conduct of the survey and considering that the number of optimal parameters to be analyzed
simultaneously should not exceed 7±2 [4], the causes and good practices have been grouped into
CITE 2022
ABSTRACT
VII International Conference on Technological Innovation in Building
eight categories: Extern, Preliminary Phase, Project Management, Client, Engineering,
Procurement, Construction and Handover. Furthermore, the number of Project Managers in
Spain has been estimated to determine the number of surveys needed (279) to ensure the
reliability of the results of 95% among the population and sample defined. Also, the
questionnaires identified in the bibliography have been requested. Finally, a selection of the web
tool to create the survey was made with the decision model of Brown-Gibson [5], considering the
following applications already used in research in this area as options: Online surveys (formerly
Bristol Online Survey) [6], Google Forms [7], SurveyHero [8].
Figure 1: Geographic description of the results of the literature review
References
[1] Project Management Institute, A Guide to the Project Management Body of Knowledge, 6th
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[2] S. Chandrasekaran et al., “Capital Projects 5.0: Reimagining capital-project delivery,” 2021.
Accessed: Aug. 22, 2021. [Online]. Available: https://www.mckinsey.com/businessfunctions/operations/our-insights/capital-projects-50-reimagining-capital-project-delivery
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