Analysis of Causes of Delays and Cost Overruns as Well as Mitigation Measures to Improve Profitability and Sustainability in Turnkey Industrial Projects

Antonio Héctor Álvarez-Pozo, Miguel Ignacio Parma-García, Isabel Ortiz-Marcos, Luis Fernando Bautista and Evangelina Atanes-Sánchez ()
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Antonio Héctor Álvarez-Pozo: Department of Mechanical, Chemical and Industrial Design Engineering, Escuela Técnica Superior de Ingeniería y Diseño Industrial, Universidad Politécnica de Madrid, 28012 Madrid, Spain
Miguel Ignacio Parma-García: Department of Mechanical, Chemical and Industrial Design Engineering, Escuela Técnica Superior de Ingeniería y Diseño Industrial, Universidad Politécnica de Madrid, 28012 Madrid, Spain
Isabel Ortiz-Marcos: Department of Organization Engineering, Business Administration and Statistics, Escuela Técnica Superior de Ingenieros Industriales, Universidad Politécnica de Madrid, 28006 Madrid, Spain
Luis Fernando Bautista: Department of Chemical and Environmental Technology, ESCET, Universidad Rey Juan Carlos, 28933 Móstoles, Spain
Evangelina Atanes-Sánchez: Department of Mechanical, Chemical and Industrial Design Engineering, Escuela Técnica Superior de Ingeniería y Diseño Industrial, Universidad Politécnica de Madrid, 28012 Madrid, Spain

Sustainability, 2024, vol. 16, issue 4, 1-16

Abstract: Delays and cost overruns in turnkey projects can lead to significant economic losses, disputes and even project abandonment. These facts negatively impact the environmental, social and governance (ESG) policies of companies involved in the project. In this paper, a bibliographic review was conducted to identify the leading causes of delays and cost overruns in turnkey industrial projects in the refining, gas and conventional electricity generation (RGE) sector and propose good practices to avoid or mitigate them. We identified 893 causes of delays and cost overruns and 147 mitigation measures. The causes and mitigation measures were grouped into eight categories based on the execution phases of an RGE project. A critical analysis was carried out to avoid duplication, and the result was evaluated by experts in turnkey project management, reducing the causes and mitigation measures to a final set of 103 and 49, respectively. The construction category showed the most significant influence on project delays and cost overruns, and this, together with the preliminary phase and project management categories, contributed to 60% of the identified causes. The findings of this study can help project managers improve the profitability of turnkey industrial projects, promoting innovation and sustainability within companies and society.

Keywords: project management; ESG; causes; mitigation measures; delays; cost overruns; turnkey project; refining; gas; electricity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:4:p:1449-:d:1336026

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