Structuring risks for a comprehensive understanding of cost overruns in power plant projects

Abstract

Purpose Power plant projects are very complex and encounter serious cost overruns worldwide. Their cost overrun risks are not independent but interrelated in many cases, having structural relationships among each other. The purpose of this study is, therefore, to establish the complex structural relationships of risks involved. Design/methodology/approach In total, 76 published articles from the previous literature are reviewed using the content analysis method. Three risk networks in different phases of power plant projects are depicted based on literature review and case studies. The possible methods of solving these risk networks are also discussed. Findings The study finds critical cost overrun risks and develops risk networks for the procurement, civil and mechanical works of power plant projects. It identifies potential models to assess cost overrun risks based on the developed risk networks. The literature review also revealed some research gaps in the cost overrun risk management of power plants and similar infrastructure projects. Practical implications This study will assist project risk managers to understand the potential risks and their relationships to prevent and mitigate cost overruns for future power plant projects. It will also facilitate decision-makers developing a risk management framework and controlling projects’ cost overruns. Originality/value The study presents conceptual risk networks in different phases of power plant projects for comprehending the root causes of cost overruns. A comparative discussion of the relevant models available in the literature is presented, where their potential applications, limitations and further improvement areas are discussed to solve the developed risk networks for modeling cost overrun risks.