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

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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
    Técnicas Reunidas S.A., 28050 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
    Técnicas Reunidas S.A., 28050 Madrid, Spain
    Department of Organization Engineering, Business Administration and Statistics, Escuela Técnica Superior de Ingenieros Industriales, Universidad Politécnica de Madrid, 28006 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
    Instituto de Tecnologías para la Sostenibilidad, 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)

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.

Suggested Citation

  • Antonio Héctor Álvarez-Pozo & Miguel Ignacio Parma-García & Isabel Ortiz-Marcos & Luis Fernando Bautista & Evangelina Atanes-Sánchez, 2024. "Analysis of Causes of Delays and Cost Overruns as Well as Mitigation Measures to Improve Profitability and Sustainability in Turnkey Industrial Projects," Sustainability, MDPI, vol. 16(4), pages 1-16, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:4:p:1449-:d:1336026
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    References listed on IDEAS

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    1. Arshi Shakeel Faridi & Sameh Monir El-Sayegh, 2006. "Significant factors causing delay in the UAE construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 24(11), pages 1167-1176.
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