Rationalizing Critical Cost Overrun Factors on Public Sector Housing Programmes

The cost overrun phenomenon on projects worldwide creates a major source of risk that warrants investigation. The prevailing factor school of thought provides strong empirical evidence that critical factors contributing to cost overruns are both context-specific and project-specific. Although many studies have been conducted identifying factors and causes of cost overruns, very few studies have investigated root causes. Additionally, a limited body of knowledge is available within the context of Small Island Development States (SIDS). To fill this gap, the objectives of this study were to identify and determine the main critical factors contributing to the cost overrun phenomenon in public sector social housing programmes (PSSHPs). These selected factors were thereafter categorized under leading root causes, and their severity was determined based on primary stakeholders’ perspectives. One hundred and twenty-three factors were identified from the literature, of which forty-one critical factors were extracted and grouped under four root causes based on a pilot survey of relevant public sector housing experts in the Trinidadian and Jamaican construction sectors. These refined factors and root causes were formulated into a questionnaire survey. One hundred and five responses were obtained from professionals who had a minimum of five years’ experience in various phases of public housing delivery. The severity of these critical factors was evaluated, ranked, and categorized using the relative importance index (RII) approach. The findings uncovered the leading root cause, which is political in nature. The top five critical factors are the selection of politically aligned contractors, the intentional design of inadequate contracts, the project actors' deliberately underestimating costs, the partisan project management team, and strategic misrepresentation. These findings are unique to SIDS and contribute to knowledge to reframe contemporary project management practices, which focus mainly on technical causes. Finally, as existing technical solutions are ineffective in curbing cost overruns in PSSHPs, these findings also inform public sector policymakers to focus on prioritization, control, and mitigation of political risks in formulating effective governance mechanisms. Doi: 10.28991/ESJ-2022-06-03-016 Full Text: PD

Violations at the Reference Point of Discontinuity: Limitations of Prospect Theory and an Alternative Model of Risk Choices

The tilted S-shaped utility function proposed in Prospect Theory (PT) relied fundamentally on the geometrical notion that there is a discontinuity between gains and losses, and that individual preferences change relative to a reference point. This results in PT having three distinct parameters; concavity, convexity and the reference point represented as a disjoint between the concavity and convexity sections of the curve. The objective of this paper is to examine the geometrical violations of PT at the zero point of reference. This qualitative study adopted a theoretical review of PT and Markowitz’s triply inflected value function concept to unravel methodological assumptions which were not fully addressed by either PT or cumulative PT. Our findings suggest a need to account for continuity and to resolve this violation of PT at the reference point. In so doing, an alternative preference transition theory, was proposed as a solution that includes a phase change space to cojoin these three separate parameters into one continuous nonlinear model. This novel conceptual model adds new knowledge of risk and uncertainty in decision making. Through a better understanding of an individual’s reference point in decision making behaviour, we add to contemporary debate by complementing empirical studies and harmonizing research in this field. Doi: 10.28991/ESJ-2022-06-01-03 Full Text: PD