Staged cost fluctuations in alliance projects: a multiple case study of public construction projects in Finland

What the paper says

Purpose Alliance contracts (ACs) are used for complicated public construction projects where clients and governmental institutions supervising them expect cost savings and social benefits. However, cost fluctuations are common, and previous research has not yet addressed them properly. Thus, this study aims to increase understanding of the cost performance of ACs compared to traditional projects by identifying cost fluctuations at different phases of the project and the reasons for such fluctuations. Design/methodology/approach The archival study approach was utilised to analyse the project cost estimates of 10 Finnish large scale public ACs. Findings The costs of public ACs mostly increased during the development and implementation stages, with only one project staying below the original estimate. The mean cost increase from the baseline estimate was 28% during the development phase and 12% between the implementation and development phases, consistent with variations linked to design maturity as specified in standard cost estimation practices. The main sources of cost disparities included design development, client modifications and subsurface urban infrastructure. Social implications These findings caution public procurement agencies, researchers and professionals about expecting ACs to have considerably lower investment costs than other initiatives. Originality/value Contrary to previous AC studies that emphasised the alliance model’s effectiveness, our findings reveal that significant cost increases are common and systematically related to design maturation and scope refinement rather than to uncontrolled overruns. This study challenges prevailing assumptions about alliance performance and highlights the need for more transparent reporting, refined incentive systems and rigorous early-stage validation.