A Framework for Mitigating Federal Highway Project Cost Overrun Effects in South East, Nigeria

Cost overruns in highway projects constitute a major financial challenge, particularly in Southeast Nigeria, where they create substantial risks for stakeholders and investors. According to Flyvbjerg et al. (2009), the two principal causes of cost overruns are optimism bias and strategic misrepresentation. Additional studies have identified a wide range of contributing factors.To address these challenges, this research develops a conceptual framework aimed at mitigating cost overruns in highway construction projects. The framework identifies the causes of overruns, explains their effects on project delivery, and outlines strategies for mitigation (Farooqi & Azhar, 2019). Its purpose is to clarify how cost overruns originate and provide practical guidance for reducing them.The primary objective is to design and validate a framework tailored to federal highway projects in Southeast Nigeria. This framework is built using a contextualized, literature-driven approach that incorporates insights from prior studies on infrastructure cost overruns in Nigeria. The research draws on a dataset of publicly funded highway projects provided by the Federal Ministry of Works (2006–2016) and employs a multistage sampling technique. In the first stage, five states in Southeast Nigeria were selected. Data were collected directly from each state and analyzed to determine the relationship between potential overrun factors and actual cost escalations using Pearson’s correlation coefficient. Findings reveal that project length, original contract sum, and revised contract sum are key contributors to cost overruns in the region. Other important factors include material price fluctuations, design modifications, and project management inefficiencies. The analysis shows a strong positive correlation between revised contract sums and overall cost overruns. For example, the construction of main works and associated infrastructure for the Second Niger Bridge (11.79 km, linking Anambra and Delta States) originally contracted at ₦206,151,693,014.87 was revised to ₦300,981,471,801.71, producing a cost deviation of approximately ₦1,094,829,778,786.90.To explain these findings, several theoretical perspectives can be applied, including the Theory of Constraints, systems thinking, and transaction cost economics. These frameworks emphasize inadequate planning, weak contract management, and external economic pressures as major drivers of cost escalation.By integrating these insights, the proposed conceptual framework provides strategies to mitigate cost overruns, reduce financial risk, and improve the efficiency and success rate of federal highway projects in Southeast Nigeria.