Figure 4.1 displays the cost overruns experienced Traditional projects in Stage 3 (Contractual Commitment to Actual Final). It should be recalled that some projects that are seen as performing within budget in this stage may have been subject to cost over-runs in previous stages, which is particularly so for Traditional projects.
We found that while small value Traditional procurement projects tended to come in under-budget, higher value projects were generally completed over-budget and often by a significant margin. The trend line shows a positive slope, and is statistically significantly different from zero at 99 percent confidence.
By contrast, PPPs tended to display much greater cost discipline. Importantly, the three largest projects all came in on budget.
In other words, the average Traditional project cost over-run is likely to be significantly higher than for PPPs, and the dispersion of outcomes is much greater also. While PPPs can be expected to come in tightly on budget, the outcome under Traditional projects is much less certain, indicating that much greater cost discipline is being applied to PPP projects.