Modeling construction cost overrun risks at the FEED stage for mining projects using PLS-SEM
Year: 2025
Type: article
Abstract: The mining industry consistently faces significant cost overruns during construction, rooted in the Front-End Engineering Design (FEED) stage, with overruns reported between 25% and 37%, underscoring the need to investigate early-stage risk factors. This study utilizes Partial Least Squares Structural Equation Modeling (PLS-SEM) and has identified 10 critical risk factors that significantly influence cost overruns in mining projects. These critical factors include impractical project schedules, inadequate project feasibility studies, client pressure to minimize the initial capital requirements, inaccurate cost estimations, increase of inflation rates, increase of official exchange rate, poorly understood geological and geotechnical aspects of a deposit, permit acquisition and approval delay, supply chain delays, and Impact on local communities and infrastructure. The robust analysis demonstrated strong indicator loadings and validated the measurement model’s discriminant validity. Significant findings from this analysis revealed that technical risks have the most direct influence on inadequate project planning risks, while compliance risks notably affect contracting and procurement risks. Further findings indicated that management and funding risks significantly influence both technical risks and market and economic risks. This study enables stakeholders to implement proactive strategies during the FEED stage by providing actionable insights, leading to more predictable and successful project outcomes. Ultimately, it offers a robust framework for mitigating cost overruns in mining projects.
Authors: Maan Shafaay, Fahad K. Alqahtani, Abdullah Alsharef, Gongfan Chen
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,165
Funder: King Saud University
OpenAlex ID: W4408823784