Design of a Model for the Analysis of Hidden Costs in International Projects. Application to the Energy Sector

Abstract

The extra costs (hidden costs) incurred in international engineering projects are an element of great relevance from the perspective of project management. These costs have been analysed generally from case-specific perspectives, being necessary the development of a theoretical model that contemplates these hidden costs studying and explaining their nature. In this sense, it is interesting to take advantage of the growing literature on hidden costs associated with offshoring experiences (and originated in the new reshoring trend). Those offshoring experiences have great similarity with international projects as the problems faced come from the same international-related factors. Thus, this paper explores into that literature developing a theoretical model for the analysis of hidden costs applicable to international engineering projects. The model is based in the analysis of the causes of those costs, the processes affected and the final impact on performance. It is finally contrasted and validated with its application to three real cases of three international projects developed by companies of the energy sector. The model is this way proved to be a suitable theoretical basis for the study of hidden costs in international experiences, and the starting point for the definition of risk analysis models to prevent these costs.