A study of owner costs and their causes in a Norwegian infrastructure company

Abstract

Transaction costs occur when a good or service is transferred across a technologically separable interface and include the costs of drafting, negotiating and enforcing an agreement and the costs of governance and bonding to secure commitments. Transaction costs are part of owner costs which include all the necessary activities for the execution of the project that are not direct production costs. There is not much data in the literature related to owner or transaction costs. This master thesis examined the owner costs of 83 projects of a Norwegian company that belongs to the construction industry. It was examined which activities cause the owner costs from both quantitative data and interviews, how much percent of total project costs are owner costs and how owner costs are distributed among owner costs activities. The factors that affect the owner costs are identified and categorized under the headings of the owner’s and contractor’s role, project management efficiency and transaction cost environment.