The incentive structure you're describing is also a major contributor to cost disease.

Every decision to increase the cost of a product is taking that money out of the customer's pocket which they then can't use to buy more nutritious food or medicine or make rent and avoid becoming homeless. Every additional tax dollar spent on inflating the cost of an infrastructure project is one that can't be spent on cancer research or Pell grants or catching pedos. Moreover, that type of "tax" is highly regressive because when you make e.g. housing cost more, only the poor become unable to afford it.

Meanwhile the system you're referring to gives the engineers the incentive to be excessively risk-averse. Give someone the authority to command that resources be allocated to something and liability for not allocating them but no liability for what happens to the people the resources were allocated from and the result is not an optimal system.