Analysis of Construction Project Cost Overrun by Statistical Method

Article (PDF Available) · May 2015with 1,777 Reads 
How we measure 'reads'
A 'read' is counted each time someone views a publication summary (such as the title, abstract, and list of authors), clicks on a figure, or views or downloads the full-text. Learn more
Cite this publication
Abstract
Cost overruns have been a major issue in many Indian construction projects. The successful execution of construction projects and keeping them within prescribed schedule and cost is very important for effective cost performance. Most of the construction projects suffer from cost overruns due to a multiplicity of factors. The present work is carried out on studying significant factors causing cost overruns in construction projects. A questionnaire for the survey has been prepared by Authors based on 45 common factors for cost overruns identified from literature review and discussion with experts. These factors are related with Owner, Contractor, Consultant, and Management, Material, Equipment, Labor and External. The cost overrun methodology presented in this study gives statistical method which is used in construction sector for computing impact of project cost overruns. The finding of the paper will help the project manager to act on critical causes and further try to reduce cost overrun of project.
© 2015, IJARCSMS All Rights Reserved 349 | P a g e
ISSN: 2321-7782 (Online)
Volume 3, Issue 5, May 2015
International Journal of Advance Research in
Computer Science and Management Studies
Research Article / Survey Paper / Case Study
Available online at: www.ijarcsms.com
Analysis of Construction Project Cost Overrun by Statistical
Method
Dhanashree S Tejale1
Post graduate student
Department of Civil Engineering
RMD Sinhgad College of Engineering
Pune, Maharashtra India
Dr. S D Khandekar2
Professor, Head of department, Department of Civil
Engineering, Sinhgad Institute of Technology & Science, Narhe,
Pune, Maharashtra India
Dr. J R Patil3
Professor, Department of Civil Engineering,
RMD college of engineering, Pune, Maharashtra India
Abstract: Cost overruns have been a major issue in many Indian construction projects. The successful execution of
construction projects and keeping them within prescribed schedule and cost is very important for effective cost performance.
Most of the construction projects suffer from cost overruns due to a multiplicity of factors. The present work is carried out
on studying significant factors causing cost overruns in construction projects. A questionnaire for the survey has been
prepared by Authors based on 45 common factors for cost overruns identified from literature review and discussion with
experts. These factors are related with Owner, Contractor, Consultant, and Management, Material, Equipment, Labor and
External.
The cost overrun methodology presented in this study gives statistical method which is used in construction sector for
computing impact of project cost overruns. The finding of the paper will help the project manager to act on critical causes
and further try to reduce cost overrun of project.
Keywords: Construction projects, Factors of cost overrun, Relative important index.
I. INTRODUCTION
Throughout the world, the business environment within which construction organization operate continues to change
rapidly [4]. It provides huge employment to the people and plays very significant role in country economy. Project cost overrun
is most common problems in the construction industry. Project overruns due to time and cost result in delays during project
execution. In developing countries project overruns is a serious where implementation of project faces many uncertainties. It
result in wastage of scare financial resources, delays in providing facilities, development and also make construction costlier.
With globalization and technology driven economic growth all over the world, a scientific and systematic approach to project
management becomes imperative to ensure that project objectives are attained within the constraints of time and resources.
To study the factors affecting cost overruns of construction projects a questionnaire has been prepared. The feedback was
taken from respondents in Pune region of Maharashtra in India. The Statistical method is carried out to understand the
perception of construction’s professionals in project towards factors influencing construction cost. An ordinal scale of
measurement is applied for data measurement in questionnaire survey. Data is collected using develop structured questionnaire.
The ranking of factor is calculated based on relative important index value.
II. LITERATURE REVIEW
Cost overrun is defined as excess of actual cost over budget. Cost overrun is also sometimes called "cost escalation," "cost
increase," or "budget overrun” [11]. A list of cost overrun factors and contributing to the cost overrun associated with buildings,
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 350 | P a g e
roads and bridges construction is prepared based on literature review. A number of studies have been carried out to determine
the causes of cost overruns in construction projects. Adnan Enshassi (2009) it was found that Construction projects located in
the Gaza Strip, Palestine suffer from many problems and complex issues such as unavailability of competent staff, late delivery
of materials and equipment, material shortage, waste rate of materials, escalation and fluctuation of material prices, quality of
equipment and raw material, delay in progress payment, cash flow of project, cost of variation order, differentiation of currency
prices, cost of rework, cost control system, poor site management, poor communication and coordination by owner and other
parties, conformance to specification, project complexity, absenteeism rate through project, planned time for construction, time
needed to rectify defects, inadequate planning and scheduling, mistake and discrepancies in design documents, late in reviewing
and approving design document by consultant and client. Abtab Hameed Memon (2010) founded factors of cost over are lack of
experience of contractor and subcontractor, Inaccurate time and cost estimate. A study on UK construction industry by Yakubu
Adisa Olawale (2010) founded cost overrun factor that are lack of software, Inaccurate time and cost estimate, cash flow of
project, equipment breakdown, material shortage. Similarly Ismail Abdul et al. (2013) found significant factor causing cost
overrun in construction project are shortage of labour low productivity level of labours, lack of experience of contractor and
subcontractor , equipment breakdown, financial difficulties by contractor, unclear and inadequate detail drawing, design change.
III. RESEARCH METHODOLOGY
The research methodology for present study has adopted questionnaire survey to identify significant factors influencing
cost overruns in construction projects. To identify cost overruns factors, literature reviews, discussion with experts were carried
out. From existing literature on the construction industry it was possible to identify certain major effects of cost overrun on
project delivery. A questionnaire was then drawn up. As the outcome of review 45 factors of cost overrun were identified.
These questionnaires were distributed to Owners and Contractors of construction Industry. The data from the questionnaire
was analyzed statistically. The perspective of owner and contractor has been analyzed to rank the causes of cost overruns based
on their Relative important index . Relative important index method was used for hierarchal assessment of factors and found out
the top most significant factors of cost overruns.
The questionnaire was designed so that it is easy to read and responses are easy to fill in. An ordinal scale of measurement
will be applied for data measurement in questionnaire survey. These sections were designed to obtain the responses on a ordinal
scale that indicates the relative importance of various cost overrun. Ordinal scale use in this study will be adopted from
(Enshassi et al. 2009) i.e Extremely Significant (E.S); Very Significant (V.S); Slightly Significant (S.S) and Not Significant
(N.S). However, abbreviation replace with numbers i.e 1 for not significant (0%); 2 for slightly significant (25%); 3 for
moderately significant; 4 for very significant (75%) and 5 for extremely significant (100). will be adopted to understand the
perception of personnel of the owner and contractors involved in handling construction projects. For reliability of data Authors
decided the minimum experience of respondents (owner and contractor) as 10 years. The questionnaire has been given
personally to the respondents and communicated to fill without hesitation or with no bias. Questionnaire has been also given to
the Class I Gazette Officers or reliable colleagues.
In the study Relative Important index (RII) have been employed and calculated for ranking of causes of cost overrun in the
construction project. The RII is used to rank the different causes. These rankings make it possible to cross-compare the relative
importance of the factors as perceived by the two groups of respondents (i.e. owner and contractors). Each individual cause’s
RII perceived by all respondents should be used to assess the general and overall rankings in order to give an overall picture of
the causes of construction cost overrun in construction industry.
All the numerical scores of each of the identified factors were transformed to relative importance indices to determine the
relative ranking of the factors. Higher the value of RII, more important is the cause of cost overrun.
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 351 | P a g e
IV. DATA COLLECTION
As discussed earlier questionnaire survey have been carried out among the two major participants namely Government and
Private representative from construction projects firms. The respondents involved in the survey had several years of experience
(more than 10 years minimum) in handling various types of projects such as buildings, roads and bridges. Total 50 sets of
questionnaires were distributed, 37 responses were received. Table-1. shows brief Summary of survey conducted. The
respondents are senior employees of their companies and holding executive and managerial position. The reliability of the
survey results is expected to be high because all the respondents are top-level experienced management officials in their
organizations.
TABLE-1. PERCENTAGE OF QUESTIONNAIRE DISTRIBUTED AND RESPONSES RECEIVED
Respondents
Questionnaire distributed
Responses return
Percentage of responses
Owner
30
22
73%
Contractor
20
15
75%
Total
50
37
74%
V. DATA ANALYSIS AND DISCUSSION OF RESULTS
The summary of cost overrun factors and relative important index (RII) of respective factors is given in Table-2. RII value
was calculated as (Enshassi and Mohamed 2009; Desai and Bhatt 2013) with the following expression.
RII = 

Where,
W = Weighting given to each factor by the respondents and ranges from 1 to 5 where '1' is 'not significant' and '5' is
'extremely significant',
A = Highest weight (i.e. 5 in this case)
N = Total number of respondents
Ranking of Cost Overruns : The ranking of causes of cost overrun for construction projects has been done based on relative
important index (RII) value calculated for each group of respondent i.e. Owner and Contractor and also the overall respondents.
Table-3 shows the top most significant factors of cost overrun ranked by overall respondents.
TABLE-2. TEN MOST IMPORTANT CAUSES OF COST OVERRUN.
FACTORS OF COST OVERRUN
OVERALL
RII
RANK
Material shortage
0.678
1
Shortage of labor
0.631
2
Late delivery of materials and equipment
0.595
3
Unavailability of competent staff
0.566
4
Low productivity level of labors
0.541
5
Quality of equipment and raw material
0.541
5
Delay in progress payment
0.538
6
Financial difficulties by contractor
0.533
7
Poor site management
0.526
8
Escalation and fluctuation of material
prices
0.523
9
Poor communication and coordination by
owner and other parties
0.520
10
From the analysis of results, it was found that material shortage and Shortage of labor are ranked high by both respondent
owner and contractor. These Factors are elaborated in more detail as follow.
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 352 | P a g e
Material shortage: Material shortage is rank 1st by overall respondent as shown in Table-3. Materials are considered as
backbone of construction projects. Therefore any problem related to construction materials would significantly affect the
project. To manage material shortage, schedule of material requirement should be made to indicate approximately the total
quantity of all essential materials such as aggregates, cement, reinforcing steel, sand etc. to be produce. Make sure sufficient
lead time for procurement of materials at best possible prices, terms and avoid emergency purchase. Complete material
requirement for each month for each item as per quantities.
Shortage of labor: shortage of labor is rank 2nd in overall ranking. Construction field is getting more essential around the
world. The major impacts such as construction costs increase, quality of work and the speed of construction will be slow down.
Employing qualified workers is a huge burden on contractors and construction owners. The project manpower planning
primarily focuses on determining the size of the project workforce, its structuring into functional groups and worker’s team and
scheduling the manpower. To determine the number of workers needed to perform a given job in the specified time, data- wise
forecasting of the workers requirements to complete the project work and then organizing the planned work.
Late delivery of materials and equipment: It is rank 3nd in overall ranking. For effective planning of delivery of materials and
equipment identify the material required, estimated quantities defining specifications, forecasting requirements, locating
sources for procurement, getting material samples approved and designing materials inventory and development the
procurement plan to ensure a smooth flow of materials till the connected construction works are completed at the project site.
This paper has highlighted factors and the need to reduce cost overrun by owner and contractor. Owner should facilitate
payment to the contractors in order to overcome delay, cost overrun and claims. Owner may recruit competent project manager
and procurement of needed materials to the contractors. There should be adequate contingency allowance in order to cover
increases in material cost. Quality materials should be of a greater interest for contractors in order to improve cost, time and
quality performance. This can be done by conducting quality training and meetings that are important for performing an
improvement. Contractors should make available source of finance during construction project, adequate and proper materials
procurement and developing human resources in the construction industry through proper and continuous training programs
about construction projects cost. These programs can update participant’s knowledge and can assist them be more familiar with
project management techniques and processes at all levels of managerial people should participate in important decision
making. There should be continuous coordination, cooperation, relationship and flow of information between all the people
involve through project life cycle for resolving problems and developing project performance. Contractor should sequence the
work according to schedule and also should have Cost Engineer in their projects to successful control cost.
VI. CONCLUSION
The present study identified and analyzed causes of cost overrun in construction industry in Pune region. It was observed
the factors for cost overrun are the Material shortage, Shortage of labor, Late delivery of materials and equipment,
Unavailability of competent staff , Low productivity level of labors, Quality of equipment and raw material. For effective and
efficient cost control of construction projects the Authors recommends that material management, resource planning and
management, and proper financial management may be adopted.
An attempt is made to capture the variables that best explain the occurrence and non-occurrence of cost overrun in
construction projects. Statistical method could assist the decision makers in identifying factor causing cost overrun for better
project development to avoid the delays and complete the project on planed schedule time.
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 353 | P a g e
APPENDIX
TABLE-3 RANKING OF CAUSES OF COST OVERRUN
SR
NO
FACTORS OF COST OVERRUN
OWNER
CONTRACTOR
OVERALL
RII
RANK
RANK
RII
RANK
1
Unavailability of competent staff
0.627
3
8
0.566
4
2
Shortage of lab our
0.663
1
2
0.631
2
3
Low productivity level of labors
0.563
6
7
0.541
5
4
Lack of experience of contractor and
subcontractor
0.500
9
8
0.503
12
5
Late delivery of materials and equipment
590
5
2
0.595
3
6
Material shortage
0.636
2
1
0.678
1
7
Waste rate of materials
0.481
11
12
0.467
20
8
Escalation and fluctuation of material prices
0.500
9
5
0.523
9
9
Equipment breakdown
0.472
12
5
0.509
11
10
Quality of equipment and raw material
0.590
5
9
0.541
5
11
Low level of equipment operating skill
0.481
11
16
0.440
26
12
Lack of software
0.345
23
20
0.345
41
13
Market share of organization
0.372
21
13
0.399
36
14
Delay in progress payment
0.490
10
3
0.538
6
15
Profit rate of project
0.381
20
13
0.403
35
16
Cash flow of project
0.472
12
5
0.509
11
17
Project design cost
0.454
14
15
0.433
30
18
Material and equipment cost
0.518
8
11
0.492
13
19
Cost of rework
0.381
20
4
0.470
18
20
Inaccurate time and cost estimate
0.500
9
10
0.490
14
21
Liquidity of organization
0.472
12
17
0.429
31
22
Cost of variation order
0.372
21
19
0.366
39
23
Overhead percentage of project
0.363
22
19
0.361
40
24
Differentiation of currency prices
0.481
11
15
0.447
23
25
Project lab our cost
0.409
19
10
0.444
28
26
Project over time cost
0.336
24
12
0.394
37
27
Motivation cost
0.454
14
21
0.380
38
28
Regular project budget update
0.472
12
16
0.436
29
29
Cost control system
0.545
7
13
0.485
15
30
Inadequate planning and scheduling
0.434
17
6
0.483
16
31
Improper construction method by sub
contractor
0.563
6
18
0.468
19
32
Financial difficulties by contractor
0.600
4
11
0.533
7
33
Poor site management
0.600
4
12
0.526
8
34
Poor communication and coordination by
owner and other parties
0.481
11
4
0.520
10
35
Conformance to specification
0.409
19
11
0.437
27
36
Project complexity
0.418
18
16
0.409
33
37
Absenteeism rate through project
0.445
15
15
0.429
31
38
Unclear and inadequate detail drawing
0.463
13
9
0.471
17
39
Planned time for construction
0.436
16
15
0.424
32
40
Mistake during construction
0.436
16
11
0.451
22
41
Design change
0.463
13
14
0.444
25
42
Time needed to rectify defects
0.463
13
12
0.458
21
43
Mistake and discrepancies in design documents
0.409
19
16
0.404
34
44
Delays in producing design document
0.436
16
11
0.451
22
45
Late in reviewing and approving design
document by consultant and client
0.372
21
7
0.446
24
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 354 | P a g e
ACKNOWLEDGEMENT
The satisfaction that accompanies the successful completion of any task would be incomplete without the mention of
people whose ceaseless co-operation made it possible, whose constant guidance and encouragement crown all efforts with
success.
I am thankful to my Paper guide Dr.S D Khandekar, Dr J R Patil, P.G co-ordinator for the guidance, inspiration and
constructive suggestions that are helpful for me in the implementation of this Paper.
I am also thankful to the faculty and staff of the department of civil engineering, RMD Sinhgad college of Engineering,
Pune for their help and support.
Last but not least, I would like to thank family and all my friends whose support and appreciation has been a pivotal factor
in successful completion of paper.
References
1. Aftab Hameed Memon , Ismail Abdul Rahman , Ade Asmi Abdul Aziz (2012) “ The cause factors of large project’s cost overrun: a survey in the
southern part of peninsular malaysia” International Journal of Real Estate Studies, Volume 7, Number 2
2. Ashwini Arun Salunkhe, Rahul S. Patil (2013) “Statistical M ethods for Construction Delay Analysis” IOSR J ournal of Mechanical and Civil Engineering
(IOSR-JMCE) e-ISSN: 2278-1684,p-ISSN: 2320-334X, Volume 9, PP 58-62
3. Abednego Oswald Gwaya, Sylvester Munguti Masu, Githae Wanyona (2014) “A Critical Analysis of the Causes of Project Management Failures in
Kenya” International Journal of Soft Computing and Engineering (IJSCE) ISSN: 2231-2307, Volume-4, Issue-1
4. Adnan Enshassi, Sherif Mohamed, Saleh Abushaban (2009) “Factors affecting the performance of construction projects in the Gaza strip” journal of civil
engineering and management 15(3): 269280
5. C.I. Anyanwu (2013) “Project Cost Control in the Nigerian Construction Industry” International Journal of Engineering Science Invention ISSN (Online):
2319 6734, ISSN (Print): 2319 6726, Volume 2 Issue 12 , PP.65-71.
6. Desai Megha, Dr Bhatt Rajiv (2013) “A Methodology for Ranking of Causes of Delay for Residential Construction Projects in Indian Context”
International Journal of Emerging Technology and Advanced Engineering, (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 3, Issue 3 )
7. Fugar, F D K and AgyakwahBaah, A B (2010) ‘Delays in building construction projects in Ghana’, Australasian Journal of Construction Economics and
Building, 10 (1/2) 103116
8. Ismail Abdul Rahman, Aftab Hameed Memon and Ahrnad Tarmizi Abd. Karim (2013) “Significant Factors Causing Cost Overruns in Large
Construction Projects in Malaysia” Journal of Applied Sciences 13 (2): 286-293, ISSN 1812-5654 / DOI: 10.3923ljas.2013.286.293, Asian Network for
Scientific Information.
9. L. Muhwezi, J. Acai, G. Otim (2014) “An Assessment of the Factors Causing Delays on Building Construction Projects in Uganda” International Journal
of Construction Engineering and Management 2014, 3(1): 13-23 DOI: 10.5923/j.ijcem.20140301.02
10. S. Shanmugapriya1, Dr. K. Subramanian (2013) “Investigation of Significant Factors Influencing Time and Cost Overruns in Indian Construction
Projects” International Journal of Emerging Technology and Advanced Engineering Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified
Journal, Volume 3, Issue 10.)
11. T.Subramani, P.T.Lishitha, M.Kavitha (2014) “Time Overrun and Cost Effectiveness in the Construction Industry”. Int. Journal of Engineering Research
and Applications, ISSN: 2248-9622, Vol. 4, Issue 6(Version 5), pp.111-116.
12. Towhid Pourrostam and Amiruddin Ismail (2012) “Causes and Effects of Delay in Iranian Construction Projects” IACSIT International Journal of
Engineering and Technology, Vol. 4, No. 5
13. Yakubu Adisa Olawale (2010) “Cost and time control of construction projects: inhibiting factors and mitigating measures in practice” Construction
Management and Economics, 28 (5), 509 526.
Dhanashree et al., International Journal of Advance Research in Computer Science and Management Studies
Volume 3, Issue 5, May 2015 pg. 349-355
© 2015, IJARCSMS All Rights Reserved ISSN: 2321-7782 (Online) 355 | P a g e
AUTHOR(S) PROFILE
Miss. Dhanashree Sunil Tejale, Pursuing M.E. in construction and Management at Dept. RMD
Sinhgad Technical Institute Campus, Warje, Pune.
  • ... Clearly identify the decision makers during tendering stage of project (Chan andKumaraswamy, 1997, Olawale andSun, 2010) 08 A clear communication system among various stakeholders be adopted to convey decisions (Gündüz et al., 2013, Tejale et al., 2015 09 Regular meeting be arranged to discuss progress and also resolve the problem faced in construction process (Memon et al., 2012, Olawale and Sun, 2010, Roslan et al., 2015 10 Client should ensure the selection of qualified and competent designer ( Architecture/ Structural Engineer Firms) Sun, 2015, Fugar andAgyakwah-Baah, 2010) 11 Competent designer be appointed to ensure the quality of design (Doloi et al., 2012, Shehu et al., 2014 12 ...
    ... Adequate contingency allowances should be determined (Chan and Kumaraswamy, 1997, Frimpong et al., 2003, Enshassi et al., 2009a, Tejale et al., 2015 22 ...
    ... Source of finance should be determined and ensured at early stage of project/ before awarding the project (Enshassi et al., 2009b, Hamzah et al., 2011, Koushki et al., 2005, Tejale et al., 2015 24 Expert cost engineer should be involved since the time of planning (Tumi et al., 2009, Tejale et al., 2015, Sambasivan and Soon, 2007 25 ...
    Book
    The significance of this book is towards DECISION SUPPORT SYSTEM for controlling time and cost overrun by suggesting the controlling measure. This research study contributes towards the development of construction society, economy, and nation. Construction Society: The KBES will help the construction practitioner to control the time and cost overrun in construction projects. Economy: By controlling the cost and time overrun, it will help the `client/developer to cut time and cost in managing time and cost overrun in construction projects. Nation: The KBES will be a useful tool in decision making for controlling the factors of time and cost overrun. This will help in investment
  • ... Based on [23][24][25][26][27][28][29][30][31][32][33][34][35][36], thirty common causes of cost overrun were identified: inadequate planning, delay in payment process by client, owner interference, poor contract management, delay in decision making, shortage of material, fluctuation in price of materials, financial difficulties by contractor, poor site management, natural disasters, change in material specifications and type, poor financial control at site, mistakes and errors in design, lack of experience of the technical consultant, additional works, mistakes and discrepancies in contract document, accidents, poor design, severe overtime, fraudulent practices and kickboards, the relationship between management and labor, delay in approval, problems with neighbours, complicated design, incompetent subcontractor, inadequate monitoring, inaccurate site investigation, schedule delay, and high labor cost. ...
    Article
    Full-text available
    Cost overrun is a serious issue in the construction industry worldwide, including Pakistan. Cost overrun is a critical and serious issue found in highway projects among all construction projects in Pakistan. Cost overrun occurs when the final cost of the projects exceeds the actual cost of the project. The main objective of this research is to identify the main causes of cost overrun and to determine possible mitigation measures of the identified main causes of cost overrun from contractors of highway/road projects of Pakistan. In this study, a mixed mode (quantitative and qualitative) approach was used. A deep literature review helped to identify the 30 most common causes of cost overrun in the construction industry. In the first stage, a questionnaire was developed, and a survey was carried out among professional and experts who were working with contractors in highway projects. In the second stage, a semi-structured questionnaire was developed, and a survey was carried out to determine the possible mitigation measures of the identified main causes of cost overrun. Collected data for the first stage from experts were inserted in SPSS and were analyzed by using the average index method and the data of the second stage were analyzed by content analysis. It is expected that the findings of this research will be useful and helpful for the construction stakeholders to control and mitigate the major causes of cost overrun.
  • ... Quantitative data that were gathered from the questionnaire survey were analysed using relative importance index (RII). RII is a well-recognized statistical tool used to measure the relative significance of several attributes (Doloi 2008) and rank them (Okeyo et al. 2015;Tejale et al. 2015;Wilfred and Sharafudeen 2015). The factors that significantly influence bid mark-up decision making were identified based on their RIIs that were calculated using Equation (1). ...
    Article
    Full-text available
    Tender estimates play a vital role in achieving bid successes. A bid price which has an optimum markup is governed by many factors. The research aims to identify the significant factors influencing the bid markup decision of infrastructure projects in Sri Lanka. Using a literature review, semi-structured interviews and a questionnaire survey, the study identifies nine significant factors influencing the markup decision of infrastructure projects. The identified significant factors are 'estimated direct cost', 'competitiveness of other bids', 'type of work', 'project duration', 'the ability to predict pre-tender estimate', 'project location', 'reliability of the company estimate', 'number of bidders' and 'need for work', respectively. The study also reveals potential relationships between the identified significant factors and bid markup based on case studies. Amongst, 'reliability of the company estimate', 'number of bidders' and 'type of work' have shown positive relationships with markup. The contents should be of interest to bidders and researchers in construction.
  • ... Normally, client could face financial issues due to shortage of funds from government. Construction activities on site would remain suspended unnecessarily if client delays the payment process to contractor for a long period of time, which may subsequently lead to project's cost overrun [17]. ...
    Article
    Full-text available
    Cost overrun occurs when the final cost of the project exceeds the approved cost at the time of tender. Cost overrun or budget overrun is one of the many problems facing by construction industry stakeholders in the construction of building projects in Sindh Province of Pakistan. To attain the main objective of the research, deep literature review was carried out whereby the total of 64 causative factors of cost overrun were identified in construction industry. A questionnaire was developed and distributed among 28 well experienced experts having more than 20 years of experience in handling building projects. Collected data was analyzed by average index method. The results revealed that significant causative factors of cost overrun in building construction projects include financial difficulties faced by client, slow information between parties, change in price of material, delay of design, poor site management, cash and payment problem faced by contractor, and delay in decision making. The findings from this research can help practitioners of building projects to find measures to mitigate or overcome these causative factors of cost overrun way before they can lead to damaging impact on project’s cost performance.
  • ... Client faced financial issues due to a shortage of funds from the government. Construction activities remained suspended if the client delays the payment process to contractor then subsequently which leads to projects to the cost overrun [16]. ...
    Article
    Full-text available
    Cost overrun is known as when the final cost of any project surpasses the sectioned cost of the project at the floating of tender. Cost overrun or cost variation overrun is the main problem in the construction of highway projects in Sindh Province of Pakistan. To attain the main objective of the research a literature review was conducted and 64 general factors of cost overrun were found in construction industry. A questionnaire was developed and distributed among 28 well experienced experts having maximum experience in construction of building projects. Gathered data was analyzed by method of average index. Results shows that main and causative factors of cost variation were financial and cash issues faced by owner, slow information between parties, change in price of material, delay of design, poor site management, payment and financial issues problem faced by the contractor and delay in decision making. This research can help petitioners of highway projects to overcome these main and causative factors of cost.
  • ... Subramani et al (2014) results showed that, slow decision making, poor schedule management, increase in material/machine prices, poor contract management, poor design/ delay in providing design, rework due to wrong work, problems in land acquisition, wrong estimation/ estimation method, and long period between design and time of bidding/tendering are the major causes of cost overrun. Thejale et al. (2015) have come with 45 cost overrun factors through literature reviews and meeting with experts in the field and concluded shortage of materials and shortage of labour as the most critical factors. Similar studies to find the factors affecting cost overrun have been carried out by many other researchers in various countries. ...
    Conference Paper
    Full-text available
    Cost overrun which is meant as exceeding the final cost of the project than the original estimate of the construction project leads to profit reduction or losses. Hence, identifying the most critical cost overrun factors is essential. This study is aiming to distinguish the factors affecting cost overruns in Sri Lankan construction industry. Mitigating measures for cost overrun have been proposed with the severity of the cost overrun factors. Qualitative analysis was done through questionnaire surveying choosing 76 respondents as 38 from each of contractor and consultant. All respondent’s represented engineers or quantity surveyors who have immense experience in the construction industry. For data analysing purpose, Relative importance index method was used. Two taxonomies were developed separately considering opinions towards cost overrun phenomena by contractors and consultants. In both taxonomies, the most critical category was contractor related cost overrun factors and the least critical category was an external cost overrun factors. Among all 42 cost overrun factors, Poor site management, Poor allocation of labours, lack of coordination between construction parties, Problems with availability of labour, material and equipment and Unrealistic schedules have ranked as the most critical cost overrun factors. Keywords: Cost overrun, Taxonomy, Relative Important Index, mitigating measures.
  • ... There are several factors that affect construction cost and various research works have been conducted to address it causative factors. Tejale et al., (2015) mentioned that material shortage, labour shortage, delay in material and equipment delivery at site, unavailability of competent personnel, poor productivity of labour, delay in progressive payment, poor construction adopted by constructor, fluctuation of material prices, poor communication and poor coordination among the client, consultant and constructor are few of the several such factors contributing project cost overrun in India. ...
    Article
    Full-text available
    Project cost overrun turned to be a major problem for the practitioners and academic researchers since years. It has been observed that construction projects are rarely completed within the estimated budget. There is an assortment of factors contributing to cost overrun in all kinds of projects. The cause of cost overrun varies depending upon nature and size of the project. Hence, this paper focuses on identification and level of cost overrun factors with specific reference to public sector projects of Pakistan. Data was collected using a set of questionnaire within different parties involved in projects. Average Index (AI) has been used as a statistical method for data analysis. The result indicates that inadequate planning and scheduling, fluctuation in prices of materials, insufficient fund provision by client, inaccurate cost estimates, delays in payment by the client, financial difficulties by client, additional works, poor financial control on site, delays in decision making and frequent design changes are the top most factors causing project cost overrun. The findings of this study will help the stakeholders of construction industry to make more informed decision to deal with project cost overrun. This study will help to prevent cost overrun in upcoming public sector projects in construction industry of Pakistan.
  • Article
    Full-text available
    Cost escalation is a ubiquitous problem, especially in Government organizations. Though bigger projects encompass escalation cost, in smaller projects, it is generally ignored. Several internal and external factors are responsible for the undesirably increased cost of a project. Among them some are tangible, and some are intangible. The scope of this study is to highlight most common remittable and non-remittable factors responsible for cost escalations. Thirty most common factors responsible were listed. A survey was done in order to have the stakeholder's opinion on identifying the most common factors. Out of 102 generally identified escalating factors, 30 factors were shortlisted based on literature and initial study. Participants responded on a 1 to 5 Likert's scale. Out of 200 distributed questionnaires, 52 reliable set of questionnaires were selected for data analysis. Clients, consultants, and constructors were selected from different projects like roads, structure, public amenities etc. Minimum threshold to participate in the survey was that a respondent must had at least a Diploma or Bachelor's degree in the field of civil engineering. Results highlighted that financial problems, slow payments, and inflation are the top-ranked identified factors responsible for cost escalation in the construction industry of Pakistan. The weighted average of all factors ranges between 0.355 and 0.688, having 0.668, 0.629 and 0.625 for the top three factors.
  • Article
    Full-text available
    Cost overrun is an increase of cost of project from approved budget which was signed by parties at the time of tender. Cost overrun in construction of highway projects is a common problem worldwide and construction industry of Pakistan is also facing this crucial problem of cost overrun in highway projects of Pakistan. The main objective of this research is to identify the causative factors of cost overrun in highway projects of Sindh province of Pakistan. A well designed questionnaire was developed based on 64 common factors of cost overrun from literature review. Developed questionnaire was distributed among selected 30 experts from owner/client, designer/consultant and contractor who have experience more than 20 years' experience in highway projects. The collected data was statistical analyzed. After analysis results showed that delay process in payment by client, inadequate planning, client interference, poor contract management, delay of decision making, change of scope of project and financial problems faced by client were most causative factors of cost overrun in highway projects. This research will provide alertness to stakeholders of highway projects of Sindh province to avoid cost overrun in projects.
  • The cause factors of large project's cost overrun: a survey in the southern part of peninsular malaysia
    Aftab Hameed Memon, Ismail Abdul Rahman, Ade Asmi Abdul Aziz (2012) " The cause factors of large project's cost overrun: a survey in the southern part of peninsular malaysia" International Journal of Real Estate Studies, Volume 7, Number 2
  • A Critical Analysis of the Causes of Project Management Failures in Kenya
    • Abednego Oswald Gwaya
    • Sylvester Munguti Masu
    • Githae Wanyona
    Abednego Oswald Gwaya, Sylvester Munguti Masu, Githae Wanyona (2014) "A Critical Analysis of the Causes of Project Management Failures in Kenya" International Journal of Soft Computing and Engineering (IJSCE) ISSN: 2231-2307, Volume-4, Issue-1
  • Project Cost Control in the Nigerian Construction Industry
    • C I Anyanwu
    C.I. Anyanwu (2013) "Project Cost Control in the Nigerian Construction Industry" International Journal of Engineering Science Invention ISSN (Online): 2319 -6734, ISSN (Print): 2319 -6726, Volume 2 Issue 12, PP.65-71.
  • Article
    Full-text available
    The occurrence of delay is common in most construction projects, due to various reasons and causes before or during construction phase. As the delay impact on time and cost overrun, analyzing of these delay(s) makes easy to give responsibility to concern party. This helps to avoid or minimize delays in future work. Numerous analytical methods are available for analyzing these impacts and selection of proper method depends upon: statistical data available, time available, limitation of method and money available for analyzing. However, information of activities which are responsible for project delay and their magnitude provides the baseline for investing the cause and assessing the responsibility for project delay. This paper reviews research methodology suggested for assessing construction delay factors by analytical methods as well as with the help of computerized schedule analysis methods. The purpose of this study is to review various analytical & computerized schedule analysis methods for analysis of construction delay factor.
  • Article
    Full-text available
    This study investigates the causes of delay of building construction projects in Ghana to determine the most important according to the key project participants; clients, consultants, and contractors. Thirty-two possible causes of delay were identified from the literature and semi-structured interviews of 15 key players in the implementation process. These delay factors were further categorised into nine major groups. The list of delay causes was subjected to a questionnaire survey for the identification of the most important causes of delay. The field survey included 130 respondents made up of 39 contractors, 37 clients and 54 consultants. The relative importance of the individual causes and the groups were calculated and ranked by their relative importance index. The overall results of the study indicate that the respondents generally agree that financial group factors ranked highest among the major factors causing delay in construction projects in Ghana. The financial group factors were delay in honouring payment certificates, difficulty in accessing credit and fluctuation in prices. Materials group factors are second followed by scheduling and controlling factors.
  • Article
    Full-text available
    Building construction projects in Uganda's construction industry are experiencing a wide spread of delays. The purpose of this study was to assess the factors causing delays and their effects on building construction projects in Uganda. Eighty one (81) project delay attributes were identified through detailed literature review. Structured interviews and questionnaire survey were conducted across stakeholders that included among others; consultants, contractors and clients on four selected building projects to gather their views on causes of delay in delivery of projects. This research categorized the causes of delay under four main groups of consultant related, contractor related, client related and external related and then assessed their impacts on delay using relative importance index (RII) as a basis for analysis. The RII for all delay factors and group of categories was computed so as to rank the factors. The most significant factors of construction delays were identified as: (1) delay in assessing changes in the scope of work by the consultant; (2) financial indiscipline/dishonesty by the contractor; (3) inadequate contractor's experience; (4) design errors made by designers; (5) inadequate site investigation by the consultant. The study concluded that consultant related category had the highest impact (RII = 0.745), followed by client related (RII = 0.698), then contractor related (RII = 0.697) and external related (RII = 0.615) exhibited the least impact. Identification of the causes of potential delay factors that are likely to affect the timely delivery of projects can help to avoid extra costs through claims and disputes that arise among parties when delays are experienced.
  • Article
    Full-text available
    Delays are one of the biggest problems in construction projects in developing countries, as cause a negative effects on the projects. Delays can be minimized only when their causes are identified. The aim of this paper is to identify the main causes and effects of delay in Iranian construction projects. The literature related the field of causes and effects of delay in construction projects has been reviewed over the last decade. A questionnaire survey was conducted to solicit the causes and effect of delay from consultants and contractors' viewpoint. This study identified 10 most important causes of delay from a list of 28 different causes of delay and 6 different effects of delay. The elements of this list has identified on the basis of literature review over the last decade. The perspective of contractors and consultants has been analysed to rank the causes of delays based on their Relative Importance Index. The 10 most causes of delay were: (1) delay in progress payment by client, (2) change orders by client during construction, (3) poor site management, (4) slowness in decision making process by client, (5) financial difficulties by contractors, (6) late in reviewing and approving design documents by client, (7) problems with subcontractors, (8) ineffective planning and scheduling of project by contractor, (9) mistakes and discrepancies in design documents, and (10) bad weather. Six major effects of delay were: (1) time overrun, (2) cost overrun, (3) disputes, (4) total abandonment (5) arbitration, and (6) litigation. The paper predicts some future trends and suggests certain areas in which future research on construction projects should be focused. Index terms—Causes of delay, effects of delay, Iran, construction project.
  • Article
    Despite the availability of various control techniques and project control software many construction projects still do not achieve their cost and time objectives. Research in this area so far has mainly been devoted to identifying causes of cost and time overruns. There is limited research geared towards studying factors inhibiting the ability of practitioners to effectively control their projects. To fill this gap, a survey was conducted on 250 construction project organizations in the UK, which was followed by face-to-face interviews with experienced practitioners from 15 of these organizations. The common factors that inhibit both time and cost control during construction projects were first identified. Subsequently 90 mitigating measures have been developed for the top five leading inhibiting factors—design changes, risks/uncertainties, inaccurate evaluation of project time/duration, complexities and non-performance of subcontractors were recommended. These mitigating measures were classified as: preventive, predictive, corrective and organizational measures. They can be used as a checklist of good practice and help project managers to improve the effectiveness of control of their projects.
  • Article
    Full-text available
    Construction projects located in the Gaza Strip, Palestine suffer from many problems and complex issues. Consequently, the objective of this paper is to identify the factors affecting the performance of local construction projects; and to elicit perceptions of their relative importance. A comprehensive literature review was deployed to generate a set of factors believed to affect project performance. A total of 120 questionnaires were distributed to 3 key groups of project participants; namely owners, consultants and contractors. The survey findings indicate that all 3 groups agree that the most important factors affecting project performance are: delays because of borders/roads closure leading to materials shortage; unavailability of resources; low level of project leadership skills; escalation of material prices; unavailability of highly experienced and qualified personnel; and poor quality of available equipment and raw materials. Based on these findings, the paper recommends that: 1) project owners must work collaboratively with contractors and facilitate regular payments in order to overcome delays, disputes and claims; 2) project participants should actively have their input in the process of decision-making; and 3) continuous coordination and relationship between project participants are required through the project life cycle in order to solve problems and develop project performance. Yes Yes