Abstract
This study investigated the effect of various factors affecting cost performance in achieving project success. Investigation was carried out with quantitative approach of questionnaire survey to understand the perception of practitioners involved in construction industry towards various factors in causing cost overrun. The targeted respondents were client, contractor, and consultant representative involved in handling small scale projects in Malaysia. A total of 54 completed responses were collected against 100 sets of questionnaire distributed. Collected questionnaires were analyzed with advance multivariate statistical approach of Partial Least Square Structural Equation Modeling (PLS-SEM). It modeled the relationship of various factors and their relative effects to cost overrun. Structural Model analysis results showed that the identified factors have overall substantial impact on cost overrun. This was assessed with convergent and discriminant validity test where R 2 value for the model is 0.71 which means that 71% variance extraction is resulted from investigated factors. Further, GoF value of the model achieved is 0.70 which shows that developed structural model has substantial power in explaining the factors of cost overrun in small scale projects of Malaysia. Amongst all the factors, contractor’s site management related factors are found as most significant factors. This indicated that for achieving better cost performance in small projects, contractors are required to improve their management related to the identified factors. Beside that, these findings will benefit parties involved in managinging cost performance of small scale construction projects.
Highlights
Cost overrun problem has significantly affected on the prices of construction projects
Various researchers have highlighted different findings about poor cost performance in construction projects such as Frame (1997) studying 8,000 projects and found that only 16% of the projects could satisfy the three famous performance criteria i.e. completing projects on time, within budgeted cost and quality standard, while Flyvberg et al (2003) in a study of 258 projects in 20 nations concluded that 90% projects faced cost overrun and the cost performance has not been improved over the time, it is in the same order of magnitude as it was 10, 30 or 70 years ago
In Nigeria, Omoregie and Radford (2006) reported a minimum average of cost escalation in construction projects is 14%, while in Portugal construction projects faced a minimum of 12% of cost overrun (Moura et al, 2007)
Summary
Cost overrun problem has significantly affected on the prices of construction projects. This trend of overrun in construction projects has become a global concern. In Nigeria, Omoregie and Radford (2006) reported a minimum average of cost escalation in construction projects is 14%, while in Portugal construction projects faced a minimum of 12% of cost overrun (Moura et al, 2007). This overrun of cost in construction projects is resulted from various factors which are vital to uncover and understand. This overrun of cost in construction projects is resulted from various factors which are vital to uncover and understand. Ameh et al (2010) in his study investigating 42 cost overrun causes found that lack of experience of contractors, cost of material, fluctuation in the prices of materials, frequent design changes, economic stability, high interest rates charged by banks on loans and Mode of financing, bonds and payments as well as fraudulent practices and kickbacks were dominant factor causing cost overrun run in Nigeria
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