Abstract
Construction cost is the most important criteria of project success and hence the construction project performance is generally expressed in terms of cost and its variance from the budget. In spite of having extant literature, cost estimation methods, cost indices etc., construction projects rarely meet the budgeted cost. This research study focuses on the construction cost overrun and to identify the various factors that affects the construction cost performance. Based on an extensive literature review and input from industry experts, sixty eight factors that causes cost overrun were identified for investigation. Further, a structured questionnaire survey was conducted among the industry experts and the collected data has been analysed statistically. It is concluded that the factors namely scope creep, construction delays, rework and practise of awarding the contract to the lowest bidder are most significant factors for construction cost overrun in non-infrastructural Indian projects. The relative importance of the listed factors used to guide the project team in addressing the cost related risks involved in the projects. The findings are expected to bridge the gap in the current construction cost management practices.
Highlights
The construction project performance is generally expressed in terms of time and cost variance against its baseline
It is important to measure the cost variance in construction to understand the performance of the project and thereby to understand financial risks involved in the project execution
A summary of all the factors causing the cost overrun is been listed and as seen in Table 2, the overall ranking reveals that various factors influence the cost performance in projects
Summary
The construction project performance is generally expressed in terms of time and cost variance against its baseline. Out of the four fundamental constraints namely scope, cost, time and quality, cost performance is the most essential and common issue in the global construction industry [1]. It is important to measure the cost variance in construction to understand the performance of the project and thereby to understand financial risks involved in the project execution. The cost variance, resulting as project cost overrun is denoted as a negative impact on economy and the profitability. Several perspectives on cost overrun are available in extant literature and are proven valid. It is not adequately explained on why the cost overrun keeps occurring though sufficient knowledge on cost overrun has been largely shared
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