Identifying factors causing cost overrun of the construction projects in India

Abstract

Delay and cost overrun are common phenomena in projects worldwide. However, these are especially severe in developing countries. In India as per MOSPI report, 235 projects out of 410 were severely affected cost overrun due to certain factors. A short questionnaire was conducted with 15 prominent factors responsible for cost overrun and forwarded to 190 constructional professionals across India. Total 85 responses were received and it was analyzed using various statistical tools such as analysis of variance (ANOVA) and factor analysis tool using SPSS. In this study, top three factors affecting cost overruns were identified such as price escalation of raw material, delay in planned activity and lack of co-ordination between construction parties which could be significantly responsible for cost overnun of construction project in India. Factor analysis method was also carried out to group the factors into three components of overall questionnaire. These components, such as client control component, project management component, and contractor control component, would be useful to the various parties involved in the construction activities. This paper also provides suggestive frameworks which have been framed after discussing with large number of construction professionals or expert.