Major causes of construction time and cost overruns

Abstract

PurposeIn Ghana, the duration of construction projects from inception to completion is becoming a great concern, recently, especially among clients and beneficiaries, because of the rising interest rates, inflation, development plan targets, among other factors. Hence the need to understand the causes of delays and cost overrun in the construction sector has become more important than ever. This study therefore aims to identify the major factors underlying time and cost overruns in projects related to the education sector in Ghana to proffer practical solutions in addressing them.Design/methodology/approachThe study conducted a survey among clients’ consultants and representatives of the contractors working on about 60 government school projects. A relative importance index was used to determine the relative effects of the factors causing construction time and cost overruns.FindingsThe key factors causing construction time overrun were: financial problems, unrealistic contract durations imposed by clients, poorly defined project scope, client-initiated variations, under-estimation of project cost by consultants, poor inspection/supervision of projects by consultants. Other factors were underestimation of project complexity by contractors, poor site management, inappropriate construction methods used by contractors and delays in the issuance of permits by government agencies. Factors affecting cost overruns were financial difficulty by client, delays in payments of completed works, variations in designs, lack of communications plans, poor feasibility and project analysis, poor financial management on site and material price fluctuations.Research limitations/implicationsThe research was limited to only the educational sector projects.Practical implicationsPractically, this study highlights for the construction sector the critical factors causing project time and cost overruns in Ghana. Identification of these factors provides the basis for pragmatic solutions to enhance the chances of project success.Social implicationsThe identification and solutions to project time and cost overruns, especially for educational sector projects, contribute toward making public goods more affordable and accessible to most citizens, particularly in developing countries.Originality/valueThis study contributes to the debate on factors causing project time and cost overruns in the construction sector especially from a developing country’s perspective.