Significant Factors Causing Cost Overruns in Large Construction Projects in Malaysia

Abstract

Once a construction projects fails in achieving effective cost performance, it will result to cost overruns. These overruns are caused from several factors which are very important to uncover for improving the cost performance. In Malaysia, not many research works have been carried out on studying cost performance factors. Hence, this study was conducted to identify the significant factors causing cost overrun in large construction projects in Malaysia. Questionnaire for the survey was developed based on 35 common factors of cost overrun identified from literature work. These factors were grouped in 7 categories and validated by interviewing five experienced personnel of construction industry. The feedback of from the survey resulted in receiving 262 sets of completed valid responses against 400 questionnaires distributed amongst contractors, consultants and clients involved in large construction projects. The data from the questionnaire was analyzed statistically. Relative importance index method was used for hierarchal assessment of factors and found that the top 3 most significant factors of cost overrun are fluctuation of prices of material, cash flow and financial difficulties faced by contractors and poor site management and supervision. These factors belong to two categories i.e., contractor's site management and financial management category, thus improvements in these categories are paramount for controlling cost overrun in construction projects.