Cost Overruns Research Articles

Factors Causing Time and Cost Overruns of Construction Projects in Malaysia

Cost overrun is a problem that the construction industry faces in many countries, including Malaysia. It is a significant problem in Malaysia because most Malaysian construction projects have seen cost overruns of between 5 and 10% of the overall contract sum. This study aims to look at the factors that could lead to time and cost overruns in Malaysian construction projects. This study's objective was accomplished by using a quantitative approach to gather data which involved the use of questionnaire surveys. The study employed a stratified random selection method for the collection of information from the contractors working in the Ipoh region who have a current registration with the Pusat Khidmat Kontraktor (PKK) and the Construction Industry Development Board (CIDB) and are mainly based in the city of Ipoh. The results showed that “lack of experiences of project type”, “delays in issuing information to the contractor during projects”, “improvements to standard drawings during construction”, “omissions and errors in the bills of quantities”, and “inaccurate quantity take-off” are the top 5 factors causing time and cost overrun in the city of Ipoh, Malaysia.

The Relationship between Cost Overruns and Modifications for Construction Projects: Spanish Public Works and Their Legal Framework

Cost overruns are a common problem for public works projects, often due to modifications to the original design. While the causes of these modifications have been studied, the legal framework’s impact and limitations on these modifications have received extensive treatment, with no specific case studies from different countries. This paper explores the relationship between modifications in Spanish public works projects and their compliance with legal limits, investigating the alignment between base bidding prices and eventual costs after adjustments. The study also delves into the strategic behaviour of construction companies in Spain, which frequently involves manipulating project costs to match the initially proposed bidding price. Statistical methods, such as the Spearman correlation test and graphical analysis, confirm a nearly exact relationship between base bid price and final price. Also, a modification costs comparison for two different legal periods highlights the legal framework’s influence, as a less restrictive framework leads into higher average cost overruns. It provides valuable information to avoid malpractice for tendering institutions, practitioners, and legal developers, as well as those interested in the Spanish public works sector, and opens the door for future research on solving this problem.

Enhancing US Software Companies' Competitive Edge with Agile Project Management

The primary purpose of this study was to examine how the adoption of Agile Project Management practices can help US-based software companies gain a competitive advantage in the rapidly evolving global marketplace. With ever-increasing customer demands and changing technology landscapes, it was crucial to assess whether agile methodologies could effectively address these challenges. The software industry in the USA faced challenges related to project delays, cost overruns, and difficulties in responding to changing customer requirements. Traditional project management approaches often proved inadequate in such dynamic environments. The study aimed to determine whether Agile Project Management could mitigate these issues and improve competitiveness. The research employed a mixed-methods approach. Quantitative data were collected through surveys distributed to software companies implementing agile practices. Qualitative insights were gathered through in-depth interviews with industry experts. Data analysis involved statistical techniques for quantitative data and thematic analysis for qualitative data. The findings revealed that Agile Project Management significantly improved software development processes. Agile adoption also fostered better collaboration among cross-functional teams. Moreover, Agile practices positively impacted software quality and customer satisfaction, ultimately contributing to a competitive edge. Based on the research findings, it can be concluded that Agile Project Management has a substantial positive impact on the competitiveness of US-based software companies. To enhance competitiveness, it is recommended that US software companies consider the adoption of Agile Project Management practices. Additionally, organizations should invest in training and cultural changes to facilitate a smooth transition to agile methodologies. Continuous improvement and alignment with agile principles are essential for sustained competitiveness. Keywords. Agile Project Management, Software Development, Competitiveness, Customer-Centric, US Software Companies

Toward predictive modelling of construction cost overruns using support vector machine techniques

Toward predictive modelling of construction cost overruns using support vector machine techniques

A bibliometric review of the statistical modelling techniques for cost estimation of infrastructure projects

PurposeCost overrun in infrastructure projects is a constant concern, with a need for a proper solution. The current estimation practice needs improvement to reduce cost overruns. This study aimed to find possible statistical modelling techniques that could be used to develop cost models to produce more reliable cost estimates.Design/methodology/approachA bibliographic literature review was conducted using a two-stage selection method to compile the relevant publications from Scopus. Then, Visualisation of Similarities (VOS)-Viewer was used to develop the visualisation maps for co-occurrence keyword analysis and yearly trends in research topics.FindingsThe study found seven primary techniques used as cost models in construction projects: regression analysis (RA), artificial neural network (ANN), case-based reasoning (CBR), fuzzy logic, Monte-Carlo simulation (MCS), support vector machine (SVM) and reference class forecasting (RCF). RA, ANN and CBR were the most researched techniques. Furthermore, it was observed that the model's performance could be improved by combining two or more techniques into one model.Research limitations/implicationsThe research was limited to the findings from the bibliometric literature review.Practical implicationsThe findings provided an assessment of statistical techniques that the industry can adopt to improve the traditional estimation practice of infrastructure projects.Originality/valueThis study mapped the research carried out on cost-modelling techniques and analysed the trends. It also reviewed the performance of the models developed for infrastructure projects. The findings could be used to further research to develop more reliable cost models using statistical modelling techniques with better performance.

Logistics management in a handicrafts store in the district of San Martin de Porres, 2023

The objective of this research is to analyze the impact of logistics management in a handicraft store in the district of San Martin de Porres, 2023. To achieve the objective the methodology used was to conduct a qualitative research approach, basic type, the scope is descriptive and the research design is a case study, for the collection of information the interview technique was used, so a guide of semi-structured questions which was directed to 6 participants who work in the areas where the study is being conducted, also had the opinion of a specialist and as a theoretical basis we have the various scientific sources obtained from reliable sites such as Scopus, Redalyc among others. The conclusion obtained is that there is an impact of logistics management in a handicraft store because it is strongly linked to the availability of the merchandise and if this management is not done properly, it generates cost overruns due to the deterioration of the products because they are not in the right place, dissatisfied customers when the staff does not find the product or because the stock is exhausted or they do not manage to see all the products.

Directional Core Drilling as an Approach to Reduce Uncertainty in Tunneling Construction

The definition of a rock mass’s characteristics is crucial in underground construction to avoid delays and cost overruns. This study proposes a system to quantify the economic uncertainty related to a lack of knowledge of a rock mass in the tunnel construction stage, either for tunnel boring machines or for drill and blast excavation techniques. Using a back-analysis of three actual tunnels completed in Spain (Burata, Lot 3 of the Pajares variant, and Bolaños), the study assessed the directional core drilling technique (DCD) for this purpose, comparing it with conventional boreholes. In this regard, the DCD approach reduced the uncertainty by between EUR 6.7 and EUR 12.7 for every EUR 1, while the total cost of the drilling campaign remained within a widely accepted proportion of the construction budget. Overall, the uncertainty was reduced by approximately EUR 6000 per meter of the tunnel.

Identification and Evaluation of the Key Decision Support Factors for Selecting Off-site Construction in Canada: A Building Information Modeling (BIM)-enabled Approach

The construction industry lags behind other sectors in terms of productivity performance, with many megaprojects experiencing cost overruns. While there are various reasons for this, the most significant one is the lack of efficiency. Adopting the off-site construction (OSC) methodology can improve productivity by enhancing project efficiency mainly in terms of time, cost and quality. Although OSC, off-site manufacturing (OSM), Industrialized Building System (IBS), prefabrication, modular, or other similar terms are not novel concepts, it is essential to shift any aspect of construction project activity from traditional onsite methods to a controlled, factory-based and manufacturing concept of production. Industrialization and digital fabrication have gained significant prominence in recent years, as they are perceived as a viable solution to the issues faced by the construction sector. As OSC is gradually gaining interest in building projects, it is crucial to identify and validate the key decision support factors (KDSFs) for selecting an appropriate OSC method from the early design stage. The purpose of this study is to identify, verify, and evaluate the KDSF for selecting OSC in Canada. This study utilized a mixed-methods design, comprising a systematic literature review (SLR) and pilot expert reviews through semi-structured interviews and surveys, to accomplish the research objectives and ensure the validity and reliability of the findings. Twelve interviews were conducted to validate and analyze the KDSFs, which were then prioritized using the mean score (MS) analysis and weighting function. Based on the research methodology, 32 KDSFs were validated and grouped into 7 'dimensions'. Further analysis concluded that the most important 'dimension' in selecting OSC for a building project in Canada is project time which consists of the design period, production time, mobilization and transfer time, as well as the assembly, and construction periods.

Construction management using ranking effective factors on the construction cost overrun via fuzzy DANP and delphi technique

The primary objective of this paper is to examine the impact of several effective factors on the construction cost overrun projects which are experienced explicitly by developing countries. In this regard, a hierarchical analysis technique is employed for conducting descriptive and survey research to comprehensively evaluate the effective factors of the construction cost overrun in Yazd city in Iran. The statistical population consists of 150 members from the managers, officials, and contractors involved professionally in construction projects. The results show that the managerial factors have the highest score amongst the investigated effective criteria and the administrative factors and environmental factors come respectively at the second and third priority. Since management is the key element in construction projects, the cost overrun can be reduced by establishing new managerial approaches and redirecting the managerial criteria to a higher performance level.

Internet of Things (IoT): Real-Time Monitoring for Decision Making Among The Malaysian Contractors

The complexity of construction projects and the poor decision-making process often result in cost and time overruns. With the rapid growth of Industrial Revolution (IR4.0) in Malaysia, Internet of Things (IoT) is being expanded in the construction industry to improve project efficiency and performance. One of the benefits of IoT is it provides a real-time monitoring function to ensure that the construction players can access accurate data and information at the exact time throughout the project life cycle and assist in their decision making. Most studies have focused on how decision making is aided through the application of IoT during the design phase, with few studies focusing on the construction phase, particularly from the perspective of contractors. Without IoT, contractors need to use their professional experiences and limited data to make their decisions. As the contractors have to make a lot of decisions during the construction phase, the adoption of IoT can help the contractors to make fast and precise decisions. Despite its benefits, the adoption of IoT in the Malaysian construction industry is still low. With the focus on Grade 7 (G7) contractors in Malaysia, this paper intends 1) to study the types of IoT-based real-time monitoring technologies for decision-making among the contractors, and 2) to explore the potential improvements of decision making by the contractors after the adoption of IoT. The research adopted the qualitative method via semi-structured interviews. Based on the findings, there are 10 types of IoT-based real-time monitoring technologies being used and they have been utilised in several areas e.g. machineries and equipment, materials, labours, project sequences, waste management, risk management, productivity and quality of works, cost control and environmental protection. The function of the real-time monitoring of IoT such as the real-time data and report, sudden changes reporting, agentless real-time monitoring, root cause analysis, alerts and warnings and predictions, help the contractors in making their decision timely and accurately. Finding reported herein is considered significant towards raising industry players' awareness and acceptance of IoT in construction projects, thereby improving project efficiency and performance.

Cost Overrun Optimism: Fact of Fiction?

Program managers are advocates by necessity. When taken to the extreme, program advocacy can result in the suppression of adverse information about the status of a program. Such was the case in the Navy’s A-12 program. In “A-12 Administrative Inquiry,” Beach (1990) speculates that such “abiding cultural problems” were not unique to the Navy. To test that assertion, this article examines cost overrun data on 64 completed acquisition contracts extracted from the Defense Acquisition Executive Summary database. Cost overruns at various contract completion points are compared with projected final cost overruns estimated by contractor and government personnel. The comparison shows that the overruns projected by the contractor and government were excessively optimistic throughout the lives of the contracts examined. These results were found insensitive to contract type (cost, price), contract phase (development, production), the type of weapon system (air, ground, sea), and the military service (Air Force, Army, Navy) that managed the contract.

Evaluation of the Implementation of Contract Change Order as A Solution to the Problem of Contract Scope Changes

Construction industry activities are increasing. Construction industry players need to be prepared to face the possibility of changes of design planed that are not in accordance with field conditions. The purpose of this research is to identify, analyze the causes and impacts of Contract Change Orders (CCO) at the pre-construction, construction implementation, and post-construction stages with case study is Proyek Simpang Susun Balaraja Timur at Tol Jakarta – Merak, Kabupaten Tangerang. The research method used is descriptive and qualitative methods by conducting Earned Value Analysis and Fishbone Analysis to identify the causal factors and impacts of CCO so that efforts can be made to mitigate the performance of the construction contract from the aspect of quality, cost, and time. The results of the analysis show 3 factors causing CCO namely consultant factors, such as lack of planning preparation and non-compliance with field conditions, project owner factors, and contractor factors. The results of Earned Value Analysis with Estimate at Completion (EAC) calculations can be used to identify the need for additional contract value and additional execution time. On initial contract identification: Cost Performance Index (CPI) is 0.77 (insufficient costs with cost overrun – Rp. 52.502,111,631.83) and Schedule Performance Index (SPI) 1.21, means that Addendum 1 needs to be done with the results: CPI is 1.17 (the costs used are sufficient from the available fees), EAC is Rp. 189,848,751,106.02 with changes in the contract value is Rp. 222,017,999,900.65, SPI is 1.21 from the initial contract value Rp. 174,437,684,167.96

Electric utility construction: Causes and types of field change orders

The electric power industry provides most of the energy for global commerce, and controlling its construction costs is important to provide affordable energy. Controlling original contract costs and any added costs due to change orders requires effective planning and design of projects. While cost overruns due to change orders occur in other industries, the electric power utility industry faces technical complexity, poor understanding of field conditions, lack of jobsite visits, and poor collaboration among stakeholders during design and planning. Although published data exist for costs of change orders in other industries, almost none are available for the electric power sector. To mitigate these problems, project managers must understand these risks, provide better cost forecasts, and take other measures to avoid change orders. Using a descriptive statistical analysis of the project database of an electric utility company, this study addresses the data gap by analyzing the magnitude, frequency, and causes of field change orders of both overhead and underground electrical construction. The results identified nine causes of field change orders (FCOs) during construction. The percentage increases in the electrical construction contract costs appear to be higher than in other industries, which is an alarming finding considering the tendency to bury transmission lines due to fire hazards. The result showed that FCOs with added scopes occurred more frequently in underground projects than in overhead projects. The analysis indicated that most causes of field change orders could be managed during planning and design and through the construction phase. The findings of this study can be used by electric utilities when they convert from overhead to underground systems due to security and climate change factors.

Cause of delay and cost overrun in infrastructure projects

This paper focused on identifies causes of cost overrun and delay factors in infrastructure projects. Mainly, a structured review of literature has been conducted for the purpose of knowing extend of time delay and cost overruns experienced by infrastructure projects. To know this issue this paper explored current state of cost overruns and delay in infrastructural projects. Principally, the reviewed of 15 empirical literatures demonstrated different causes of delay and cost overrun. Main findings proposed distinctive factors of cost overrun and delays, and the main of them; pitfalls and errors in design, economic and political instability, bureaucracy of owner, poor experience of contractors, late in payment to contractor for terminate work, incompetent contractor human resources, in accurate scheduling and initial cost estimation by contractor and recurrent design change.

Analysis of delays and cost overruns of road construction projects in the Colombian Caribbean Region

Construction projects are constantly threatened by delays and cost overruns that might compromise their viability. Th us, identifying the leading causes of these issues based on the experience of experienced professionals is essential to planning and reducing these risks. This research evaluates the frequency and severity of variables causing delays and cost overruns in Colombian Caribbean Region road projects. Th e nine causes studied in this research were defined through a literature review, preliminary discussion and a pilot test. A survey directed to 42 road construction engineers allowed the authors to characterise these professionals’ perceptions regarding the frequency and severity of these variables in terms of delay and cost overruns, with a confi dence level of 80%. Statistical analyses were applied to the results of the survey to establish which variables generate the most signifi cant impacts when building roads and related works in the Colombian Caribbean Region

Cost Effective Methods in Construction Engineering

The economic impact of construction cost overrun is a possible loss of the economic justification for the project. The financial impact of a cost overrun results in demand for construction investment credits. Therefore reliable estimates of construction cost are an important aspect to the contemporary construction companies especially during the conceptual phase of lifecycle management. In this paper a cost-effective analysis is done using one of the cost effective construction technique called Rat Trap Bond versus Flemish bond and when estimated with CPWD 2012 schedule of rates it is proved that Low cost techniques such as rat trap bond provides better cost effectiveness as compared to conventional Flemish bond construction method.

How do megaprojects build open innovation capabilities?

ABSTRACT Governments around the world are increasingly using megaprojects to deliver services to communities. However, most megaprojects fail; they are delivered late, with significant cost overruns and/or diluted benefits. Researchers have suggested implementing open innovation (OI) to improve megaproject performance. However, implementing OI requires an organization to build new capabilities. This study contributes to the literature on megaprojects by adapting the dynamic capabilities concept to develop a theoretical framework for implementing OI. A combination of a literature review and expert judgement was used to extract twenty-nine elements that are the micro-foundations of the capability to implement OI in megaprojects. A grey number theory-based mathematical model was developed to measure and objectively monitor the OI implementation index (O3I) for megaprojects. This study presents a case study that indicates the ease of implementation of the developed model and its transferability to other megaprojects across domains. This study intersects three areas of inquiry: megaproject management, OI, and dynamic capabilities and makes two key contributions to the growing body of knowledge in megaproject management: (1) we adapt the dynamic capabilities concept to develop a framework to implement OI in megaprojects and (2) we develop a scale to qualitatively assess the level of OI implementation in an organization.

Post ERP implementation issues and challenges: exploratory case studies in the context of Saudi Arabia

PurposeThe purpose of this study is to investigate the post–enterprise resource planning (ERP) issues and challenges in the context of Saudi Arabia. There is a lack of research in the context of developing countries regarding post-ERP implementation issues and challenges. The high failure rate of the ERP system is a reflection of many management issues that occurred at different phases of ERP implementation. Previous research indicated that even after a successful implementation, the ERP system was unable to sustain itself in the organizations.Design/methodology/approachAn exploratory case study design was adopted to proceed with this research process at two organizations in Saudi Arabia. The interviews of the top and middle management are conducted and transcribed. These case studies were further analyzed using the Creswell approach to generate several themes, and descriptions provided a deeper understanding of the post ERP implementation issues and challenges.FindingsResearch findings show that for successful ERP implementation, identified factors are top management support, integration, strategy, employee resistance, BPR, change management, vendor selection, team formation and culture. Moreover, factors for the post-ERP implementation that led to sustainability are top management support, training, system adoption, system testing, data migration, cost overrun, employee retention and post-implementation support.Originality/valueThis study is unique in its type to examine the issues and challenges organizations face after deploying ERP initiatives. This research's findings were useful and supportive for the senior management interested in successfully sustaining such an initiative in the organization.

The potential of new models of construction procurement to counter cost overruns in construction projects: an exploratory study from a contractors’ perspective

PurposeCost overrun is a significant issue in construction, an undesirable feature the industry has long been associated with. Poor procurement practices are often blamed for subsequent cost overruns in construction, especially with conventional procurement methods leading to outrageous cost overruns. The purpose of this study is to review the features of the new models of construction procurement (NMCP) and assess their potential to reduce cost overruns in construction projects.Design/methodology/approachA literature review was conducted to identify the issues of procurement leading to cost escalations. Primary data were obtained through exploratory, semi-structured interviews using a case study approach.FindingsClients’ lack of knowledge was highlighted as a key issue in procurement that interlinks with many factors causing cost escalation. The findings suggest that the features contained within the NMCP, such as early contractor involvement and collaboration throughout the project team, have the potential to make a positive contribution to addressing cost escalation in construction.Research limitations/implicationsThe primary research was undertaken as an exploratory study and presents the contractor's perspective. Further research is therefore suggested, with multiple organisations representing all key stakeholders in a construction project, including clients, consultants, sub-contractors and suppliers.Practical implicationsThe study recommends awareness of the NMCP be raised throughout the industry, and simplified information must be made available to help widen uptake of these contemporary procurement methods.Originality/valueAddressing the dearth of research concerning the use of NMCP within the industry, this study makes a niche contribution to the body of knowledge on construction cost management by illustrating the potential offered by these new procurement methods for addressing cost escalation. For an industry where collaboration is accepted with reservations, this case study demonstrates how novel collaborative strategies such as open book costing, project bank accounts and shared pain and gain mechanisms can be implemented as part of the procurement strategy and how such strategies can contribute towards minimising the cost escalation inherent in construction projects.

Cost Forecasting for Building Materials under Conditions of Uncertainty: Methodology and Practice

Most large construction projects face the problem of cost overruns and failures to meet deadlines mainly due to changes in the cost of building materials. A lot of studies proved the high importance of the cost of building materials for the project budget and highlighted a number of factors that determine the cost of materials. However, modern unstable economic dynamics lead to the need not only to observe sufficient accuracy of quantity and cost calculations regarding primary building materials but also to carefully predict the cost, taking into account uncertainty factors (changes in the geopolitical situation, the impact of the pandemic, changes in the technological structure, etc.). This article proposes the use of a calculation and expert methodology for forecasting the cost of building materials on the example of building bars for two regions of the Russian Federation. This study includes a review of literature, which showed the dependence of the dynamics of the cost of construction on the prices of building materials, confirmed the impact of economic and noneconomic factors of the dynamics of prices of building materials and the impact of risk and uncertainty. Based on the literature review, it is also concluded that it is necessary to expertly adjust the results of the economic and mathematical modeling of the building materials’ price trend line under the influence of noneconomic factors of uncertainty. The statistics of the prices of building materials in Russia were analyzed, and the main causes of price dynamics (economic and noneconomic) were identified. The ARIMA model was selected to build a series of dynamics of prices of reinforcement steel, an expert adjustment of the forecast was made taking into account uncertainty factors. The method of calculation and expert forecasting of prices of building materials was proposed, and the forecast of prices of steel reinforcement in the regions of Russia was calculated on its basis. In conclusion, this study demonstrates the algorithm and practical results of forecasting the cost of building materials under the conditions of uncertainty, as well as recommendations for the implementation of predictive analytics tools in construction practice.