Cost Overruns In Construction Projects Research Articles

Analysis of Construction Project Cost Overrun by Statistical Method

Abstract: Most of the construction projects suffer from cost overruns due to a multiplicity of factors. The present work is carried out on studying significant factors causing cost overruns in construction projects. A questionnaire for the survey has been prepared by Authors based on 45 common factors for cost overruns identified from literature review and discussion with experts. These factors are related with Owner, Contractor, Consultant, and Management, Material, Equipment, Labor and External. The cost overrun methodology presented in this study gives statistical method which is used in construction sector for computing impact of project cost overruns. The finding of the paper will help the project manager to act on critical causes and further try to reduce cost overrun of project. Keywords: Construction projects, Factors of cost overrun, Relative important index

Unearthing direct and indirect material waste-related factors underpinning cost overruns in construction projects

Despite the roles of construction projects in socio-economic development, expanding number of projects suffer chronic problems of cost overruns. However, approaches to unravelling the antecedents of this problem remain vastly nonspecific and lack a pertinent characterisation of issues with direct and indirect linkages between material waste factors and cost overruns. This study modelled the direct and indirect effects of six dimensions of material waste-related factors contributing to construction projects’ cost overrun: unanticipated site conditions, material management, site management, workforce factors, material theft, design and contract documentations. The hypothesised recursive model of direct and indirect effects was validated using data from 200 valid responses of experts in the Nigerian construction industry. The results showed that the total effects of direct and indirect contributions of materials waste-related factors paths to project cost overrun are 55.38% and 44.62% respectively. Among the six dimensions of materials waste-related factors modelled, site management-related issues emerged as the most significant, contributing 9.23% of the total effect. Based on these results, effective cost performance in building project delivery is achievable by curbing materials waste-related concerns. Developing pertinent strategies to curb identified construction material waste, is necessary for achieving direct and indirect reductions in projects’ cost overruns.

Opportunities and Challenges for Construction Health and Safety Technologies under the COVID-19 Pandemic in Chinese Construction Projects.

The Coronavirus disease 2019 (COVID-19) pandemic has resulted in significant delays and cost overrun in construction projects. The implementation of health and safety (H&S) technologies is one of the most important strategies to alleviate the adverse impacts of COVID-19 on the construction industry and help the industry adapt to the new normal. This study aims to evaluate the adoption of H&S technologies for pandemic management in the construction sector under the COVID-19 pandemic. Semi-structured interviews with eighteen practitioners engaged from construction companies and technology firms were conducted to collect their views on the driving forces and issues of the adoption of H&S technologies for pandemic management in Chinese construction projects. The results reveal that the major H&S technologies used included the health quick response (QR) code system, artificial intelligence (AI)-powered fever monitoring, and site access control system. These technologies were reported to be effective in preventing the spread of the pandemic in workplaces. The findings of the study amplify that the pandemic may serve as an acceleration of the adoption of H&S technologies in the construction sector. Other technologies, such as building information modeling, drones, AI-based safety monitoring, and robotics, however, were seldom used in the studied projects. The interviewees addressed several problems regarding the implementation of these technologies. High costs of technologies, a lack of client support, and disruptions to the normal work process were the main hurdles of the adoption of these technologies. The results indicated that the external influence factor—the COVID-19 pandemic—could considerably drive the use of H&S technologies, whereas the internal influence factors—cost and compatibility of technology—might be the major barriers to technology adoption. To encourage the wider use of H&S technologies in construction, the government is recommended to support the technology transformation by granting financial subsidies for costs involved in innovation adoption. Project owners may consider investing substantially in H&S technologies that can strengthen their resilient and innovative ability to adapt to the post-COVID-19 landscape. The present results will be useful to industry stakeholders and researchers interested in developing H&S technologies for combating the COVID-19 pandemic and future crises.

Causal model for rework in building construction for developing countries

Rework is one of the crucial reasons for time and cost overrun in construction projects and involves the consumption of additional resources. Given the environmental and economic impact, the menace of rework in projects must be minimized, which calls for a clear understanding of its causes, especially their quantitative impact. The present study seeks to identify and analyze the various causes of rework in building construction both qualitatively and quantitatively using Structural Equation Modeling (SEM). After identifying the different causes of rework from literature, a panel of experts was consulted, and an appropriate questionnaire was designed with 28 attributes. Then, using the questionnaire, personal interviews with stakeholders from across India were conducted to understand the ranking of various causes of rework. Principal Component Analysis was used to group these 28 attributes into eight components – coordination issues, poor execution, supervision issues, consultant issues, aberrant events, worker issues, client issues, and site issues. Further, to understand the criticality of these factors, the structural relationship between the factors and rework was studied using SEM. It was found that inappropriate coordination amongst the various stakeholders of the project is the most critical reason for rework. The study will be helpful to stakeholders of the construction industry to understand better the relative quantitative impact of different causes on rework and prioritize their efforts to control or eliminate rework. • Lack of coordination amongst stakeholders in a project has been identified as the most critical reason for rework. • Untrained workers at site have been ranked highest with RII of 0.549 followed by change in scope during construction. • Redesign during construction due to shortage of construction materials/equipment in the market has been ranked last.

Cost overrun in construction projects in Oman: Case study

There are many challenges in construction industry sector, and one of the most important and critical is completion of the project within the original contract value. As the issue of cost overrun in construction projects is spread worldwide generally and commonly encountered in the Sultanate of Oman.The main objectives of this study are to identify and determine vital factors leading to cost overrun in Building Projects in Oman, evaluate the impact of cost overrun in building construction projects and develop the best protocol strategy for project management teams that can be adopted in order to control the cost overrun in future projects. These objectives have been obtained through several methods, questionnaire survey,interviews with experts in construction industry. Twenty nine major factors lead to cost overrun were identified through literature review and studied in Sultanate of Oman.The study concluded that there are three major impacts of cost overrun in construction projects and industry which are time of completion, delivery of poor quality projects and delay of payment approval. Additional to that, Hire good Supervision Team, a good Cost Controller, Project Manager, a good project design team, well planning for pre-contract stage and proper procurement strategy. Consider the Risk assessment and Risk Control are crucial to minimize the cost overrun in building construction project in Oman. The study have recommended procedure to cost control in future project such as the Employer should have a proper tender analysis of the Contractor’s bid, Detailed design should be finalized before award of work and others.

CAUSES OF DELAY AND COST OVERRUN FOR EDUCATIONAL BUILDING PROJECTS IN EGYPT

The construction industry is considered one of the most important industries in Egypt. The majority of construction projects are known to have time delays and cost overruns. The main contribution of this study is that it is the first study of its type that identifies causes of delay and cost overrun in educational building projects with its different types (public schools, private schools, public universities, and private universities) within Egypt. The research main objective is to identify the causes of delay and cost overrun in educational building projects in Egypt and evaluate their importance by the main project stakeholders (Consultants, Contractors, and Owners). This objective was accomplished by means of an extensive literature review and a questionnaire-based survey. Forty causes of delay and cost overrun were gathered through the literature review and categorized into seven groups. The questionnaire was divided into three sections; the main section concentrated on the causes of delay and cost overrun in construction projects. Responses were gathered from 130 participants representing the key stakeholders participated in the project's construction. The analysis was conducted to determine the amount of delay and cost overrun experienced by the projects, in addition to the indices concerning the frequency of occurrence, impact on time and cost, and significance of the seven groups. As well, a ranking of the forty causes was performed to identify the most critical causes of delay and cost overrun in each type of educational building projects (public schools, private schools, public universities, and private universities).

Estimation of cost overrun in construction projects using Fuzzy Logic

In recent years, the impact of the construction industry on the economy of India is increasing. However, there are a number of problems that are being faced by the construction companies or contractors or other relevant stakeholders, in the completion of a construction project. One of the major problems being faced is time and cost overrun. Thus, it is important to find ways of mitigating this critical problem. One of the solutions that is being used is the prediction of the amount and time that a project might overrun beforehand i.e. estimating the overrun during the design phase itself. This prediction can be done using a number of different techniques, the important one of which used in this paper is through the use of Fuzzy Logic. It also provides a brief description about the factors that are responsible for causing this cost overrun. The factors are identified by conducting a questionnaire survey and gathering responses from the relevant stakeholders which include contractors, project engineers, architects and consultants. The responses collected are further processed and analysed using SPSS software. The top 5 factors have been selected after the analysis and further used in preparation of the fuzzy logic model in the fuzzy toolbox of MATLAB. Further, the validation of this model has been done with real-time data of projects from various published research papers. Thus, the model developed provided prediction of the percentage of the cost overrun based on the percentage input of the top five factors.

Investigating the impact of inflation on labour wages in Construction Industry of Malaysia

Labours in construction are one of the main pillars in the construction industry of Malaysia for projects execution. Construction labours not only contributes to the development of the construction industry but also impacts the Malaysian economy. Consideration of labour wages is made in the initial phase of the project budget, however, wages are getting changed over time. The inflation rate is one of the key factors which affect labours wages. Regrettably, the inflation rate is being ignored while computing labour wages for projects budget development, resulting in cost overrun of construction projects. In this regard, the correlation coefficient test was used to determine the impact of the inflation rate on labour wages gathered from the year 2013 to 2019. The results showed that a significant acceptable relationship exists among the inflation rate and several categories of labour wages. Most of the labour wages showed a negative relationship with the inflation rate, indicating the deviation in the wages, thus, result in cost overrun. To steer the cost overrun effect, it is recommended to adopt automation system and introduce the Industrial Revolution (IR) 4.0 in construction projects as a replacer of labours.

A system dynamics approach to conceptualise causes of cost overrun of construction projects in developing countries

PurposeThis study aimed at developing and empirically testing a system dynamics causal loop (SDCL) model for investigating factors related to the risk of cost overruns, associated with the performance of construction projects in developing countries.Design/methodology/approachUsing data derived from the Ghanaian construction industry (GCI), a conceptual system dynamics model was hypothesised and empirically tested.FindingsSupported by empirical evidence, the study established that the low technical capacity of consultants is the underlying cause of cost overruns in government projects. There is a strong proof of the relationship between the results of the SDCL model and poor contract planning and supervision, change orders, competence of the project team and the lack of effective coordination amongst the contractual parties.Practical implicationsThe final SDCL model has revealed key risk components that would require standard mitigation measures in order to achieve “acceptable success” in construction projects.Originality/valueThe study presents an interactive approach for construction practitioners in developing countries to prioritise the causes of cost overruns in order to initiate quick responses.

Factors Influencing Cost Overruns in Construction Projects of International Contractors in Vietnam

A construction project is a designed product made up of labors, materials, and installations in the project positioned on the ground and may include the underground and ground section, and the section in water or on the water surface. It is a civil, industrial, transport, agricultural and rural development, infrastructure, or some other. A key phase in the life cycle of these construction projects is the implementation when building products are made directly with workers, equipment, materials, and managers. If there is a lack of management experience, information, and problem-solving solutions to tackle the risks faced by contractors, especially foreign ones, will fail in controlling the project’s cost. This study was conducted with investigations, discussions, and evaluation of the factors that lead to cost overruns in the construction projects of international contractors in Vietnam. The principal component analysis (PCA) showed that those factors that influence cost overruns these construction projects fall into five general groups, including factors related to (i) the owners, (ii) the foreign contractors, (iii) the subcontractors and suppliers, (iv) state management, and (v) the project itself. Besides, the study proposes solutions to limit cost overruns in construction projects and improve the profitability of international contractors in Vietnam.

ANALYSIS OF CAUSES OF COST OVERRUN IN COMMERCIAL PROJECTS IN EGYPT.

Construction sector is developing every year due to use of new technologies and need of skilled labours to perform required designs. Hence, it is becoming more critical to ensure proper management of construction works to complete the project according to assigned objectives and specifications. The success of any construction work relies mainly on cost, time, and quality of work. Hence, proper management was done in order to ensure completion of projects according to expected and assigned budget. Nevertheless, projects in developing countries are yet suffering from potential overrun of cost due to multiple factors. There are multiple authors in literature that indicated the main problems faced by projects that prevents them from completing the project according to expected budget (Apolot et al, 2012), and (Memon et al, 2012). Hence, it became quite urgent to investigate reasons that lead to overrun of cost in construction works. Therefore, the major goal of this study is to investigate sources of cost overrun in construction projects in Egypt. The study will concentrate mainly on commercial projects due to the fact that most of these projects are extremely expensive and would require proper management to prevent any increase in its cost. The method of data collection is a questionnaire survey that included risk factors collected from previous literature. The expected outcome will be in the form of estimating reasons that lead to cost overrun, and impact of cost increase on performance of construction projects.

Delays and Cost Overruns in Construction Projects in Nigeria: Causes and Remedies

Despite improvements in the control techniques available for managing construction projects in Nigeria, the projects still do not meet their cost and time objectives. Delays and cost overruns are still prevalent even as time and cost performance remains key criteria for project success. Yet empirical studies conducted on this subject are few. This paper investigates the underlying causes for delays and cost overruns observed on selected construction projects in major Nigerian cities. Quantitative and qualitative methods were used to generate data for the research; structured questionnaire survey was used to obtain information on the causes of delays and cost overruns, and face-to-face interview with respondents actively involved on the selected projects helped to develop mitigating strategies to curb delays and cost overruns. Data generated was analyzed using Mean Scores, weighted averages and Spearman correlation coefficients to arrive at the significant causes of delays and cost overruns. The study found that delays and cost overruns occurred in varying degrees in all the projects studied. The most significant causes of delays and cost overruns are design/scope changes, inadequate availability of skilled resources, ineffective procurement planning, price escalations of construction materials and labour, and scope change. The study developed14 and 15strategies for mitigating delays and cost overruns respectively. These strategies would help to improve time and cost performance on construction projects. Industry practitioners will find them very useful at the planning phase where decisions that define a project are made, and also during project implementation.

Review of construction journals on causes of project cost overruns

PurposeThe study investigates the causes of project cost overruns (COs) that have been reported in the construction-management-related articles since 1985.Design/methodology/approachTo achieve the aim and provide recommendations to avoid project COs, 48 selected journal articles were reviewed and assessed with regard to the countries, institutions and researchers that have contributed to the subject.FindingsThe review of the articles shows that the subject has attracted a considerable attention from the researchers worldwide. However, the problem mainly occurred in developing countries and the researchers drew the attention on the resource-related, economic/financial as well as political problems. While 79 causes of COs were identified, the top ten causes of project COs, which have received the highest number of citations by the reviewed articles, were presented and discussed. These causes are: design problems and incomplete design, inaccurate estimation, poor planning, weather, poor communication, stakeholder's skill, experience and competence, financial problems/poor financial management, price fluctuations, contract management issues and ground/soil conditions.Research limitations/implicationsThe study findings have several implications, which are not only for the academic world, but also for the construction front line. For scholars, the study provides a list of project COs that the researchers in the area could benefit for their future studies. The industry practitioners could find ways to improve project cost performance by giving attention to the causative factors that are significantly affecting construction projects and investing their resources and efforts towards the most occurred ones.Originality/valueThus, this study provides insight into the research output on the subject and a checklist of COs, which is believed to provide a better understanding of significant areas requiring attention where steps should be taken to minimize or control factors causing COs in construction projects.

Investigation of Cost-Influencing Factors Potentially Controllable by Main Contractors in Construction Projects in Iraq

Cost overrun in construction projects is a common phenomenon in Iraq. This might occur due to diversity of factors. This study aims to identify the factors influencing construction projects cost that are potentially controllable by main contractors. A field study through a questionnaire survey was directed to a sample of related Iraqi professional engineers from general contracting companies at both public and private sectors. Their opinions on the impact and frequency of each factor were investigated. The questionnaire offered (59) factors classified in (8) categories namely; legislations, financial and economic, design, contractual, site management, material, labor and equipment. The factors were ranked according to the highest Relative Importance Index (RII). The study revealed (10) major factors that are potentially controllable by main contractors namely; labor productivity, sub-contractors and suppliers performance, equipment productivity, site organization and distribution of equipment, experience and training of project managers, scheduling and control techniques, planning for materials supply, planning for equipment supply, materials delivery and planning for skilled labor recruitment. Recommendations to aid contractors and owners in early identification of these factors are also included in this study.

Contractor’s Perception on Factors Causing Cost Overrun in Construction Works of Pakistan

This paper assessed the occurrence and severity level of various factors causing time and cost overrun in construction projects of Pakistan. Investigation was carried out through questionnaire form prepared based on 55 common factors identified from literature. Survey was done amongst the representatives of the contractors involved in handling construction activities in Pakistan. A total of 46 responses gathered against 100 distributed forms were analysed statistically. The results obtained from the analyses based on Average Index values revealed that delay in obtaining permits from the governmental agencies, financial difficulties are common issue faced in construction works of Pakistan. The study also revealed that high cost of machinery & its maintenance, inadequate planning & scheduling and slow information flow between parties have significant effect on time overrun cost while critical factors affecting cost overrun are high cost of machinery & its maintenance, unsuitable construction methods and lack of experience of contractors in affecting project cost. The findings of this study will be helpful for the practitioner in planning for achieving timely completion of the projects and also within the estimated cost.

A Study on Factors Causing Cost Overrun of Construction Projects in Sarawak, Malaysia

Cost overrun is one of the issues confronting the construction industry. Most of the construction projects in Malaysia have experienced cost overrun of 5 to 10% of the total contract sum. In examining the east Malaysia scenario, this study aims to identify the factors causing cost overrun of construction projects in Sarawak. A quantitative approach was adopted in carrying out the research. Stratified random sampling was adopted to obtain data from Grade 7 contracting companies and quantity surveying firms operating in Sarawak. Descriptive statistics (measures of central tendency) and the Relative Importance Index (RII) were used to analyze the data. The most significant factors identified were the shortage of material, lack of plant and spare parts of equipment, acceleration required by clients, change of work scope or changes in material specification by clients, mistakes during construction, fluctuation in prices of raw materials, shortage of workforce, lack of skilled labour, poor project management, poor cost control and awarding of a contract to the lowest bidders. This study complements the existing knowledge on the factors causing cost overrun in the Malaysian construction industry. Hence, clients, contractors, project managers, quantity surveyors, and other project participants will be aware of the factors considered while planning for a project.

Cost Overrun in Construction Projects in Indonesia

Cost overrun is one of the problems faced by most construction projects in Indonesia. The unexpected budget in cost overrun can raise many problems in the project. Hence, it is important for every stakeholder in the project to have a good understanding of the factors causing cost overrun to avoid or to minimize the risk of it in the project. The aims of this study are to identify factors causing cost overrun in a project and to analyze factors that most influence the occurrence of cost overrun in construction projects in Indonesia as perceived by the owner and contractor. This research used a questionnaire to collect data. 15 factors were identified in this research i.e. site availability delay; site conditions; social site conditions; change order; rework; subcontractor and/or vendor performance; approval/permit delay; inaccuracy in budgeting; scheduling and resource planning; materials price fluctuations; rules and regulations; owner additional requirements; inflation; delay in payment; weak cash flow and bad weather. From a total of the 15 factors identified, both parties agreed on rework as the most factor causing cost overrun in construction projects in Indonesia.

Application of knowledge discovery in database (KDD) techniques in cost overrun of construction projects

Currently, cost overrun is a global challenge to completing construction projects successfully. To overcome this problem, earlier studies investigated factors of cost overrun. Knowledge Discovery in Data (KDD) and data mining techniques have been implemented effectively in various research areas to extract novel and valuable knowledge from historical data but have only recently been implemented in the construction industry. The aim of this research is to develop a model that predicts project cost overrun using a suitable data mining technique and cost overrun factors as predictors. A review of the literature identified twelve factors that can be easily measured and analyzed in construction projects. A case study was performed to validate the model with an actual data set of executed projects. The resulting model is simple, interpretable, and relatively accurate (60.87%), and it uses three steps of data mining – clustering, feature selection, and classification. These steps improve model performance.

Investigating conflicts of expert contractors using the last planner system in building information modeling process

PurposeThis paper aims to increase the integrity of the planning process with the executive process by simulating the Last Planner System (LPS) technique using building information modeling.Design/methodology/approachA five-dimensional model was prepared, and after specifying the number of physical conflicts on the plans, all the scenarios of the starting points in the expert contractors’ plans were analyzed. Accordingly, the best scenario was determined by LPS technique. To assess the performance of the study, it was implemented on several tasks of a construction project.FindingsThe results of this research indicate that if this method is used in the planning process, the time conflicts between the expert contractors who are in the critical path are reduced, and the total delay of the scheduled time reaches zero. In addition, the conflicts between contractors whose suspension will cause no incentive and increase the daily cost overruns will reduce to the lowest point.Originality/valueBy simulating LPS in the planning process, time-physical conflicts are considered at the lowest point. Using this approach, conflicts are detected before the execution process, resulting in a significant reduction in the delays and cost overruns in construction projects.

Impact of Cost Overrun Factors in Constructing Apartments in Tamil Nadu

Construction industry is more planned and resource driven industry in the world. As this industry is vast, it offers more commercial facilities projects, residential projects, and industrial projects. In addition to the infrastructure sector, there are also other areas which require growth as well. According to Working Group of Planning Commission 2012, the present housing scarcity is anticipated as 18.58 million houses. Usually, construction industries visages cost overrun when implemented and this issue generate immediate impact on country’s economy and construction stakeholders. Hence this study aims to examine the most significant factors that affect cost overrun in constructing apartments in Tamil Nadu. The study found that from the perspective of civil workers, inadequate number of equipment’s, contractors faces financial complexities and cash flow at site factor, labour absenteeism, alteration in material specification, lack of dexterity between parties, and retardation in decision making are the most significant factors that influences cost overrun in construction projects.