Project Cost Overruns Research Articles

Unveiling Effectiveness of Lean Construction Practices: A Comprehensive Study through Surveys and Case Studies

Construction projects frequently encounter challenges such as stagnant productivity, excessive waste, cost overruns, and delays, contributing to sustainability issues. In response to these issues, Lean Construction (LC) has emerged as a methodology aimed at eradicating inefficiencies and wasteful practices. However, the construction industry has been slow to embrace LC, primarily due to a lack of comprehensive evaluations regarding its real-world effectiveness. This study seeks to thoroughly assess the effectiveness of LC when implemented in construction projects in Pakistan. The research involved conducting a survey among experts in the construction industry, utilizing a comprehensive questionnaire to evaluate the extent of LC adoption and its impact on construction project performance. The collected data underwent rigorous statistical analysis to ascertain the influence of LC practices on project outcomes. To validate the survey results, the study selected five case study projects for in-depth analysis. These case studies assessed how well the projects adhered to LC principles and examined the resulting effects on project delays, cost overruns, quality issues, rework, and health-related concerns. The findings consistently confirmed that a higher level of adherence to LC principles led to significant reductions in project delays, cost overruns, quality issues, and health-related problems. This analysis strongly supports the notion that a more extensive adoption of LC practices results in substantial improvements in project performance. By presenting these compelling results, this study offers valuable insights to the construction industry, providing a clearer path for the effective integration of LC practices. Doi: 10.28991/CEJ-2024-010-04-09 Full Text: PDF

Unlocking the Potential of BIM and VR Integration to Address Construction Challenges in Malaysia’s Building Industry: A Literature Review

Delays in project completion, cost overruns, safety risks, and poor communication among project stakeholders are just some of the leading causes of the many problems plaguing Malaysian construction projects. The construction sector in this country is suffering from these significant problems, which could be remedied with the help of emerging technologies, including Building Information Modelling (BIM) and Virtual Reality (VR). Integrating Virtual Reality (IVR) and Building Information Modelling (BIM) may help avoid and resolve such problems during construction. The features allow for remote collaboration, enhanced communication and connection, enhanced immersion and interactivity, and reduced costs. This literature review exemplifies the challenge that arose on a construction site, as well as the potential of VR technology in general and its integration in assisting the construction industry in Malaysia with BIM. Based on the comprehensive analysis conducted, it is evident that the integration of BIM and VR presents a vast potential to alleviate and resolve the pressing construction-related challenges afflicting Malaysia’s construction industry. The effective integration of these innovative technologies can revolutionise the sector by mitigating cost overruns, reducing project delays, enhancing communication, and improving safety outcomes. Therefore, realising the potential and exploring the possibilities of BIM and VR integration is crucial to overcoming the issues and promoting sustainable growth in Malaysia’s construction sector.

Critical success factors for cost overrun minimization in public construction projects in developing countries: the case of Ghana

Purpose It is widely accepted that one criterion for determining if a construction project is successful is whether it is completed within the expected budget. There have been advancements in the management of building projects throughout time but cost overruns remain a key concern in the construction sector internationally, particularly in emerging economies such as Ghana. This study aims to answer the question, “What are the critical success factors (CSFs) that can assist reduce cost overruns in public sector infrastructure projects in the Ghanaian construction industry?” Design/methodology/approach This study used a quantitative survey method. The questionnaire was pre-tested by interviewing 15 contractors to ascertain the validity of the content. Factor analysis and multiple regression were adopted to analyze the data. Findings This study discovered that the critical factors that can reduce cost overruns in construction projects in Ghana are directly linked to five themes: early contractor involvement in the project planning stage, adequate funding, good project team relations, competent managers/supervisors and project participant incentives/bonuses. This study identifies indestructible, empirically measurable important success criteria for reducing cost overruns in public building projects in Ghana. Practical implications When well thought through from the project initiation stage to completion, these critical successes can also be used to deal with damaging economic effects such as allocative inefficiency of scarce resources, further delays, contractual disputes, claims and litigation, project failure and total abandonment. Originality/value The uniqueness of this research resides in the fact that it is, to the best of the authors’ knowledge, a first-of-its-kind investigation of the CSFs for reducing cost overruns in public building projects in developing countries.

Exploring causes of ineffective material management and impact on successful project deliverables in civil engineering construction projects in Sri Lanka

Purpose Construction material management plays a significant role in achieving successful project delivery of a construction project. However, ineffective material management is a critical issue in the construction industry, especially in developing economies, of which Sri Lanka is not an exception. Therefore, this study aims to focus on exploring the causes of ineffective material management practices in civil engineering construction projects in Sri Lanka and their impact on successful project delivery. Design/methodology/approach Furthermore, the literature findings were validated through the preliminary survey. Subsequently, a quantitative research approach was adopted to pursue the research aim. Questionnaire responses were obtained from 215 construction professionals in civil engineering projects who were selected using the judgemental and snowball sampling techniques. Collected data were analysed through Statistical Package for the Social Sciences (SPSS) V26 and Microsoft Excel 2016. Findings Moreover, the study revealed that material price fluctuation, shortage of material in the market, delay in material procurement, inadequate planning and delays in material delivery are the most frequent causes of ineffective material management in civil engineering projects. In addition, it was evidenced that most ineffective material management practices cause both time and cost overruns in civil engineering construction projects. Most respondents emphasized inadequate planning, inadequate qualified and experienced staff, lack of supervision and lack of leadership as the causes for both time and cost overruns. Originality/value The study was concluded by proposing strategies for effective material management. Education/training/enlightenment of staff in charge of materials management, use of software like Microsoft Project, Primavera and similar software to eliminate manual errors in material management, and providing clear specifications to suppliers were the most agreed strategies for effective material management in civil engineering construction projects.

Impact of unexpected conditions on construction cost forecasting performance: evidence from Europe

In order to prepare proper budgets, practitioners endeavor to forecast future cost fluctuations. In recent years, the COVID-19 pandemic and the Russia-Ukraine war have caused cost overruns in most construction projects, and there has been no effort to analyze the effects of such situations on cost forecasting performances. This paper aims to investigate the impact of unexpected conditions, such as pandemics and wars, on the construction cost forecasting performances of widely used univariate time series models. For this purpose, statistical forecasting models and two widely used machine learning techniques are employed for the construction cost forecasting of nine European economies in two scenarios: a stable period (2017–2020) and a fluctuating period (2020–2023). The results showed that the success of the models varied by region and period. Unexpected global conditions cause significant errors, especially in the medium and long term. There are significant increases in forecast errors between stable and fluctuating periods. This study provides comprehensive experimental results to determine the cost-forecasting risks of construction projects under unexpected global conditions. The investigation is limited to the European economies, which are mostly developed countries with low inflation rates. Therefore, the results should also be validated in underdeveloped and developing countries.

A Proposed Model for Variation Order Management in Construction Projects

This study aims to identify the causes of excessive change orders and their impact on public construction projects in Saudi Arabia. This should support the organizations working in the construction industry to improve variation order management (VOM) as a preventive action by dealing proactively with variation order causes. Therefore, a new methodology was proposed to minimize change orders and their impact on the successful completion of projects as well as cost during the project lifecycle. The methodology involved ten selected turnkey building projects at King Faisal University (KFU) campus, Saudi Arabia. Statistical analyses were conducted to predict the cost overrun in project size and contract value. The findings showed the most significant causes leading to variation order in public construction projects. These include the combined effect of the designer and owner technical committee, designer document, and owner stakeholder committee. Hence, a new model for VOM was developed as a best practice approach, including three stages. The first stage is the initiation process, which includes seven procedures, seven tools, and key responsibilities. The second stage deals with the course of change orders based on a certain number of procedures and weight for each parameter assigned to this phase. It supports decision processes based on a certain average ratio of weights calculation. The third stage is the decision to support decision makers in proceeding or not proceeding with the variation order. Although the present study was conducted in Saudi Arabia’s public building construction project, it is envisaged that these research results are widely applicable to other developing countries. The paper presents a direction for further research to enhance the impact of cost overrun in public sector construction projects in developing countries, i.e., Saudi Arabia.

Analysis of Causes of Delays and Cost Overruns as Well as Mitigation Measures to Improve Profitability and Sustainability in Turnkey Industrial Projects

Delays and cost overruns in turnkey projects can lead to significant economic losses, disputes and even project abandonment. These facts negatively impact the environmental, social and governance (ESG) policies of companies involved in the project. In this paper, a bibliographic review was conducted to identify the leading causes of delays and cost overruns in turnkey industrial projects in the refining, gas and conventional electricity generation (RGE) sector and propose good practices to avoid or mitigate them. We identified 893 causes of delays and cost overruns and 147 mitigation measures. The causes and mitigation measures were grouped into eight categories based on the execution phases of an RGE project. A critical analysis was carried out to avoid duplication, and the result was evaluated by experts in turnkey project management, reducing the causes and mitigation measures to a final set of 103 and 49, respectively. The construction category showed the most significant influence on project delays and cost overruns, and this, together with the preliminary phase and project management categories, contributed to 60% of the identified causes. The findings of this study can help project managers improve the profitability of turnkey industrial projects, promoting innovation and sustainability within companies and society.

Minimizing Cost Overrun in Rail Projects through 5D-BIM: A Conceptual Governance Framework

Integration of 5D Building Information Modeling (BIM) into large rail projects has the potential to significantly enhance cost management and control. Nevertheless, 5D-BIM implementation has encountered difficulties stemming from technical, functional, and governance-related factors. This paper builds a conceptual framework to support financial decision making, enhances project management, and promotes efficient project delivery. The framework encompasses a set of interrelated elements that include project governance, BIM policies and standards, digital platforms, BIM LOD, cost-estimation classification, and continuous improvement. The proposed framework acknowledges the significance of project governance in guiding and organizing the implementation of 5D-BIM. Additionally, BIM policies and standards ensure the adherence to quality standards for the produced BIM models. Digital platforms serve as the basis for multiple users to generate, access, share, and exchange project information. BIM LOD promotes collaboration and coordination among all project stakeholders. Cost-estimation classification aligns the estimation process with the development of project scope and financial decision making. Continuous improvement plays a vital role in optimizing processes, enhancing efficiency, and achieving higher-quality outcomes. Moreover, it fosters stakeholder satisfaction, improves project performance, and nurtures a conducive environment for innovation and learning. The study analyzes the framework utilization in Victorian rail projects and identifies key implementation challenges. The main technical hurdles encountered were the lack of current horizontal infrastructure standards for data exchange and the lack of compatibility with current cost-management standards. Increased project complexity and the absence of clear project governance strategies and processes also posed organizational challenges. A further validation of the framework in real-world rail projects was recommended to achieve the implementation goals.

An Investigation of BIM Advantages in Analysing Claims Procedures Related to the Extension of Time and Money in the KSA Construction Industry

The construction industry in the Kingdom of Saudi Arabia (KSA) is a significant sector in the Middle East, with annual expenditures exceeding USD 120 billion. It employs 15% of the workforce and consumes more than 14% of the country’s energy resources. Despite the significant growth in the Saudi construction sector, it faces various challenges due to the rapid launch of mega projects, such as the Line project engaged with the NEOM project, as well as other new projects as part of the Saudi Vision 2030. The challenges might be limited to a shortage of skilled labourers, rising costs, construction disputes, and material shortages. This study aims to investigate claims management procedures under traditional practice and compare them with a proposed BIM package as an alternative solution to mitigate construction disputes. The objective of the study focuses on reducing the time consumed when analysing claims against the level of accuracy of claims values. The proposed BIM model improves and streamlines the claims process through automation. This study presents prospective and retrospective methods in delay analysis under an accepted programme. A questionnaire survey was conducted, and out of a total of 123 practitioners, 79 replied. The findings in tables in this article reveal that there are demands and a growing awareness of BIM in the KSA construction industry. The results reveal that BIM can help to reduce potential disputes and can reduce overall project cost overruns.

Significant factors affecting the Vietnam Roads Infrastructure Construction Cost Overrun - A Review

Cost overrun represents a significant challenge faced in construction projects, particularly in the realm of transportation infrastructure. The investigation into the causes of cost overruns in such projects has garnered substantial attention from both academics and the general public. Various studies conducted globally have identified diverse factors contributing to cost overruns. This article undertakes a critical review of the literature on cost overruns in construction projects, encompassing cases from different countries with a specific focus on Vietnam. The aim is to identify and comprehend the primary potential causes of cost overruns in construction projects across various geographical contexts, providing insights into both commonalities and distinctions within the identified factors. According to the findings of this study, the ten identified factors encompassing Delay in site clearance certificates, Change Management, Delay in Payment, Extension of the project implementation schedule, Construction Material Price Fluctuation, Effects of inflation and price slippage, Poor construction site management, Poor project management capacity of the investor, Poor financial capacity of the investor, Geological complexity are deemed highly influential and warrant close scrutiny during the implementation of projects in Vietnam. The insights gained from this study will serve as invaluable recommendations for active entities within the construction industry to adopt a more holistic approach to project management, cost control, and cost overrun management. By addressing quantitatively these factors in the forthcoming research, organizations in construction industries in Vietnam can effectively minimize project costs overrun in the future.

Evaluation of Cost Overrun in Construction Projects during COVID-19 Pandemic

Evaluation of Cost Overrun in Construction Projects during COVID-19 Pandemic

Rework investigation in residential building projects: Cost, factors and effects

AbstractThis article aims at investigating rework cost, factors and effects in residential building projects in the West Bank – Palestine. Questionnaire survey is used to collect and rank the main factors and effects of rework from consultants' and constructors' point of view. Respondents show that more than 80% of the projects completed with rework cost of value greater than 5% of the total project cost. Overall, respondents' view concludes that the top rework factors include: mistakes in design, unskilled labors, unqualified subcontractors, non-conformance with required specifications, and bid awarding policy. Respondents indicate that the main effects of rework are cost overrun, project time extension, material waste excess and profit reduction. Spearman correlation test concludes a good correlation between contractors and consultants in ranking of rework factors and effects. Data collected from 47 residential projects reveal a high rework impact on cost overrun in construction projects. The results of this study would be helpful for researchers and professionals to guide their efforts to minimize rework in construction projects and to improve projects outcomes in term of cost, time and quality.

Avoiding Cost Overrun Through Stochastic Cost Estimation and External Quality Assurance

Cost overruns are a threat to project performance and continue to attract interest in both the popular media and the academic literature. Numerous studies from all continents have demonstrated that overruns remain prevalent in all industries. Although there are different suggestions as to what are the main causes of this problem, few studies have demonstrated what can be done to improve cost performance. This article provides evidence that improved cost estimation methodologies combined with external quality assurance can significantly reduce the extent of cost overruns in projects. The authors use data from 96 government projects in Norway, which implemented a quality assurance regime for large investment projects in the year 2000. The results show that cost performance was reasonably good. Only c. 25% of the projects subject to the regime experienced cost overruns. This suggests that by using proper cost estimation methodologies that are embedded in a governance framework that ensures that projects are subject to external scrutiny, the risks of cost overruns can be significantly reduced. The results should be encouraging for project owners who may have the impression that overrun is an unavoidable part of project delivery.

Factors Affecting Quality of Construction Projects in Lebanon after its Economic Crisis, and their Impact on the Project Cost Overrun

Factors Affecting Quality of Construction Projects in Lebanon after its Economic Crisis, and their Impact on the Project Cost Overrun

Effects of Cultural Factors on Cost Performance of Multinational Construction Organizations

Purpose: This study examines the effects of cultural factors on cost performance of multinational construction project organisations with a view towards identifying the most effective cost performance variables affected by the influence of cultural practices. Purposive sampling technique was adopted in deterring the number of construction professionals identified in construction companies with international market experience involved in the delivery of building, civil, and heavy engineering construction projects within the south-east geopolitical zone of Nigeria. Outline: A well-structured questionnaire was used to sample respondent’s opinion. Data analysis was through frequencies, percentile, and Mean Item Score (MIS). Findings: Research findings proved that irrespective of the positive effects of educational culture which improves cost performance by ensuring that projects are executed at estimated cost and within client’s budget (Mean = 4.34) and the result of effective communication culture which ensures value for money and return of customer as project is designed to suite client’s budget while maintaining standard quality delivery (Mean = 4.16), political culture tends to have mixed effect on cost performance as project design cost, labour, material and equipment cost, profit and overhead cost, etc. (Mean = 4.30) is found to be responsible for cost overruns of construction projects. Research Implication: The study recommends among others that multinational construction organisations pay great attention to the political style practiced in the host community / country in which they operate.

Research on the Influencing Factors of Cost Overruns in Construction Projects

Research on the Influencing Factors of Cost Overruns in Construction Projects

Application of Management Techniques in Controlling Cost Overruns in Residential Construction Projects

Application of Management Techniques in Controlling Cost Overruns in Residential Construction Projects

Critical Factors Influencing Bid Mark-up Decision in Public Street Project – A Review

Deciding a bid price with an appropriate mark-up added to the estimated project cost is essential for the contractors' business survival. However, the competitive environment had influenced contractors to offer the lowest bid price, leading to the submission of unrealistically low prices to win bids. This practice can impact disputes and adversarial relationships between parties during construction and provide an additional risk to the project delay, cost overrun, quality compromise and failure to complete the project. Therefore, this paper aims to provide an overview of the literature on critical factors influencing bid mark-up decisions in public street projects. The objectives are to identify methods and tools, including the critical factors in determining the contractors' bid mark-up decision. The approach is based on analysing pertinent publications on the theme. The top five (5)ranked factors influencing contractors' decision on bid mark-up size can be found in the literature: the number of bidders, the competitiveness of other bidders, relationship and experience with clients, experience on similar projects and project size. Besides that, the determination of mark-up size is based on experience, intuition, past bidding results, past bidding patterns ofcompetitors, the client's tender estimate, the client's record, and financial ability.

Modelling Cost-Risk Impact on Nigerian Highway Projects Using Multiple Linear Regression and Artificial Neural Networks

Cost predictive models for highway projects are relatively scarce in developing countries, despite the frequency and magnitude of project cost overruns in such countries. This study identified critical cost risks impacting highway projects and modelled their impacts on the actual cost of the projects. Historical cost data on highway projects published by the Nigerian Federal Ministry of Power, Works and Housing in 2017 served as a preliminary list of projects for the study, while further cost data were obtained from highway engineers and quantity surveyors across Nigeria using the snowballing technique until 103 highway projects were identified. Project participants were purposively chosen to fill out questionnaires on costrisks factors associated with highway construction projects. The relative importance index and Pareto 80/20 rule were used to analyse the collected primary data. Thereafter, multiple linear regression and artificial neural network models were developed. Findings revealed that the increase in the cost of construction materials and labour and the fluctuations in foreign exchange rates were the most significant risks impacting highway project cost performance. A comparison of the models indicated that the artificial neural networks model performed better. Hence, the artificial neural networks model is a superior technique for modelling the relationship between cost risks and cost performance of highway projects.

The Impact of Inflation on Real Estate Investment Perfomance And Effective Investment Decisions

Purpose: This study aims to examine the impact of inflation on key variables of real estate investment performance and investment decisions. Theoretical Reference: This paper considers several models of real estate investment performance indicators because the effect of inflation on key variables of real estate investment performance is an important factor in investment decisions. Since effective investment decision is key to avert investment loss especially during inflation period, this paper follows the suggestions by Otegbulu (2022) and Georgiv, et al (2002) that property incomes and values are not static during periods of inflation bur responds to economic dynamics, and could infact trigger favourable investment opportunities in real estate. This paper therefore follows these models/suggestions of Otegbulu (2022) and Geoargiv, et al, (2002) to examine several real estate investment to offer appropriate reflection of how inflation impacts of incomes from real estate investment. Method: Data collected were analysed using Pearson Correlation Analysis to determine the relationship between inflation rate and real estate investment performance (measured by annual returns). Regression analysis was also employed on the data to determine the level of contribution or degree of impact of inflation on real estate performance. Also data collected on the exchange rate and real estate performance over the study period were analysed using Pearson Correlation Analysis to determine the relationship between exchange rate and real estate investment performance (measured by annual returns on investment). Regression analysis was also employed on the data to determine the degree of impact of exchange rate on real estate investment performance. Data collected for the analysis and hypotheses testing were secondary data over a period from 2005 – 2022. Result: The study reveals that real estate investment market generates average total annual returns of 21.39% under average inflation rate of 12.5%. The test statistics (Pearson Correlation) results shows that the higher the inflation rate, the lower the performance of the real estate investment. Also, the study reveals that as inflation persists causing exchange rate fluctuations, the test statistics (Pearson Correlation) results shows that higher exchange rate causes lower performance of real estate investment. This could be because more than 90% of the real estate construction materials in the study are imported. Conclusion: It is clear and obvious that inflation impacts highly on real estate and capable of distorting projections in property investment. Rational investors must therefore factor in inflation risk in investment decisions. The study has shown that inflation has significant impact on annual returns of real estate and consequently affects investment performance. The study concluded that the higher the inflation, the lower the performance of the real estate investment and that the continuous rise in inflation rate reduces the purchasing power of the local currency leading to local currency devaluation. Also, it was concluded that higher exchange rate causes lower performance of the real estate in terms of annual returns. Research Implications: One of the major implications of the findings from this study is that as inflation raises the volatility of local currency which adversely affect the cost of construction, real estate investment performance is hindered. The risk element increases which could lead to project cost over-run, abandonment or increased vacancy rate. Investors become skeptical in making investment decisions because of uncertainties. Policy makers should put in place policies and guidelines that will attract cross-border investors who can take advantage of the local currency devaluation to improve their real estate investment portfolios. Originality/Value: The relationship between inflation rate, exchange rate and real estate performance (measured by rate of returns on the investment) is of great concern for real estate practitioners and investors. The study is original well thought efforts of the authors as contribution to real estate practice and education in developing economies currently being threatened by rising inflation. It is believed that this study will be very useful to global investors who will like to invest in the study area in particular and other emerging markets in general.