Construction industry plays an important role in the development of a country. Often, cost overrun is one of the most recurring problems in the construction industry and it has an adverse impact on project success in terms of time, cost, quality and safety. The industry plays a pivotal role in developing the countrys infrastructure, a prerequisite for high levels of economic growth. Ahiagadagbui, d, smith, s d, love, p e d and ackermann, f 2015 spotlight on construction cost overrun research. Contractor related, consultant related depending on their nature and mode of occurrence. However, with project budgets being scrutinized more so than ever and overall industry productivity remaining. For all 258 projects in the sample we have data on percentage cost overrun.
Infrastructure projects regularly experience cost and schedule overruns. Hughes college of engineering, university of nevada, las vegas, nv, usa clark county public works department, las vegas. Assaf and alhejji 4 defined schedule overrun as the time overrun either beyond completion date specified in a contract, or beyond the date that the parties agreed upon for delivery of a project. These projects, often referred to as mega projects, are. This has led to the project s design contract, with one of the biggest names in architecture, to be. How proper planning can help keep your project on budget. Besides being unique, expensive and usually carried out within a limited time frame, construction projects have been described as complicated and uncertain in nature, as no two construction projects are ever exactly the same. Cost overrun, time overrun, construction projects, remedial measures. An investigation into the causes of delay and cost overrun. Most of the construction projects suffer from cost overruns due to a multiplicity of factors. Factors contributing to cost overruns of construction projects durban south africa isbn. Research article magnitude of construction cost and.
Therefore this research was carried out to identify the causes leading to cost overrun in construction projects. Based on three approaches of implementation, the 15 mitigation measures have. Ali and kamaruzzaman, 2010 also showed malaysian construction projects cost overrun caused by inflation is ranked as 7 th out of cost overrun factors. Most construction projects experience cost overrun and it put massive financial burden on the client or owner.
The overruns were highest in rail projects with cost overruns of 45%. An investigation on time and cost overrun in construction. The present work is carried out on studying significant factors causing cost overruns in construction projects. In fact, according to a study from kpmg, just 31% of all projects came within 10% of the budget in the past 3 years. A onefactor anova test was conducted to determine whether construction cost and. They saw this as a means to increase operatives output. A study in ghana considered 26 factors that cause cost overrun in construction of ground water projects 15. A recent study by aalborg university in denmark of 258 major international transport infrastructure projects between 1927 and 1998 found that they had overrun their original estimates by an average of 28%. The study explores the causes and effects of construction projects cost and schedule overruns and presents a robust background on the theories of construction project cost and schedule overruns. As a result of the loss of financial resources and the need to optimize projects, academics, politicians, and the construction industry have become increasingly aware of the challenges presented by the frequent time and cost overruns and reduced quality of construction projects. An investigation on time and cost overrun in construction projects changiz ahbab submitted to the institute of graduate studies and research in partial fulfillment of the requirements for the degree of master of science in civil engineering eastern mediterranean university january 2012.
The success of any project will depends on how that project can achieve its objectives in terms of cost, quality and duration. Of course, this is the cost overrun plan for almost all construction projects, but circumstances occur that cause some projects to go astray which make cost overruns inevitable. International journal of construction supply chain management 1 1. Avoiding cost overruns in construction projects in india 193 cause cost overrun, 15 mitigation measures to control it have been proposed. Factors affecting schedule delay, cost overrun, and. Use big data to monitor projects and report on cost overruns. Roya derakhshanalavijeh bahai institute for higher education no. Effects of construction projects schedule overruns. Delay and cost overrun are inherent part of most projects despite the much acquired knowledge in project management. Causes of cost overrun in construction projects in. Cost overrun in construction projects can occur due to various causes. Strategies to reduce cost overruns and schedule delays in construction projects by ali alkeim mpm, university of technology, sydney, 2007 mcpm, university of new south wales, 2005 bs, almustansiriyah university, iraq 1995 doctoral study submitted in partial fulfillment of the requirements for the degree of doctor of business administration.
Causes of cost overrun in construction projects in developing countries, gasoil construction industry of iran as a case study 1st author. Nowadays, construction industry of malaysia is being developed rapidly ali and kamaruzzaman, 2010. Studying the reasons for delay and cost overrun in. An empirical classification of cost overrun in infrastructure projects by using cluster analysis. Its safe to say that cost overruns in construction projects have become an industrywide status quo.
Impact of cost control techniques on cost overruns in. Study of cost control techniques used in construction. Vrijland, university of twente, enschede, the netherlands. This study analyzed 363 clark county department of public works ccdpw projects to determine construction cost and schedule overruns in various types and sizes of the projects. A list of causes of cost overrun in construction projects is prepared to collect data about the significance of these causes through questionnaire survey. After consideration of factors and ranking them with the help. Cost overrun or budget overrun is one of the many problems facing by construction industry stakeholders in the construction of building projects in sindh province of pakistan. Two models for predicting cost overrun percentage in construction projects are presented. An investigation into the causes of delay and cost overrun in ugandas public sector construction projects ruth apolot1, henry alinaitwe2, dan tindiwensi2 1graduate student, department of civil engineering, makerere university, p. Pdf analysis of construction project cost overrun by. Causes and effects of cost overrun on construction. In construction, delay could be defined as the time overrun either beyond completion date specified in a contract or beyond the date that the parties agreed upon for delivery of a project. The second phase include preparation of two type of questionnaire created used for giving ranking to causes of cost and time overrun of.
What causes cost overrun in transport infrastructure projects. Whereas, delay and cost overruns are usual issues in construction projects in both developing and developed countries sweis et al. Study of relationship between time overrun and productivity on construction sites. A questionnaire survey was made on construction contractors in egypt to evaluate the relative importance of these causes from contractors perspective. Analysis of cost overrun in road construction activities a. The result can be summarized in the following points.
Factors contributing to cost overruns of construction projects. These causes were categorising in two main groups as. In order to achieve success in a project, it would be essential to plan that project well and have a proper monitoring mechanism in place. Cost overrun in construction industries in developing countries the construction industry is one of the major industries assisting impressively to the growth of the socioeconomic development of a nation, especially in the developing countries. Ibrahim and nabil, 20 study in palestine building construction showed that currency exchange and economic instability are the 4 th and 5 th cost overrun factors out of 41 factors. Causes of contractor cost overrun in construction projects. A number of researchers have investigated various causes of cost overrun in different countries. The study covers four selected states in the region, which includes. Cost overrun in construction projects in saudi arabia. Mid 1997 first ground was broken for the construction of the so called betuwe route, a new 160 km. From these results it was found that 44 out of 15 public building construction projects suffered cost overrun. Due to be complete in 2004, a year later than planned, the project is reported to cost upwards of.
Cost overrun in the public sector, a case study dr maarten s. In general most if not all construction projects experience time delays and cost overruns during their implementation phase. Explaining cost overruns in infrastructural projects. It is basically a project slipping over its planned schedule and is considered as common problem in construction projects worldwide. Strategies to reduce cost overruns and schedule delays in. Project cost overruns and risk management please leave footer empty to be in chaos leftly, 2001. Studying the reasons for delay and cost overrun penerbit universiti sains malaysia53 managers to reassess the timelines and costs of the construction projects in iran based on the current delay profiles. In general, in the implementation of construction projects found many projects thatexperiencing cost overrun and delay in completion time. Key project members staying on top of project cost overruns by confronting problems at discovery and being attentive to avoid the problem from worsening is of the.
According to 5 that most projects are affected by the cost overrun and out of 10 projects, 9 projects have faced cost overrun. A study of project delay in sudan construction industry the construction industry in sudan is an important sector due to its enormous contribution to the countrys economic development. The scope of this work is centered on factors influencing time and cost overruns on construction projects in the south east geopolitical zone of nigeria. It is a project slipping over its planned schedule and is considered as common problem in construction projects. Cost overrun is a condition in which the actual costs exceed the planned costs. Implications of cost overruns and time delays on major. Total 37 factors affecting cost and time overrun were categorized in 5 major groups. This in terms of employment opportunities and attraction of foreign direct investments which grossly contributes to the countrys gdp. The construction industry is one of the key economic industry in india and is the main motivating force in indian national economy.
Take advantage of publicprivate partnerships for the largest projects. Magnitude of construction cost and schedule overruns in. In vietnam for example, a developing country in asia, many problems had arisen during implementation of. Research article magnitude of construction cost and schedule overruns in public work projects pramenp. Without a proper control, even a wellplanned and scheduled construction system can lead to problems, delays and cost overruns. Draw on past experience to award contracts to the bestperforming firms. Use data from previous projects to create more precise cost estimates. Reasons for these overruns ranged from poor project definition, incomplete information, poor productivity, inadequate communications, uncertainties around labor and material costs, and. Unfortunately construction industry today is facing major risk in achieving completion of project within estimated time and cost. In most construction sites, best possible performance are unachievable with poor productivity resulting in time overrun and consequently cost escalation of the projects. This cost overrun issue is found as dominant in construction in all. When we combine percentage cost overrun with other variables, for instance length of implementation phase, the number of projects becomes lower because data on other variables is not available for all 258 projects. Impact of cost and time overrun on building construction.
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