Assessing the risk perception of cost overrun through importance rating
Abstract
Cost overrun in construction projects is a common issue affecting project performance. After a review of the literature, a list of 39 cost overrun attributes were gathered and presented in a survey. The survey was distributed online to construction professionals. 101 complete responses were received and analyzed by importance index, frequency index, cost index, frequency adjusted cost index, Spearman’s rank correlation, student’s t-test, risk assessment and factor analysis. The results of the survey revealed that the main causes of cost overrun in construction industry include inaccurate cost estimation, improper planning and scheduling, unrealistic contract duration and requirements, frequent changes to the scope of work, frequent design changes, inadequate labor/skill availability, inflation on costs of machinery, labor, material and transportation.
Keyword : risk assessment, cost overrun, importance index, frequency adjusted cost index
How to Cite
Gunduz, M., & Maki, O. L. (2018). Assessing the risk perception of cost overrun through importance rating. Technological and Economic Development of Economy, 24(5), 1829-1844. https://doi.org/10.3846/20294913.2017.1321053
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Sambasivan, M.; Soon, Y. W. 2007. Causes and effects of delays in Malaysian construction industry, International Journal of Project Management 25(5): 517–526. https://doi.org/10.1016/j.ijproman.2006.11.007
Shibani, A.; Arumugam, K. 2015. Avoiding cost overruns in construction projects in India, Journal of Management Studies 3(7–8): 192–202.
Sinesilassie, E. G.; Tabish, S. Z. S.; Jha, K. N. 2017. Critical factors affecting cost performance: a case of Ethiopian public construction projects, International Journal of Construction Management 18(2): 108–119. https://doi.org/10.1080/15623599.2016.1277058
Sweis, G.; Sweis, R.; Abu Hammad, A.; Shboul, A. 2008. Delays in construction projects: the case of Jordan, International Journal of Project Management 26(6): 665–674. https://doi.org/10.1016/j.ijproman.2007.09.009
Tumi, S.; Omran, A.; Pakir, A. 2009. Causes of delay in construction industry in Libya, in The International Conference on Administration and Business. Faculty of Administration and Business, University of Bucharest, Romania, ICEA-FAA Bucharest, 14–15 November 2009, Bucharest, Romania, 265–272.
Yates, J. 1993. Construction decision support system for delay analysis, Journal of Construction Engineering and Management 119(2): 226–244. https://doi.org/10.1061/(ASCE)0733-9364(1993)119:2(226)
Yousefi, V.; Yakchali, S. H.; Khanzadi, M.; Mehrabanfar, E.; Šaparauskas, J. 2016. Proposing a neural network model to predict time and cost claims in construction projects, Journal of Civil Engineering and Management 22(7): 967–978. https://doi.org/10.3846/13923730.2016.1205510
Al-Kharashi, A.; Skitmore, M. 2008. Causes of delays in Saudi Arabian public sector construction projects, Construction Management and Economics 27(1): 3–23. https://doi.org/10.1080/01446190802541457
Al-Tabtabai, H. 2002. Causes for delays in construction projects in Kuwait, Engineering Journal of the University of Qatar (15): 19–37.
Arcila, S. 2012. Avoiding cost overruns in construction projects in the United Kingdom: Dissertation submitted in partial fulfilment for the Degree of Master of Science in Programme and Project Management. The University of Warwick.
Assaf, S. A.; Al-Khalid, M.; Al-Hazmi, M. 1995. Causes of delay in large building construction projects, Journal of Construction Engineering and Management, ASCE 11(2): 45–50. https://doi.org/10.1061/(ASCE)0742-597X(1995)11:2(45)
Azhar, N.; Farooqui, A.; Ahmed S. M. 2008. Cost overrun factors in construction industry of Pakistan, in 1st International Conference on Construction in Developing Countries (ICCIDC–I) Advancing and Integrating Construction Education, Research and Practice, 4–5 August 2008, Karachi, Pakistan, 1–10.
Chan, D.; Kumaraswamy, M. 1997. A comparative study of causes of time overruns in Hong Kong construction projects, International Journal of Project Management 15(1): 55–63. https://doi.org/10.1016/S0263-7863(96)00039-7
El-Razek, M.; Bassioni, H; Mobarak, A. 2008. Causes of delay in building construction projects in Egypt, Journal of Construction Engineering and Management 134(11): 831–841. https://doi.org/10.1061/(ASCE)0733-9364(2008)134:11(831)
Elchaig, T.; Boussabinaine, A.; Ballal, T. 2005. Critical determinants of construction tendering costs: Quantity surveyors’ standpoint, International Journal of Project Management 23(7): 538–545. https://doi.org/10.1016/j.ijproman.2005.04.002
Enshassi, A.; Al-Najjar, J.; Kumaraswamy, M. 2009. Delays and cost overruns in the construction projects in the Gaza Strip, Journal of Financial Management of Property and Construction 14(2): 126–151. https://doi.org/10.1108/13664380910977592
Flyvbjerg, B.; Holm, M. K. S.; Buhl, S. L. 2003. How common and how large are cost overruns in transport infrastructure projects?, Transport Reviews 23(1): 71–88. https://doi.org/10.1080/01441640309904
Frimponga, Y.; Oluwoyeb, J.; and Crawfordc, L. 2003. Causes of delay and cost overruns in construction of groundwater projects in a developing country: Ghana as a case study, International Journal of Project Management (21): 321–326. https://doi.org/10.1016/S0263-7863(02)00055-8
Fugar, K.; Agyakwah‐Baah, B. 2010. Delays in building construction projects in Ghana, Australasian Journal of Construction Economics and Building (10): 103–116.
Gunduz, M.; AbuHassan, H. A. 2017. Mapping the industrial perception of delay data through importance rating, Arabian Journal for Science and Engineering 42(9): 3799–3808. https://doi.org/10.1007/s13369-017-2477-3
Harisaweni, H. 2007. “The Framework for Minimizing Construction Time and Cost Overruns in Padang and Pekanbaru, Indonesia”: Master Thesis. Faculty of Built Environment, University of Technology, Malaysia.
Le-Hoai, L.; Lee, Y. D.; Lee, J. Y. 2008. Delay and cost overruns in Vietnam large construction projects: a comparison with other selected countries, KSCE Journal of Civil Engineering 12(6): 367–377. https://doi.org/10.1007/s12205-008-0367-7
Lo, T. Y.; Fung, I.; Tung, K. 2006. Construction delays in Hong Kong civil engineering projects, Journal of Construction Engineering and Management 132(6): 636–649. https://doi.org/10.1061/(ASCE)0733-9364(2006)132:6(636)
Long, N. D.; S. Ogunlana, S.; Quang, T.; Lam, K. C. 2004. Large construction projects in developing countries: a case study from Vietnam, International Journal of Project Management (22): 553–561. https://doi.org/10.1016/j.ijproman.2004.03.004
Moura, H. P.; Teixeira, J. C.; Pires, B. 2007. Dealing with cost and time in the Portuguese construction industry, in Proceedings of the CIB World Building Congress, 14–18 May 2007, Cape Town South Africa, 1252–1265.
Odeh, A.; Battaineh, H. 2002. Causes of construction delays: traditional contracts, International Journal of Project Management 20(1): 67–73. https://doi.org/10.1016/S0263-7863(00)00037-5
Oludolapo, O. 2011. Mathematical expressions for explaining project delays in Southwestern Nigeria, Singapore Journal of Scientific Research 1(1): 59–67.
Omoregie, A. 2006. Infrastructure delays and cost escalation: causes and effects in Nigeria, in 6th International Postgraduate Research Conference in the Built and Human environment (2): 79–93.
Sambasivan, M.; Soon, Y. W. 2007. Causes and effects of delays in Malaysian construction industry, International Journal of Project Management 25(5): 517–526. https://doi.org/10.1016/j.ijproman.2006.11.007
Shibani, A.; Arumugam, K. 2015. Avoiding cost overruns in construction projects in India, Journal of Management Studies 3(7–8): 192–202.
Sinesilassie, E. G.; Tabish, S. Z. S.; Jha, K. N. 2017. Critical factors affecting cost performance: a case of Ethiopian public construction projects, International Journal of Construction Management 18(2): 108–119. https://doi.org/10.1080/15623599.2016.1277058
Sweis, G.; Sweis, R.; Abu Hammad, A.; Shboul, A. 2008. Delays in construction projects: the case of Jordan, International Journal of Project Management 26(6): 665–674. https://doi.org/10.1016/j.ijproman.2007.09.009
Tumi, S.; Omran, A.; Pakir, A. 2009. Causes of delay in construction industry in Libya, in The International Conference on Administration and Business. Faculty of Administration and Business, University of Bucharest, Romania, ICEA-FAA Bucharest, 14–15 November 2009, Bucharest, Romania, 265–272.
Yates, J. 1993. Construction decision support system for delay analysis, Journal of Construction Engineering and Management 119(2): 226–244. https://doi.org/10.1061/(ASCE)0733-9364(1993)119:2(226)
Yousefi, V.; Yakchali, S. H.; Khanzadi, M.; Mehrabanfar, E.; Šaparauskas, J. 2016. Proposing a neural network model to predict time and cost claims in construction projects, Journal of Civil Engineering and Management 22(7): 967–978. https://doi.org/10.3846/13923730.2016.1205510