Causes of Cost-Overrun in Construction Projects

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 questionnaire. The survey was distributed through face to face meetings with construction engineers and managers in different construction projects, in addition to publishing it online and sending it to various experts in the construction industry around the world. 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 mapping and factor analysis. The results of the survey revealed that the main causes of cost overrun in construction industry include inaccurate cost estimations, improper planning and scheduling, unrealistic contract duration and requirements, frequent changes to the scope of work, frequent design changes, inadequate labor/skill availability, inflation of costs of machinery, labor, raw material and transportation prices.