Cost overruns of public sector construction projects: a developing country perspective

Abstract

Purpose Cost overrun of construction projects has been a key concern for all stakeholders of projects for many decades now. Many studies have been done in the past and continue to be done currently to understand the underlying causes of construction project cost overruns. However, the empirical evidence of the causes seem not be clear due to the silo approach in understanding the causes of construction project cost overruns. The purpose of this paper is to take the debate a step forward by providing an understanding of the causes of project cost overrun from a system’s perspective, especially from a less researched environment. Design/methodology/approach Data were collected and analysed from 131 respondents who were mainly involved in construction works in public procurement entities in Ghana. A two-staged approach was employed in collecting data from the respondents. The first stage involved an interview session with key informants in the construction industry in Ghana to ascertain the detailed causes of cost overrun of construction projects. The second stage focussed on the validation of these detailed factors by a wider stakeholder group through questionnaires. Factor analysis was employed to consolidate these detailed factors into major causes of construction project cost overruns. Findings The results show that there are primarily four major causes of most public sector construction projects cost overruns. These four major causes of cost overruns are poor contract planning and supervision; change orders; weak institutional and economic environment of projects and lack of effective coordination among the contracting parties. Originality/value The study provides more insights as to the critical and major factors that underpin public sector construction projects cost overruns and more importantly provides a basis for common treatment of the multiple risk factors engendering public sector construction projects cost overruns.

Implications of ‘Lock-in’ on Public Sector Project Management in a Small Island Development State

“…Table 1 proposes a theoretical framework for tracing these sub-optimal outcomes' path dependency to a theoretical concept. Intent---------------------------- Contemporary research into cost overruns mainly focuses on cost overruns causes 'as a consequence of' or symptoms associated with poor project performance [1][2][3]. However, further investigations into whether cost overruns continue after the completion of a project are infrequently undertaken.…”

“…Social infrastructure development projects (SIDPs), such as public housing, often begin with noble intentions of delivering beneficial outcomes to society. The utility derived from low-income housing delivery has proven to be advantageous, positively influencing social dynamism and affecting economic growth [1]. However, these social infrastructure projects are delicate.…”

Planning for Public Procurement

“…Miroslav et al (2014) identified the planning phase as a point where corruption is possiblea measured, deliberative planning phase can help sort out a tendency toward rushed procurements with corrupt intent. Asiedu and Adaku (2019) suggested that poor planning leads to costoverruns, which aligns with the notion that shorting the planning phase to force predetermined, corrupt outcomes may be purposeful. The planning phase is also a point at which elected officials are likely to intervene (Hudon and Garzón 2016), which may increase the potential for outcomes that serve personal interests, rather than advantaging the government client.…”

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

“…client, consultant and contractors agreed that common factors of cost overrun in construction works are lack of communication between parties, delay in obtaining the permits from governmental agencies, shortage of technical personnel (skilled labour), poor site management, lack of coordination between parties and poor financial control on site. Asiedu and Adaku (2019) pointed out that planning and scheduling play very important role in controlling the issue of cost overrun while ANDRIĆ et. al.…”