Significant Factors Causing Cost Overruns in Large Construction Projects in Malaysia

Abstract

Once a construction projects fails in achieving effective cost performance, it will result to cost overmn. These ovemrns are caused from several factors which are very important to uncover for improving the cost performance. In Malaysia, not many research works have been carried out on study~ng cost performance factors. Hence, this study was conducted to identify the significant factors causing cost overrun in large construction projects in Malaysia. Questionnaire for the survey was developed based on 35 common factors of cost overrun identified from literature work. These factors were grouped in 7 categories and validated by interviewing five experiencedpersonnel of construction industry. The feedback of from the survey resulted in receiving 262 sets of completed valid responses against 400 questionnaires distributed amongst contractors, consultants and clients involved in large construction projects. The data from the questionnaire was analyzed statistically. Relative importance index method was used for hierarchal assessment of factors and found that the top 3 most significant factors of cost overmn are fluctuation of prices of material, cash flow and financial difficulties faced by contractors and poor site management and supervision. These factors belong to two categories i.e., contractor's site management and financial management category, thus improvements in these categories are paramount for controlling cost overrun in construction projects.

Contractors perspective for critical factors of cost overrun in highway projects of Sindh, Pakistan

“…It is a true fact that a contractor plays important role from initial to completion of the project, and therefore sufficient funds is required to ensure the smoothness of every single work activity. Financial and cash flow difficulties faced by contractor may lead to slow down and stop of the construction activities at site which results in the cost overrun [10].…”

Impact of Rework on Building Project and Organisation Performance: A View of Construction Professionals in Nigeria

“…In spite of the significance of the construction industry, it is faced with the problems of poor financial performance, high cost of project delivery, poor quality and material waste and failure to deliver value to clients on schedule [2,40]. Consequently, the industry has been extensively criticized for poor performance and ineffective productivity [42].…”

“…[26] reported that the indirect cost of rework is as high as six times the cost of rectifying failures. Studies have revealed that the consequence of poor quality work such as rework are; denying clients value for their monies; dissatisfied customers; unsafe structures; contract disputes; battered reputation; resource wastage; loss of business; loss of profit/revenue; reduce market share; and increase time and cost of construction; extra charges, and increased professional fees [2,6,11,15,27,31,34,35,38,42,44,47]. [33] assessed rework cost of selected building projects in Ondo state, Nigeria.…”

Assessment of materials waste in the construction industry: A view of Construction Operatives, Tradesmen and Artisans in Nigeria.

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