Preliminary Study on Causative Factors Leading to Construction Cost Overrun

Aftab Hameed Memon, Ismail Abdul Rahman, Ade Asmi Abdul Azis



Cost is the fundamental component for any construction project. However, cost overrun is observed as one of the most frequently occurring issues in construction projects worldwide and need to be studied more to alleviate this issue in the future. This trend is more severe in developing countries where these overruns sometimes exceeds 100% of the anticipated cost of the project.


Like other countries, construction industry in Malaysia is also facing a lot of challenges such as the delay to complete the project in time, the expenditure exceeding the budget, the building defects and over dependent of foreign workers. The ultimate effects of project delay also results in exceeding cost. This leads to serious need of addressing the critical issue of construction cost overrun. To avoid construction cost overrun, very first and most important step is to identify and understand the causes and factors responsible for that. Hence, this paper is aimed to identify various factors responsible for construction cost overrun. Through a comprehensive study of literature review, common factors causing cost overrun resulting in identification of 78 factors were mapped in frequency table. A questionnaire survey and interviews were carried out amongst selected experienced personnel for expert opinion to identify the significant factors causing cost overrun in Malaysia. Five respondents were selected from each of the respondents groups including client, consultant and contractor. The questionnaire responses were analyzed by average index method, which resulted in identification of 59 common factors causing construction cost overrun in Malaysia. Results show that poor design & delays in Design, unrealistic contract duration & requirements imposed, lack of experience, late delivery of materials & equipment, relationship between management & labour, delay preparation & approval of drawings, inadequate planning & scheduling, poor site management & supervision and mistakes during construction were most common and significant factors causing cost overrun in Malaysian construction industry as perceived by experts.


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