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The cause factors of large project's cost overrun: a survey in the southern part of Peninsular Malaysia

Memon, Aftab Hameed and Abdul Rahman, Ismail and Abdul Aziz, Ade Asmi (2014) The cause factors of large project's cost overrun: a survey in the southern part of Peninsular Malaysia. International Journal of Real Estate Studies (INTREST), 7 (2).

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Abstract

Construction cost overrun has become a global concern amongst the practitioners and academic researchers because the construction projects are very rarely completed within the estimated cost limit. There are various contributing factors to cost overrun. This study focuses on cost overrun encountered in large construction projects. Data was gathered using structured questionnaire survey among clients, consultants and contractors in the states of Johor, Melaka and Negeri Sembilan of Peninsular Malaysia. Statistical methods were used to analyze the data. The survey results show that 96% of the respondents agreed that most construction projects face cost overrun with an average amount ranging from 5% to 10% of the contract sum. Investigation on the causes of cost overrun involves 35 common factors identified through the literature. Results indicate that fluctuation in materials price, cash flow and financial difficulties faced by contractors, delay in progress payment by owner, and frequent design changes were most dominant factors causing cost overrun. Spearman correlation test was conducted on the factors showing that slow information flow was highly correlated with the lack of communication between parties (with a correlation value ρ = 0.787). Standardized design practices, efficient resource planning and management and proper financial management should be considered as effective tools in controlling cost overrun especially in large construction projects.

Item Type: Article
Uncontrolled Keywords: cost overrun; causes of cost overrun; Relative Importance Index; spearman correlation; large projects
Subjects: T Technology > TA Engineering (General). Civil engineering (General) > TA630-695 Structural engineering (General)
T Technology > TH Building construction > TH1-844 Building construction
Divisions: Faculty of Civil and Environmental Engineering > Department of Civil Engineering Technology
Depositing User: Normajihan Abd. Rahman
Date Deposited: 27 Feb 2014 03:49
Last Modified: 21 Jan 2015 08:26
URI: http://eprints.uthm.edu.my/id/eprint/5007
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