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A Framework For Avoiding Cost Overruns I
A Framework For Avoiding Cost Overruns I
A Framework For Avoiding Cost Overruns I
Contents lists available at Science‐Gate
International Journal of Advanced and Applied Sciences
Journal homepage: http://www.science‐gate.com/IJAAS.html
Faculty of Civil and Environmental Engineering, University Tun Hussein Onn Malaysia, 86400 Parit Raja, Batu Pahat, Johor,
Malaysia
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Ullah et al/International Journal of Advanced and Applied Sciences, 3(3) 2016, Pages: 28‐31
conducted by Chang (2002) on four construction Various researches have been conducted on the
projects showed that all of them faced cost overrun cost overrun in construction projects in Malaysia. In
in the range of 12.3% to 15.3%. In Germany, Kostka a very comprehensive study by Shehu et al. (2014)
and Anzinger (2015) found that the average on 359 different construction projects, it was found
escalation for cost overrun was 63% in construction that 62.8% of the private sector projects and 53.2%
projects. of the public sector projects experienced cost
Cost overrun occurs due to various reasons in overrun. While, in a study of cost and time
construction projects. The causes of construction performance in central region of Malaysia, Rahman
cost overrun can vary from country to country et al. (2012) concluded that cost overrun was a
because of the difference in the political, economic, major issue in construction projects as agreed by
social and environmental condition. Hence, the 89% of the respondents. The results of the
purpose of this proposal is to determine critical questionnaire survey in the southern region of
factors causing cost overrun in the construction Malaysia conducted by Memon et al. (2012), showed
project in Malaysia and to determine mitigation that 96% of the respondents agreed that their
measures for each critical causative factors of projects experienced cost overrun. More recently,
construction cost overrun. the Kuala Lumpur International Airport 2 (known as
KLIA2) also experienced the problem of cost overrun
2. Problem statement as the total cost of the project increased from RM1.6
billion to RM4 billion (Ismail et al., 2014; Nie, 2013).
The construction industry can be considered as Regarding factors of cost overrun, a study carried
an important contributor to the Malaysian economic out by Memon et al. (2011) found that major causes
growth. In Malaysia, Construction sector shears 3.9% of cost overrun were poor design and delays in
to overall GDP of the country (Bank Negara Malaysia, design, unrealistic contract duration and
2015). However, like other developing countries, requirements imposed, lack of experience, late
Malaysia’s construction industry is also facing the delivery of materials and equipment, relationship
problem of cost overrun. In Malaysia, more than between management and labour, delay preparation
50% of construction projects were found to and approval of drawings, inadequate planning and
experience cost overrun (Shehu et al., 2014). In a scheduling, poor site management and supervision
study of MARA construction projects by Abdullah et and mistakes during construction. Furthermore,
al. (2009), it was revealed that more than 90% of Rahman et al. (2013) studied causative factors of
MARA construction projects experienced delay with cost overrun in large construction projects and
significant effects on time and cost overrun since found that the top 3 most significant factors of cost
1984. Furthermore, a survey conducted by Memon et overrun were fluctuation in prices of material, cash
al. (2012) regarding cost overrun in large flow and financial difficulties faced by contractors
construction projects showed that 96% of the large and poor site management and supervision. The
construction projects experienced cost overrun. Cost results of a study carried out by Ali and
overrun in construction projects is caused by various Kamaruzzaman (2010) on residential building
factors. This cost overrun in construction projects projects in Kalang valley completed during the years
can be minimized when their critical cause factors 2000-2009 with contract value of more than RM 5
are identified. Deterring the mitigation measures for million showed that the most serious factor
these critical causative factors would help in contributes to cost overrun was inaccurate or poor
controlling the cost overruns in construction estimation of original cost and the factor do not
projects. Mitigation measures for cost overrun affect most was mistake in design. Ismail et al.
factors mean that the process by which construction (2014) found that poor site management and
project managers introduces specific measures to supervision, inadequate planning and scheduling,
minimize or eliminate possible factors leading to lack of experience, inaccurate time and cost
cost overrun. According to Toh et al. (2011), there is estimates, frequent design changes, cash flow and
a need for further investigations on construction cost financial difficulties faced by contractors, financial
overrun in Malaysia. Few studies have been carried difficulties of owner, slow information flow between
out on the problem of cost overrun in construction parties, shortage of site workers, shortages of
projects. Majority of these studies stopped at finding materials, late delivery of materials and equipment,
the causing factors of cost overrun. Moreover, some poor project management, and change in the scope
of the studies had relatively small sample sizes, of the project causes time and cost overrun
which may affect the reliability of their results. There throughout the project management life cycle.
is a lack of investigation on identifying the severe Jamaludin et al. (2014) found that major factors
factors of construction cost overrun in Malaysia and causing cost overrun during construction stage of
determining the mitigation measures for each construction projects were incomplete design
critical cost overrun factors. Hence, this study will drawings and specifications at tendering stage,
focus on determining mitigation measures for each changes in client requirements, financial difficulties
critical factors causing cost overrun in Malaysian faced by the contractors, fluctuation of material
construction projects. prices, poor planning, scheduling and monitoring,
increasing of labour salaries, fluctuation of plant and
3. Cost overrun in construction projects machineries cost, lack of coordination among the
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parties, scrape and rework, and lack of project develop a list of measures for each critical cost
team’s experience. From the above studies, it can be overrun factors that can be used to control these
concluded that there is still a lack of study on factors. Interview protocol and qualitative
determining mitigation measures for each critical instrument will be prepared to keep reliability and
causative factors of cost overrun in order to control validity of data.
cost overrun in construction projects in Malaysia.
5.4. Stage four: Second questionnaire survey
4. Research aim and objectives
A structured questionnaire survey among the
This research aims to propose the mitigation construction experts will be carried out to evaluate
measures for each critical factor leading to cost the mitigation measures, in order to identify most
overrun in Malaysian construction projects. In order significant mitigation measures for each cost
to achieve this aim, the objectives are set specifically overrun factors.
as the followings:
Objective 1: To determine critical factors causing 6. Expected finding and significance of the
cost overrun in construction projects in Peninsular research
Malaysia.
Objective 2: To identify the mitigation measures From the results of this research, possible
for each causative factors of cost overrun in mitigation measures for the critical factors causing
construction projects in Peninsular Malaysia. cost overrun in construction projects in Malaysia will
Objective 3: To evaluate the most significant be determined. Recommendations will be
mitigation measures for each construction cost formulated for improving cost performance in
overrun factors. construction projects. The results of this study will
be used as guidance to all construction practitioners
5. Research methodology such clients, consultants and contractors in order to
overcome the cost overrun issue in their projects.
This research will adopt mixed modes of When remedial measures for each uppermost cost
quantitative and qualitative research. The overrun causing factors have been determined, it
methodology will be divided into the following would be possible to control them. Minimizing and
stages: eliminating the cost overrun in construction projects
will reduce the conflicts among construction
5.1. Stage one: Extensive literature review practitioners. Above all, controlling and reducing
construction cost overrun will minimize the possible
Literature review will be performed to determine increase in the final construction project cost. Thus,
the current common influencing factors of cost it will directly benefit the construction community
overrun in construction projects in Malaysia. and indirectly to the country economically.
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