Construction cost impacts related to

manpower, material, and equipment factors

in contractor firms perspective
Cite as: AIP Conference Proceedings 1903, 110007 (2017); https://doi.org/10.1063/1.5011633
Published Online: 14 November 2017

Saiful Husin, Abdullah, Medyan Riza, and Mochammad Afifuddin

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AIP Conference Proceedings 1903, 110007 (2017); https://doi.org/10.1063/1.5011633 1903, 110007

© 2017 Author(s).
 Construction Cost Impacts Related to Manpower, Material,
and Equipment Factors in Contractor Firms Perspective
Saiful Husin1, a), Abdullah2, b), Medyan Riza2, c), and Mochammad Afifuddin2, d)
1
Engineering Doctoral Study Program, Univ. of Syiah Kuala, 23111 Banda Aceh, Indonesia
2
Faculty of Engineering, Univ. of Syiah Kuala, 23111 Banda Aceh, Indonesia
a)
Corresponding author: saifulhusin@gmail.com
b)
abdullahmahmud2004@yahoo.com
c)
medyanriza@unsyiah.ac.id
d)
afifuddin64@gmail.com

Abstract. Risk can be defined as consequences which possible happened inscrutably. Although an activity has planned as
good as possible, but it keep contains uncertainty. Implementation of construction project was encountering various risk
impacts from a number of risk factors. This study was intended to analyze the impacts of construction cost to for
contractor firms as construction project executor related to the factors of manpower, material and equipment. The study
was using data obtained from questionnaires distributed to 15 large qualification contractor firms. The period of study
classified into conflict period (2000-2004), post tsunami disaster rehabilitation and reconstruction period (2005-2009),
and post rehabilitation and reconstruction period (2010-present). The statistical analysis of severity index and variance
used to analyze the data. The three risk factors reviewed generally affected the cost in a medium impact. The high impact
occurred in minor variables, which are ‘increase in material prices’, ‘theft of materials’, and ‘the fuel scarcity’. In overall,
the three risk factors and the observed period contributed significant impact on construction costs.

INTRODUCTION
Issues related to uncertainty and unexpected events are common place in a construction project. The uncertainty
is caused by the risk, and the risk will have unfortunate consequences. If such risks happen to a project, then the
project could suffer significant losses in the development process. All risk sources that arise will have a particular
impact on a project. These impacts can contribute to the cost, time, or performance of the project. These conditions
will be felt by the project implementers, whether contractors, consultants, or project owners.
Risks are likely or impossible, which, if they occur, have an impact on the project [1, 2]. When associated with
the concept of opportunity, risk is the probability of occurrence of unexpected conditions with all possible
consequences that may result in delays or failures of the project [3]. Risks as activities or factors that if they occur
will increase the likelihood of non-achievement of the project objectives i.e. cost and performance [4]. From some
sense, it can be concluded that the risk is a condition that arises because of uncertainty with a certain chance of
occurrence that if it occurs will lead to unfavorable consequences. Furthermore, the risks to the project are a
condition of the project that arises because of uncertainty with certain probability of occurrence which, if it occurs,
will result in unfavorable physical and financial consequences for the achievement of project objectives, i.e. cost,
time, and project quality [4]. Therefore, risk is important to manage. Risk management aims to manage risk so that
the project can survive, or perhaps optimize risk [4].
The implementation of construction projects is highly vulnerable to uncertain events or problems beyond the
desire that result in negative impacts on achievement of targets in project implementation. A project can be affected
by a number of risk factors originating from within the project (internal) or outside the project (external factors).
One source of risk from within the project is from the project resource factor, which includes human resources,
materials, and equipment.

Proceedings of the 3rd International Conference on Construction and Building Engineering (ICONBUILD) 2017
AIP Conf. Proc. 1903, 110007-1–110007-7; https://doi.org/10.1063/1.5011633
Published by AIP Publishing. 978-0-7354-1591-1/$30.00

110007-1
 A number of research results have indicated various risk variables associated with the project resource factor.
Associated with human resource factors, risks can be sourced from labor availability, capacity and productivity
issues, worker discipline, worker wages, and synergies in work teams, strikes, and overwork turnover [5, 6, 7, 8].
Risk factors associated with the material may include variables related to material prices, ordering processes,
shipping and storage, material theft, volume and quality of materials, limited material storage, material suppliers,
waste material handling, and material management [5, 6, 7, 8]. In terms of equipment factors, risks may occur in
relation to equipment completeness or equipment capacity, equipment placement, equipment mobilization,
equipment malfunction, negligence in equipment condition checks, productivity and efficiency, equipment rental
costs, fuel, poor equipment and equipment management, high equipment maintenance costs, understanding of
equipment usage procedures, equipment compatibility with work /field conditions, equipment ownership [5, 6, 7, 8].
The implementation of a construction project in Aceh Province can be affected by a number of factors related to
the aspect of project resources. Previous research results indicate that risk from project resources factors and time-
related aspects of the project implementation area have a significant effect on the probability of risks arising from
project implementation [9]. The study focused on the conditions of the Aceh region over the past 15 years, covering
periods of political and military conflict (2000-2004), post-tsunami rehabilitation and reconstruction period (2005-
2009), and post-rehabilitation and reconstruction period (2010-2016). The period of conflict can be considered to
have the most dominant risk potential, followed by rehabilitation and reconstruction period, and post-rehabilitation
and reconstruction period. The variable of material price increase on the material resource factor is the only
potentially high risk variable in all periods reviewed.
As a follow-up to the previous results, further study was needed to explain the question of how the project's risk
factors impact on costs. Therefore, this research is aimed to analyze the impact on construction cost as contributed
by the factors of risk related to human resource, material and equipment risk factors. The study also analyzed the
extent to which project risk variables and the focused periods impacted on construction costs.

METHODOLOGY

Object of Research
The object studied in this research is related to the impact of risks on the cost of construction implementation in
the perspective of the contractor. The scope of study was conducted on the condition of Aceh Province in the last 15
years, and grouped in 3 (three) periods, namely: the period of political and military conflict (2000-2004), the period
of rehabilitation and reconstruction post tsunami disaster (2005-2009) and the period of post-rehabilitation and
reconstruction (2010-2015).

Instrument Tests and Analysis

The data collection process was conducted by using questionnaire instruments involving respondents from large
qualification contractors in Aceh Province, in accordance with the data of company registration at LPJK of Aceh
Province in 2016. The companies involved in this research are a business entity that was established before 2005. Of
the total population 20 contractor companies, there are 15 companies that contributed in this research. Backgrounds
of respondents are generally directors or managers of corporates. The questionnaire contains a number of
questionnaires to describe the characteristics of respondents and to assess the impact on construction costs that
occurred from resources risk factors.
Before being distributed, instruments are tested using validity and reliability test. Validity test is done by using
product moment correlation Eq. 1 and Eq. 2.

n( ¦ xy )  ( ¦ x¦ y ) (1)
r
{ n¦ x  ( ¦ x ) }{ n¦ y  ( ¦ y ) }
2 2 2 2

r n2
t count
1 r2 (2)

110007-2
 With r= correlation coefficient, ∑x = number of item scores, ∑y = total score and n = number of respondents.
Validity criteria of an item determined by the following assessment criterion:
1. If tcount > ttable, then the question item is significantly correlated to the total score (declared valid).
2. If tcount < ttable, then the question item not correlated significantly to the total score (declared invalid).
Reliability analysis was performed using Cronbach's Alpha (C-Alpha) analysis. The test using the coefficient C-
Alpha is a value that is considered to be able to test whether or not the questionnaire used is appropriate. The
coefficient C-Alpha should be ≥ 0.6 to be considered reliable. Reliability testing is done with Eq. 3 to Eq. 5.

k ª V2 º
r «1  b »
( k  1) « V 2 »
¬ 1¼ (3)

With r = instrument reliability, k = number of questions, V V 2 1 = total variance. The

2
b = items variance and
formulas for calculating items variance and total variance are:

JKi JKs
V 2b  2
n n (4)

V 2
1
¦ xt 2

( ¦ xt 2 )
n n2 (5)

With Σxt = total number of respondents 'answers, Σxt2 = squared the total number of respondents' answers, JKi =
sum of squares of whole grains and JKs = sum of squares subject.
Descriptive analysis is used to analyze data by describing the data that has been collected as it is without
intending to make conclusions that apply to the public or generalization. The impact on project cost of each risk
factor is analyzed using Severity Index (SI). The SI analysis (7) is determined by using Eq. 6.

¦a n i i
Severity Index(SI) I 1
5N (6)
With i = category index of respond, a1 = weight associated with value of i response, n1 = frequency of
respondent i as percentage of total respondent for each factor and N = total number of respondents. Criteria and
scale of SI assessment provided in Table 1 [10].
TABLE 1. Criteria and scale of SI assessment
Criteria Likert Scale Scoring Scale
Very low 1 0.000 d SI d 0.125
Low 2 0.125 d SI d 0.375
Medium 3 0.375 d SI d 0.625
High 4 0.625 d SI d 0.875
Very high 5 0.875 d SI d 1.000

Analysis of variance or anova is used to investigate whether resources risk factors and the three study periods
have a significant impact on increased project costs. This study uses two-way anova with analytical process shown
in Table 2.

110007-3
 TABLE 2. Two – way summary of anova
Sum of Deg. of
Source of Var. Mean of Squares Fcount
Squares Freedom

Line JKb b-1 KRb = JKb / dbb Fline

KRb
KRe

Column JKk k-1 KRk = JKk / dbk Fcolumn

KRk
KRe
Error JKe (b-1)(k-1) KRe = JKe / dbe
Total JKt N-1 KRt = JKt / dbt

DISCUSSION AND RESULTS

Characteristics of Respondent
Characteristics of respondents in this study divided into two, namely the characteristics of respondents and
characteristics of the company. Characteristics of 15 respondents can be seen in Table 3 and the characteristics of
the company can be seen in Table 4.
TABLE 3. Characteristics of respondents (Personal)
Characteristics of Respondent Category of Measurement
Director
Personnel positions Manager
Other
>2-4 years
Working experience of
>4-7 years
personnel
>7 years
TABLE 4. Characteristics of respondents (Company)
Characteristics of Respondent Category of Measurement Amount
Total of projects ever handled Period of conflict
by the company 1-3 project
>3-6 project
>6-10 project
>10 project
Period of Rehab Recon
1-3 projects
>3-6 projects
>6-10 projects
>10 projects
Total of projects ever handled Period of Post Rehab
by the company Recon
1-3 projects
>3-6 projects
>6-10 projects
>10 projects
Types of projects ever handled Building
Roads and bridges
Water constructions
Average yearly project value < IDR 10,000,000,000
IDR 10,000,000,000 -
IDR 50,000,000,000
> IDR 50,000,000,000
Amount (%)
5 33.3
7 46.67
3 20.00
1 6.67
1 6.67
13 86.67
(%)
3 20.00
5 33.33
4 30.00
3 40.00
1 6.67
5 33.33
3 20.00
6 40.00
2 13.33
2 13.33
5 33.33
6 40.00
11 73.33
14 93.33
9 60.00
2 13.33
8 53.33
2 13.33

110007-4
 Validity and Reliability Tests Result
Validity test in this research was conducted by taking 15 respondents, so the value of ttable is 0.514 in accordance
to 5% significant level. Test results for all questions (24 variables) provided an indication that tcount ≥ ttable, so that the
research instrument can be declared valid. For the reliability test, the test results indicate that the C-Alpha value for
all resources risk factors analyzed is greater than 0.6. The results of the validity and reliability test are summarized
in Table 5 and Table 6.
TABLE 5. Result of validity test
Minimum tcount
Questionnaire Period of Period of Period of Post Information
Codes Conflict Rehab Recon Rehab Recon
A1 – A7 0.735 0.616 0.807 Valid
B1 – B10 0.560 0.612 0.647 Valid
C1 – C17 0.697 0.612 0.670 Valid

The reliability test is carried out jointly on all questions for each external risk factor and the result is compared
with a value of 0.6. The summary of the reliability test results for each of the external risks that have been processed
can be seen in Table 6.
TABLE 6. Result of reliability test
Conflict Rehab Recon Post Rehab
Risk Factors
C-Alpha C-Alpha Recon C-Alpha
Manpower 0.86 0,84 0,88
Material 0.88 0,88 0,89
Equipment 0.97 0,98 0,99

Impact of Risk
The Severity Index (SI) analysis is used to show the index of the effect of the level of influence of each risk
factor for each question in this questionnaire. In this analysis each risk impact on the cost of each risk factor has a
frequency value based on the number of respondents who answered the same question with the same answer. The
results of the Severity Index calculation impact the risks to construction costs of human, material and equipment risk
factors on the implementation of construction project work.
The impact risk to the cost of the study in this study consists of 3 factors and 24 variables. The results of the SI
analysis based on Table 7 show that:
1. Based on Table 7, the severity index of the conflict period shows that the highest severity index value is
0.690. There are 3 (three) risk variables that have high severity index value that is the increase of material
price, material theft, fuel scarcity. While the lowest severity index value is 0.360, with variable risk of
equipment placement error.
2. Severity index on rehabilitation and reconstruction period shows that the highest severity index value is
0.680. There is 1 (one) risk variable that has high severity index value that is material price increase. While
the lowest severity index value is 0.320 with material handling risk variable. There is 1 (one) risk variable
that has low severity index value that is material handling.
3. In the post-rehabilitation and reconstruction period shows that the highest severity index value is 0.670 that
is the risk variable of material price increase. While the lowest severity index value is 0.320 with the
variable risk of material handling. There are 5 (five) risk variables that have low severity index values that
are workers' squabble, labor strikes, material handling, small equipment capacities, and equipment damage.

Result of analysis of variance (anova)

The anova analysis conducted to identify significance of the resources risk factors for the three periods studied
affecting construction cost. Mathematical indications resulted in Table 8. The analysis results described that the
value of F count > F table and P-value < 0.005. Thus, the three risk factors and the review periods contributed
significantly to the impact on construction costs.

110007-5
 TABLE 7. Assessment of the impact on construction costs
Post
Risk Var. Conflict Rehab/Recon
Variable Rehab/Recon
Factors Codes
SI Impact SI Impact SI Impact
A1 Low manpower availability 0.52 Medium 0.51 Medium 0.49 Medium
The ability of the manpower is
A2 0.52 Medium 0.48 Medium 0.35 Medium
lacking
Manpower

Discipline of unfavorable
A3 0.53 Medium 0.53 Medium 0.35 Medium
manpower
A4 Low manpower productivity 0.55 Medium 0.52 Medium 0.35 Medium
A5 Less solid team work 0.47 Medium 0.45 Medium 0.35 Medium
A6 Manpower squabble 0.39 Medium 0.39 Medium 0.35 Low
A7 Strike the manpower 0.39 Medium 0.40 Medium 0.35 Low
B1 Increase in material prices 0.69 High 0.68 High 0.67 High
B2 Delay in material delivery 0.56 Medium 0.61 Medium 0.57 Medium
B3 Theft of material 0.67 High 0.60 Medium 0.57 Medium
Material quality is below standard
B4 0.44 Medium 0.40 Medium 0.39 Medium
(specification)
The volume and type of material is
B5 0.51 Medium 0.48 Medium 0.44 Medium
Material

not correct
Damage to material delivery and
B6 0.48 Medium 0.48 Medium 0.48 Medium
storage
B7 Limited material shelter 0.47 Medium 0.49 Medium 0.45 Medium
Supplier cannot fulfill material
B8 0.49 Medium 0.48 Medium 0.40 Medium
order
Planning & management of good
B9 0.49 Medium 0.47 Medium 0.41 Medium
materials
B10 Material Handling 0.37 Low 0.32 Low 0.32 Low
C1 Small equipment capacity 0.44 Medium 0.39 Medium 0.36 Low
C2 Placement error equipment 0.36 Low 0.39 Medium 0.39 Medium
C3 Late mobilization of equipment 0.52 Medium 0.55 Medium 0.39 Medium
C4 Equipment is incomplete 0.43 Medium 0.41 Medium 0.49 Medium
C5 Device damage 0.56 Medium 0.57 Medium 0.36 Low
Equipment

Negligence in inspection of
C6 0.45 Medium 0.48 Medium 0.52 Medium
equipment condition
Productivity and efficiency
C7 0.49 Medium 0.49 Medium 0.41 Medium
decreased
The additional cost of equipment
C8 0.57 Medium 0.56 Medium 0.43 Medium
rental
C9 Fuel scarcity 0.64 High 0.61 Medium 0.43 Medium
Difficult access to entry for heavy
C10 0.57 Medium 0.51 Medium 0.51 Medium
equipment to be used for

TABLE 8. Analysis of variance (anova)

Source of
SS Df Ms F count P-value F table
Var.
Rows 112296 23 4882.4 41.255 5.2E-128 1.540
Columns 1043 44 23.713 0.227 0 1.387
Error 110555 1012 109.24
Total -697.704 1034

110007-6
 CONCLUSSIONS
Referring to the results of the previous result and discussion, it can be concluded:
1. Impacts on project costs that may arise from project resource factors can generally be classified as impacts
with medium intensity. Only a small number of high-intensity (3 of 24 variables) and low (6 of 24
variables);
2. Risk factors and variables that have an impact on costs with high intensity need to acquire serious attention.
These factors appear in the material factors (variables Increase in material prices and Theft of materials), as
well as on the fuel scarcity factor.
3. The factors and variables of risk related to project resources in the three periods observed have been proved
significantly affected the increasing construction cost in the level of low, medium, and high.
4. Given the large number of potential risk variables with medium intensity, the contractor needs to design the
project's resource management strategy to avoid incurring additional project implementation costs when the
risk occurs. Associated with human resources factors, management should consider aspects of availability,
ability, and work control. Material factors need to be refined related to procurement strategy, security, and
material handling starting from distribution, storage and usage process. For equipment factors, handling the
impact of risk can be done by applying a good equipment management pattern, starting from the selection
up to the operational phase in the field.

REFERENCES
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Edition (John Willey and Sons, New York, 2009).
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