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Cost Control in Building Construction: Inhibiting Factors and Potential

Improvements

Thesis · October 2016

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 Cost Control in Building Construction:
Inhibiting Factors and Potential Improvements

By

Aws Harb
(s0550007)

THESIS

Submitted in partial fulfillment of the requirements for the degree of Master of Science in
Construction and Real Estate Management at
HTW Berlin – University of Applied Sciences
Helsinki Metropolia – University of Applied Sciences

BERLIN, GERMANY

Advisers:

Prof. Dr.-Ing. Dieter Bunte

Prof. Dr.-Ing. Nicole Riediger
 ©2016 Aws Harb
Email: Harb84aws@gmail.com
All rights reserved
Specification for the Master Examination

iii
 Abstract

Construction projects in reality are considered to be complicated in regard to estimate the

inputs that needed to issue the most accurate plan & budget in order to halt deficits that might
cause extra costs. Due to this complexity, profit margin for contractors is at risk if the
calculation of the inputs is significantly deviated from the realities. Despite the availability of
many project control techniques, many projects still strive to achieve their objectives. The
main objective in construction projects is to accomplish them on time, within budget, and
according to terms and conditions of the plan. Among these objectives, completion within
budget is of priority concerned among clients. Therefore, knowledge of cost control in
construction is crucial. After the literature being reviewed, a number of gaps emerged and
became the author’s investigation points. The main objective of this paper is to ascertain the
best techniques in estimating costs, to study the actions undertaken to react to risks and
uncertainties, to study cost control techniques, to highlight the main contributors to cost
overruns, to analyze the possibilities of cost reduction and productivity improvement, and to
investigate the importance of applying Building Information Modelling (BIM) technologies
through the project progress.

To collect the data and discover the current trend of cost control in construction, a
questionnaire survey was conducted on different professionals from construction industry
such as contractors, architects, consultants, and service providers. 67 respondents had
answered the questionnaire. It consists of 6 sections covering the most important cost issues
such as cost estimation, cost control, cost overruns, and cost efficiency. The next step was the
analysis of the collected data where charts, figures, and tables were used, supported with
information from the literature review in order to answer the research gaps and objectives.
The final step was to discuss the findings in more practical way that benefits professionals
with the same background for better cost control practices.

iv
The study found that around half of the respondents to the questionnaire are facing cost and
duration overruns. The results showed a lack of using BIM technologies in estimating
construction costs. Material costs knowledge, labor costs knowledge, and the selection of
work method are necessary for generating accurate estimates. The results revealed that
adding a safety factor to cost estimates is the most used method to react to risks and
uncertainties. It was also found that most of the respondents do not apply Earned Value
Management (EVM) technique in cost control process. The study revealed the top five
contributing factors to cost overruns; inaccurate evaluation of project duration, design
changes, risks and uncertainties, financial management, and the non-performance of
subcontractors and nominated suppliers. The findings proved that there is a trend towards
increasing productivity and reducing construction costs among construction organizations.

The recommendations were that, estimators should use BIM technologies to generate more
accurate estimates and minimize conflicts between different professions, they must combine
estimating methods at the same time as well, risk management could help identifying not
only risks but also opportunities, adding safety factor to estimated costs should be learned
because it is very important in response to risks and uncertainties, budgets should also
include the funding requirements, earned value management (EVM) method is highly
recommended as the basis of cost control, finally, the cost control process should not only be
reactive but also proactive as it influences the final budget amount.

Keywords: Cost Control; Cost Overruns; Building Construction; Project Management.

v
 Dedication

Looking at what I have become now concerning my academic study, my career, and
personality, I thank god for every turn, the bad one before the god one. Beside all of that,
the existence of supporting people around me was necessary. Those people have always
pushed me toward my dreams, they always saw hope in their eyes when I couldn't find it in
mine.

Dad, you inspired me with your great mind. I wouldn't be here without your support and
your vision. Thank you for standing by myside in my hard times. Thank you for believing in
me when I lost hope.

Mum, should I start by thanking you for helping me to dream fully? Or should I thank you
for those sincerely honest prayers you did for me? Thank you for making me believe that I
could add something to this world.

My happiness today is because of my family. My greatest accomplishment today is a smile

on their faces and a worm hug when I get back home.

vi
 Acknowledgement

This project would not have been possible without the support of many people. In the
beginning, I would like to thank my adviser, Prof. Dr.-Ing. Dieter Bunte, who helped
develop this project and offered his precious time for that. I would like also to thank my
Prof. Dr.-Ing. Nicole Riediger, who led us through the whole program till success. There are
also people who made it possible to complete this project by their support and experience.
Special thanks to Jamil Harb, Moath Aldous, Ahmed Tawfik, Ragi Elgamal, Muhammad
Alshami, Taima’a Harb, Rua’a Harb, Conor Shaw, Omar Melhem, Marwan Melhem, Saywan
Aria, Miguel Olmof, Sarosh Imam, Andrea Castro, Muhammad Faisal, and Amer Rihani.
And finally, thanks to HTW Berlin University of Applied Sciences and Helsinki Metropolia
University of Applied Sciences for this opportunity to continue my studies.

vii
 Table of Contents

Specification for the Master Examination ................................................................................iii

Abstract .....................................................................................................................................iv

Dedication .................................................................................................................................vi

Acknowledgement ................................................................................................................... vii

Table of Contents .................................................................................................................... viii

List of Figures, tables, charts......................................................................................................x

List of Abbreviations ................................................................................................................ xii

Chapter 1: Introduction ............................................................................................................ 1

Chapter 2: Literature Review .................................................................................................... 4

2.1 Introduction..................................................................................................................... 4

2.2 Review Findings ............................................................................................................... 5

2.3 Conclusion ....................................................................................................................... 6

Chapter 3: Methodology ........................................................................................................... 8

3.1 Introduction..................................................................................................................... 8

3.2 Data Collection: Questionnaire Survey ........................................................................... 9

3.3 Conclusion ..................................................................................................................... 15

Chapter 4: Results and Findings .............................................................................................. 16

4.1 Respondents’ Background............................................................................................. 16

4.2 Companies’ Backgrounds .............................................................................................. 20

4.3 Cost Estimation ............................................................................................................. 22

4.3.1 Data Analysis........................................................................................................... 22

viii
 4.3.2 Estimate Costs Techniques ..................................................................................... 27

4.3.3 Determine Budget Techniques ............................................................................... 33

4.4 Cost Control ................................................................................................................... 36

4.4.1 Data Analysis........................................................................................................... 36

4.4.2 Cost Control Techniques......................................................................................... 40

4.5 Cost Overrun Factors and Mitigation Actions ............................................................... 46

4.5.1 Data Analysis........................................................................................................... 47

4.5.2 Inaccurate evaluation of project’s time duration .................................................. 49

4.5.3 Design Changes ....................................................................................................... 49

4.5.4 Risks and uncertainties associated with projects ................................................... 51

4.5.5 Financial Management ........................................................................................... 52

4.5.6 Non-performance of subcontractors and nominated suppliers ............................ 53

4.6 Improve Costs Efficiency ............................................................................................... 54

4.6.1 Data Analysis........................................................................................................... 54

Chapter 5: Discussions ............................................................................................................ 60

Chapter 6: Conclusions ........................................................................................................... 63

References .............................................................................................................................. 64

Appendix A: Survey Letter ...................................................................................................... 66

Appendix B: Survey Questionnaire ......................................................................................... 68

ix
 List of Figures, tables, charts

Chart 4.1 Ages of respondents 17

Chart 4.2 The educational level of respondents 18
Chart 4.3 Number of experience years of respondents 19
Chart 4.4 Percentage of respondents who have cost control
experience 20
Chart 4.5 Estimating techniques that used by respondents 25
Chart 4.6 Cost control application frequency according to
respondents 37
Chart 4.7 How are the respondents satisfied about their cost control
methods? 39
Chart 4.8 The frequency of issuing cost control reports 40
Chart 4.9 Construction costs efficiency among respondents 55
Chart 4.10 Applying cost efficiency inside construction companies
among respondents 56

Figure 4.1 Cost Performance Baseline 35

Figure 4.2 Earned Value Management (EVM) 43
Figure 4.3 To-Complete Performance Index (TCPI) 45
Figure 4.4 BIM uses 59

Table 3.1 Data Requirement Table 11

Table 4.1 Which stakeholder the respondents work for 19
Table 4.2 Industry of respondents’ organizations 21
Table 4.3 Countries where the organizations operate 22
Table 4.4 Organizations’’ performances regarding cost estimates,
milestones, and quality 24
Table 4.5 Influencing factors on achieving accurate estimates 26
Table 4.6 Respondents’ reactions to risks and uncertainties during
initial stages 27
Table 4.7 Cost control techniques used by respondents 38
Table 4.8 Computerized softwares used to control costs by
respondents 38

x
Table 4.9 Cost overrun causes 48
Table 4.10 Prices of selected petroleum products in Uganda 52

xi
 List of Abbreviations

AC Actual Cost
BAC Budget at Completion
BIM Building Information Modelling
BOQ Bill of Quantities
CPI Cost Performance Index
COQ Cost of Quality
CV Cost Variance
EAC Estimate at Completion
ETC Estimate to Complete
EV Earned Value
EVM Earned Value Management
PV Planned Value
RBS Risk Breakdown Structure
ROM Rough Order of Magnitude
SPI Schedule Performance Index
SV Schedule Variance
TCPI To-Complete Performance Index
VTM Vico Takeoff Manager
WBS Work Breakdown Structure
3D Three Dimension
4D Four Dimension

xii
 Chapter 1: Introduction

The process of construction involves several parties who work to achieve the project’s
deliverables. The client might be a private or public sector. Other parties such as architects,
engineers, contractors, manpower, and surveyors work on acknowledging and completing the
project deliverables. The most important factors to complete a project are finishing the
project on time, meeting the quality standards, and costs within budget. Most of the clients
are more concerned to complete their projects within the planned budget. Cost control is the
process of managing costs according to the cost baseline of a project and updating the
project’s budget according to that. A big part of cost control is being put on the comparison
between the expenditures and the physical accomplishments (Project Management Institute,
2008, p. 179). As any process in project management, cost control process has its own inputs,
tools & techniques, & outputs.

There has been a great need to acknowledge the principles of cost control in construction
industry, especially during the design stage. The importance comes due to the following
reasons:

 (Tan Chin Keng, 2015) explains that because construction projects are unique and
heterogeneous, there will always be unforeseen factors that may cause delay; hence
the project management takes unsatisfying decisions of escalating costs;
 According to (Validating 12), an investigation had been done on 3 projects for the
same construction company in Dubai showing the importance of applying earned
value management (EVM) method for cost control during the project life cycle.
Project estimators should acknowledge how to distribute a project expenses properly
because unfair distribution of the general and administration expenses could change
the final project outcomes most of the time;
 The design plans nowadays are more variable and different than those in the past.
They are more modern. As a result, designers are able to choose among huge number
of materials, products, designs, and techniques. Hence, the old traditional estimating
1
 techniques are not efficient any more. Old methods are replaced by new estimating
techniques with more accuracy (Pearson Education);
 Profits relating to contractors have been reduced with time. Hence, contractors
become more aware regarding their costs and expenses; and
 There is a general tendency towards profitable cost management, and thus a
consideration of construction costs analysis not solely relating to initial estimates but
also to the whole life cycle of a project.

While this research may not be representative of a special country, it is hoped that, the issues
considered highlight the challenges of cost control in construction industry across the board
and give practical opinions, responses, experiences, and solutions from practitioners. The
main objective of this paper is to answer the following questions that were considered by the
author as the most important issues to be investigated regarding cost control practices in
construction industry:

 To which degree construction projects attain the planned costs, milestones, and
quality;
 To discover the powerful tools or techniques used for estimating costs;
 What causes or leads to accurate cost estimations;
 How to react to risks and uncertainties in the initial stages of a project;
 How often cost control should be applied ;
 What techniques are the most preferred for cost control;
 What kind of computerized programs are the most preferred for cost control;
 What are the top main reasons for costs overruns;
 What is the possibility to reduce or lower costs during construction and what kind of
actions used for that; and
 To what degree construction companies reduce wastes in labor, time, and material.

The report consists of six chapters. The first chapter is the introduction which represents the
background and importance of the subject, highlights the research questions and objectives,
and presents the route map for the reader to guide him/her through the report. The second
chapter is the literature review which contains the importance of conducting a literature
2
review about the subject, discussing previous methodologies in investigating the subject,
proposing methodologies to conduct this research, and mentioning all the gaps discovered
after the literature review had been read, those gaps need to be closed and answered using
this research report. The third chapter discusses the methodology of this report. It consists of
the principles of collecting data based on “Internet Mediated Questionnaire” as well as the
methods used for analyzing the data. It also refined the research objectives into research
questions using a data requirement table. Moreover, it discusses the types of questions and
sections of the questionnaire. At the end of chapter three, the author mentioned the
constrained that faced conducting this research. The fourth chapter is the results and findings,
which uses the data analysis methods in expressing the respondents’ answers to the
questionnaire. After analyzing the data in each section, the literature review was used to close
the gaps appeared in the respondents’ answers. The main objectives from chapter four are to
study the nature of the respondents and their companies, to discuss the most used practices in
costs estimation, to study the importance of generating accurate estimates, to discuss the
problems and best practices faced during cost controlling, to highlight the main causes of
cost overruns, and finally to investigate the used practices in minimizing the planned costs
and work in more efficient ways. The fifth chapter is the discussions which focus on the
interpretation of the results that presented in the previous chapter. In addition, it helps in
presenting the results in a way that could be helpful to the field of construction. Finally, the
last chapter is the conclusions.

3
 Chapter 2: Literature Review

2.1 Introduction

Cost and schedule control in construction projects have become a very crucial matter for
management because profit margins are getting smaller and smaller due to strong
competitions among many firms in the same industry. Cost and schedule controlling are
much attached activities since almost any change that would happen in one of them will
affect the other. Indeed, construction projects are normally dealing with very narrow profit
margins (5-15% of the total project’s value) and because of that, cost control has become
very important. The project manager role is to accomplish the project’s deliverables in the
specified time, cost, and scope. This is not an easy mission since every construction project is
unique and risky. Reading and reviewing literature about this topic are very important in this
stage because (Saunders et al., 2009):

 Critically reviewing the literature will enhance the subject;

 During reading the primary and secondary resources, the author will be able to clarify
the research questions in a better way;
 The author will be updated by the newly researches written about this topic. So the
author will use the read literature as a basis for his research.

A thoroughly reviewing the literature has shown common approaches in investigating this
topic, such as:

 Although construction project are unique in nature, still there are common practices
in managing the costs that used world-wide;
 The common approach in dealing with this topic is to conduct a survey questionnaire
and analyzing the data in qualitative and quantitative ways;
 Determining the factors for costs and schedule overruns and discussing the mitigation
actions are the dominating data analysis approaches.

4
2.2 Review Findings

Most of the authors who wrote about this topic are focusing on conducting questionnaire
surveys where a sample of professionals in the field of construction is selected. The results
from those surveys are mainly to find out the main reasons for cost and schedule overruns
and how to mitigate them. The literature has recommended potential mitigation factors for
both cost and time overruns. A long list of actions is presented where all the stakeholders in
any construction project have to be aware of. Other researches such as (Chang, 2002) has
conducted case studies where the results were quantified in order to give more detailed
mitigation actions. (Chang, 2002) conducted research on 4 case studies and revealed the most
influencing factors for cost and time overruns. Some of these factors are the owner’s request,
optimistic schedule, owner’s failure to take proper decisions, consultants’ inability to manage
and supervise, external stakeholders, etc. Nearly, all the researches about cost overrun factors
link between cost and time overruns. In addition, there are always common factors between
them because time extensions use more resources and consequently increase the costs, and
vice versa. The classification of those inhibiting factors also is discussed in the literature.
Some classified them according to responsibility; contractor, owner, consultants, and beyond
control. Others classified according to, e.g. top 10 inhibiting factors followed by discussing
the potential mitigation factors (Olawale and Sun, 2010).

Conducting a qualitative and/or quantitative data collection and analysis are common among
many articles. A quantitative data collection is being done by conducting a survey
questionnaire which contains the main questions and objectives of the research that required
answers from professionals experiencing ups and downs with cost controlling. A qualitative
data collection is normally following the quantitative one where the respondents are being
interviewed, and more deeply discussion and analysis of the topic were conducted.

(Al-Jibouri, 2003) discusses the most common monitoring systems for cost control in
construction projects and the most affecting factors on project’s cost performance in terms of
changes in project plan and inflation rates. This shows the importance of studying the

5
literature and discussing with professionals to investigate the most up-to-date systems used in
cost control and the difficulties inhibit keep projects within the planned costs.

Reading the secondary literature such as (Project Management Institute, 2008) will help the
author in later stages in this research to go back to theories, steps, and tools required to help
project managers to conduct better cost control practices and close remaining gaps.

2.3 Conclusion

Because there is huge number of factors leading to cost overruns, it has been noted that it is
very difficult to analyze the collected data in a quantitative way. However, still the following
approaches are very important to enhance this research:

1. Conducting a quantitative data collection using a predefined questionnaire to be

answered by a sample of professionals in the field of construction is very important;
2. Conducting a qualitative data collection using interviews with as many as possible
respondents from the questionnaire above; and
3. Data analysis for the above approaches in quantitative and qualitative ways.

The author concluded after a thoroughly investigation the necessity of searching and
conducting deeper investigation to highlight and close the following gaps in this research:

1. There was a lack in discussing the main contribution of Building Information

Technologies (BIM) in building construction. This necessitates the investigation of
benefits added by applying BIM tools in construction. BIM is a new trend in the
buildings’ industry that uses computer based applications to ease the process of
managing buildings and presenting them. Recently, a number of BIM programs are
already existed in the industry. Few researches have focused on whether or not BIM
technologies would solve many problems that are facing engineers regarding cost
control;
2. As being known in the field of construction, the Earned Value Management (EVM)
method for cost controlling is one of the best solid methods. However, still projects

6
 are having cost overruns and this requires the author to investigate the gaps in
applying EVM method in construction;
3. The author will investigate the best practices and factors affecting the generating of
accurate construction estimates;
4. There was a lack of discussing actions that could be taken during both bidding and
construction stages which lower construction costs. As a result, the survey
questionnaire aims to define and address those actions undertaken by the
professional; and
5. The author will obtain information from respondents regarding the causes of cost
overruns and actions that would mitigate them.

7
 Chapter 3: Methodology

3.1 Introduction

Determining the methodology type for this research is a very crucial part. The author
carefully chose the “Pragmatism” philosophy to conduct this research (Saunders et al., 2009,
p. 109), which mainly depends on answering the questions in the beginning of the research.
Pragmatism means a logical way of thinking to solve problems based on dealing with
situations rather than theories (Merriam Webster). Moreover, researchers following the
pragmatism philosophy may use quantitative and qualitative techniques to sort out their
questions.

The author has decided to conduct the “Inductive” research approach rather than the
deductive one. This approach is more suitable to this research project because of the
following reasons (Saunders et al., 2009, p. 125):

 It tends to understand the nature of a problem;

 After observation, theories would follow the data;
 A more flexible research structure that adapts with the research objectives;
 Less interest in generalization;
 It works with a small sample size; and
 It tends to describe why something is happening.

The author also chose the methods for collecting data and analyzing them. The author has
selected the “Mixed Method Research” way to conduct this research (Saunders et al., 2009,
p. 151). A mixed method research means that collecting the data will depend on quantitative
and qualitative methods and then for the purpose of analyzing these data, the qualitative data
will be analyzed qualitatively and the quantitative data will be analyzed quantitatively.

This research was conducted in two stages. The first stage is the collecting of data using a
questionnaire. The questionnaire was designed after reformulating the research objectives. It
8
was designed using the online service by “Survey Monkey” which allows also distributing
this survey using email and social media to reach the respondents. The second stage is the
data analysis using both quantitative and qualitative methods. The quantitative results are
shown in this research using figures and tables, and followed by qualitative data analysis.

A number of constraints that limit the value of this research were as follows:

 Limited access to resources;

 No budget was assigned to this research;
 Language barriers; as the author was living during the research period in Germany.
This limits the number of respondents from Germany who mainly speak Deutsch; and
 The research time period is limited according to HTW Berlin University of Applied
Sciences of only five months.

3.2 Data Collection: Questionnaire Survey

The author depends on (Saunders et al., 2009) to conduct a reliable questionnaire that will be
used later for both quantitative and quantitative analysis. This necessitates from the author to
think about all the steps and requirements to accomplish a well done questionnaire. A well
done questionnaire should have, but not limited to the following characteristics:

 Careful design
 Clear and pleasing layout
 Clear purpose

The author, as a result of thoroughly investigation, decided to conduct an “Internet Mediated

Questionnaire” which basically depends on internet access and email service. The reasons for
choosing this kind of questionnaire are:

 First, most of the concerned professionals are persons who at least have finished
their bachelor degree. They are people who work in the construction industry with
leading positions such as project managers, construction managers, financial

9
 managers, and senior engineers who may not have free time while doing their
duties, so that the use of internet is very common for them and for their business.
The author’s initial plan is to contact them first by phone or email to get the green
light from them;
 Second, this is an international investigation which means that internet would
facilitate reaching concerned professionals;
 Third, as a respondent would fill the questionnaire solely by himself, the
questionnaire should be short in the range of 2 – 5 pages;
 Fourth, the duration to conduct this questionnaire is approximately 2-6 weeks; and
 At Last, the data input technique will be automated.

In order to design and build the questionnaire, it was important to refine the research
objectives and questions into more detailed and specific questionnaire questions. A data
requirements table (Saunders et al., 2009) ensures reliable data to be collected, therefore it is
a crucial part in this initial stage. Table 3.1 shows how the data requirements table
reformulates and filters the research questions. Investigate questions were generated from the
research objectives and for each question there is a need to specify which variable will be
used. Three kinds of variables are to be used:

 Opinion variables: reveal how a respondent feel, think, or believe about a matter or a
subject;
 Behavioral variables: reveal what a respondent did in the past, do in the present time,
and will do in the future;
 Attribute variables: describe respondents’ characteristics such as age, gender, marital
status, education, etc.

10
Table 3.1 Data Requirements Table

Investigate Detail in which data

questions Variable(s) required measured

To what extent Opinion of the respondent on Closed (Matrix) question:

construction projects to what extent costs, quality,  To a large extent
achieve the planned and milestones are achieved in  To a quite large extent
cost, milestones, and his/her project.  To some extent
quality?  To a quite small extent
 To a small extent
 Not at all

What kind of Behavior of the respondent on Closed and Open question

technique is used for method used for cost
costs estimation? estimation inside his/her
organization.

What leads to Opinion of the respondent on Closed (Matrix) question:

accurate construction important things required to  Strongly agree
costs estimation? generate accurate costs  Agree
estimations.  Not sure
 Disagree
 Strongly agree

11
 Investigate Detail in which data
questions Variable(s) required measured

What actions could be Behavior of the respondent on Open question

taken as reactions to how he/she reacts to risks and
uncertainties during uncertainties during initial
estimation stage? stages of the project.

How often should cost Behavior of the respondents on Closed (Category) question:
control during how often they apply cost  All the time
construction be control during construction.  Most of the time
applied?  Sometimes
 Rarely
 Never

What are the favorite Behavior of the respondent on Closed and open question
techniques that used what kind of technique is used
for cost control? for cost control.

What are the favorite Behavior of the respondent on Closed and open question
computer programs what program he/she is using
that used for cost for cost control.
control?

How often the Behavior of respondents’ Closed question:

companies are companies on how often they  Weekly
preparing cost control conduct cost control reports.  Monthly
reports?  Quarterly
 Yearly

12
 Investigate Detail in which data
questions Variable(s) required measured

What are the main Opinion of the respondent on Matrix question

factors of cost what he/she thinks the most
overruns in contributing factors to costs
construction? overruns.

What is the possibility Behavior of the respondent if Open question:

to achieve costs he/she has experienced costs  Yes
efficiency or costs reduction? How that  No
reduction during happened?  Not sure
construction?

To what extent Opinion of the respondent on Closed question:

construction his/her company’s 1 - 10
companies minimize performance in minimizing
the wastes in wastes.
material, labor, time,
etc.?

What actions could be Opinion of the respondent on Open question

taken in order to what actions should be taken
lower construction in order to minimize
costs and achieve construction costs.
efficiency?

13
A detailed literature review and discussions with professionals in the field were also the basis
of designing the questionnaire. As a result, the questionnaire consists of 23 important
questions from the author’s point of view. The aim of the questionnaire is to study the current
practice of cost control during construction phases on international level thorough getting
respondents’ opinions and behaviors inside their organizations. The questionnaire was
divided into six sections. Each section belongs to different category or stage as follows:

 Section 1 provides data about the respondents’ personal information such as age,
educational level, experience, which stakeholder he/she works with, if he/she
experienced cost control responsibility in the past, and position. This section in total
has six questions. The aim of this section is to have an overview about respondents’
backgrounds and to be satisfied about the reliability of the information to some
extent.

 Section 2 provides data about the Company’s background such as its industry and
country. The aim of this section is to make sure that most of the organizations are
operating in construction or close to this industry. In total, this section has two
questions.
 Section 3 discusses the respondents’ opinions regarding how satisfied they are for
their organization’s performances in achieving the planned costs, quality, and
milestones. Also, it asks for their opinions about important things required to achieve
accurate estimations. Moreover, this section discusses the respondents’ behaviors
regarding the techniques used for construction costs estimations and actions taken in
order to react to risks and uncertainties. This section in total has four questions.
 Section 4 discusses the respondents’ behaviors inside their organizations regarding
cost control practices. Important information are presented in this section such as the
frequency of conducting cost control, techniques and software’s used for cost control,
and the frequency of issuing cost control reports. In addition, this section asks
respondents about their satisfaction regarding the used techniques and programs. This
section in total has five questions.

14
  Section 5 discusses Costs overrun factors and how to mitigate them. The aim of this
section is to rate several factors so that finally the reader will know the top 5 main
reasons that lead to costs overruns. This section in total has two questions.
 Section 6 discusses Costs efficiency which is new practice being used in the
construction industry under cost engineering science, where the top management tries
during the project’s life cycle to reduce wastes in time, quality, labor, etc. to the
benefit of the project and to maximize profits. The aim of this section is to figure out
the most used practices to decrease costs and improve efficiency. This section in total
has four questions.

A total of 100 questionnaires were administered and sent directly to specified respondents.
The returned answered questionnaire in total were 67 where 34 were conducted on
contractors, 15 on consultants and architects, 9 on clients, and 9 on Suppliers and service
providers. The response rate was 67%. Section 3.2 explains in detail the respondents’
backgrounds.

3.3 Conclusion

This research is following the pragmatism philosophy which depends on answers the
research questions. It also follows the inductive approach which describes why something is
happening. The author decided to conduct a questionnaire survey to collect data. A Mix of
qualitative and quantitative methods was used to analyze the data. The questionnaire is
distributed using internet access and E-mail service. A proper design for the questionnaire
was done. Investigative questions were generated from the research objectives using a data
requirement table. As a result, the questionnaire consists of 23 questions and 6 sections.
Appendix B shows the complete questionnaire.

15
 Chapter 4: Results and Findings

This chapter analyzes the 23 questions answered by the respondents. The main concern here
is to approach each question in a way that could be analyzed. The main objectives from this
chapter are to study the nature of the respondents and their companies, to discuss the most
used practices in costs estimation, to study the importance of generating accurate estimates,
to discuss the problems faced during cost controlling, to highlight the main causes of cost
overruns, and finally to investigate used practices in minimizing the planned costs and work
in a more efficient way.

4.1 Respondents’ Background

Chart 4.1 shows the ages of the respondents. Based on the chart, the biggest number of the
respondents is of the range between 30 – 44 years old with 72.31% percentage. The second
biggest number is of the range 18 – 29 years old with 21.54% percentage. Lastly, 6.15% of
the respondents belong to the range 45 – 59 years old. This strengthens the fact that the
results are based on experienced professionals with precise answers.

16
CHART 4.1 Ages of the respondents.

Chart 4.2 shows the educational level of the respondents. Based on the chart, the biggest
number of respondents is having a bachelor degree with 75.38% percentage. The second
biggest number is for master degree holders with 23.08% percentage. Lastly, 1.54% of the
respondents are PhD degree holders. This strengthens the fact that the results are based on
educated professionals with at least bachelor degree relating the field of construction.

17
CHART 4.2 The educational level of respondents.

Chart 4.3 shows the number of experience years of the respondents. Based on the chart, the
biggest number of respondents is having between 5 to 10 years of experience with 50.77%
percentage. The second biggest number is for respondents of 10 to 15 years of experience
with 23.08% percentage. 7.69% of the respondents have between 15 to 20 years of
experience. 6.15% of the respondents have more than 20 years of experience. Lastly, the
respondents who have less than 5 years of experience are 12.31%. This strengthens the fact
that the results are based on experienced professionals as most of them are having more than
5 years of experience.

18
CHART 4.3 Number of experience years of respondents.

Table 4.1 shows that 67 out of 100 respondents have answered the questionnaire. Then, the
response rate is 67%. The respondents were classified into categories according to which
stakeholder he/she works for. The table shows that 34 questionnaires were conducted on
contractors, 15 on consultants and architects, 9 on clients, and 9 on Suppliers and service
providers.

TABLE 4.1 Which stakeholder the respondents work for.

Category Number Percentage

%
Contractor 34 50.74

Architect and Consultant 15 22.38

Client 9 13.44

19
 Category Number Percentage
%
Supplier and Service Provider 9 13.44

CHART 4.4 Percentage of respondents who have cost control experience

Chart 4.4 shows how many respondents were actually responsible for cost control during
their careers. This enables the author to write a reliable research with data that based on
experienced respondents with cost control background. 83.08% of them are having
experience in cost control. The remaining 16.92% of the respondents do not have experience
in cost control but they are working in the construction field.

4.2 Companies’ Backgrounds

Table 4.2 below shows the field or industry the respondents’ organizations belong to. In this
table, the top 6 largest groups are Building Construction (Commercial or Residential) with
42.42% of the respondents, Civil Engineering with 21.21%, Mechanical Sector with 19.70%,
Electrical Sector with 18.18%, Building Construction (High Rise Buildings) with 15.15%,
and Water & Sanitary with 15.15%.

20
TABLE 4.2 Industry of the respondents’ organizations.

Industry Responses

Building Construction (Commercial or 42.42% 28

Residential)
Civil Engineering 21.21% 14
Mechanical Sector 19.70% 13
Electrical Sector 18.18% 12
Building Construction (High Rise Buildings) 15.15% 10
Water and Sanitary 15.15% 10
Infrastructure 7.58% 5
Roads 7.57% 5
Medical Engineering 7.57% 5
Telecommunication 7.57% 5
Machines Supplier 3.03% 2
Construction Materials 1.51% 1
Precast 1.51% 1
Steel Manufacture 1.51% 1

Table 4.3 below shows the country where the respondents’ organizations operate. In this
table, the top 6 largest groups are from Saudi Arabia with 46.15% of the respondents, Egypt
with 16.92%, Germany with 9.23%, Jordan with 9.23%, United Arab Emirates with 4.62%,
and United States of America with 3.08%.

21
TABLE 4.3 Countries where the organizations operate

4.3 Cost Estimation

This section is divided into three parts. First, respondents’ answers to the questionnaire are
presented followed by analysis of data. Second, a full explanation of successful practices
used for costs estimating is presented. Lastly, the best practices used for preparing budgets
for construction projects are presented.

4.3.1 Data Analysis

Table 4.4 shows respondents’ opinions about “to what extent their organizations have
achieved the planned costs, milestones, and quality”. In the first question, a large number of
respondents show non-satisfaction about their company’s actual costs. 46.43% of the

22
respondents show incompatibility between actual costs and planned costs. In the second
question, there is a close relation between cost and milestones progress. 62.49% of the
respondents are having difficulties in achieving the planned milestones. This theory is also
supported by (Olawale and Sun, 2010) when a research found that the top factors inhibiting
cost control and the top factors inhibiting time control are almost the same. In the third
question, there is a general satisfaction among respondents regarding the achieved quality in
their projects comparing to previous projects. In the fourth question, again there is a general
satisfaction on the achieved objectives of respondents’ projects. In the fifth and last question,
a high percentage of respondents insisted on the importance of applying BIM tools in
estimating costs for construction projects. 67.85% of them show that it is very important to
use BIM technologies in estimating costs.

Chart 4.5 shows the used techniques for estimating costs in construction projects. The results
show that traditional methods are still dominating; project comparison with previous projects
(Analogous Estimating), Unit cost estimating (Parametric Estimating), and square and cubic
foot estimating. The results show a lack of using BIM technologies in estimating, having
known that BIM technologies give more accurate results. However, BIM tools are still new
techniques and this research is discussing the benefits from using BIM tools in construction
projects. Another important concern is that only 5.36% of the respondents are using “Reserve
Analysis” method for cost estimation, having known that “Reserve Analysis” is very
important to add contingency costs to the direct and indirect costs because of uncertainty.

23
TABLE 4.4 Organizations’ performances regarding cost estimates, milestones, and quality.

24
CHART 4.5 Estimation techniques that used by respondents.

Table 4.5 shows respondents’ selections when they were asked to weigh the influence of five
factors that might affect the generation of accurate cost estimates. The author came up with
these factors after a thorough reading for the literature. The results show that materials cost
knowledge (96.43% of respondents agree to this factor), labor cost knowledge (91.07% of
respondents agree to this factor), and the choice of work method (94.64% of respondents
agree to this factor) are necessary to generate accurate estimations. On the other hand,
choosing estimating technique had only 67.85% of the respondents who agree to its
importance. 78.19% of the respondents say that over- head costs inhibit estimators from
calculating accurate results.

25
TABLE 4.5 Influencing factors on achieving accurate estimates

In the questionnaire, respondents were asked to explain their behaviors when reacting to risks
and uncertainties during estimating stages in an open question. 34 respondents only answered
this question and described their opinions which the author analyzed later. The author
summarized their responses in table 4.6. Results show that “Adding Safety Factor” is the
most dominating practice being used by practitioners to avoid risks and uncertainties.

26
TABLE 4.6 Respondents’ reactions to uncertainties and risks during initial stages.

REACTION No. of RESPONDENTS PERCENTAGE

Adding safety factor 19 55.88%

Applying risk management 8 23.53%

Understanding the work 2 5.88%

scope
Learn from past experience 2 5.88%

Study local market 2 5.88%

Using BIM softwares 1 2.95%

4.3.2 Estimate Costs Techniques

(Project Management Institute, 2008, p. 168) identifies costs estimation as the approximation
of all activities’ costs required to complete a construction project. Costs estimation is an
iterative process during the construction time which begins with a big rough order of
magnitude (ROM, e. g. ±50%). The ROM is an estimate of costs and time which is identified
in early stages when not all information is known. The ROM is used to minimize risks and
uncertainties. Later in a project, this percentage decreases as the project progresses (e. g.
±10%). This estimation should include all the resources needed to complete the project
successfully. This includes, but not limited to, materials, labor, services, inflation allowance,
and contingency costs.

INPUTS

The first input is the SCOPE BASELINE. (Project Management Institute, 2008, p. 115)
discusses a project scope baseline. Project Scope Statement is a crucial statement for
describing a project deliverables which helps the management team to plan accordingly. The

27
level of detail of this statement is very important as it arranges the relationship between the
management team and other stakeholders. It should include the product description, criteria
of acceptance, deliverables, subsidiary reports, project assumptions, project exceptions, and
project constraints (e. g. predefined budget or imposed completion dates).

The Work Breakdown Structure (WBS), as discussed by (Project Management Institute,

2008, p. 121), breaks down and decomposes the project’s scope into more detailed work
packages that help to achieve the project’s deliverables and objectives. For each work
package there is a control account which is a management tool to compare the earned value
of that package with the planned cost, scope, and schedule for performance measurements.
Nowadays, it becomes easier to generate WBS’s from structure plans and models. BIM
(Building Information Modelling) applications have been used so far by many organizations
to generate WBS’s accurately and quickly. According to (Vico Software, Inc), Vico Takeoff
Manager is considered one of those reliable applications. VTM is used by consulting and
contracting firms to generate WBS’s from models automatically. VTM has the ability to
share models with other BIM applications, especially BIM authoring tools, and automatically
derives quantities from 3D models which later used in cost and schedule planning. Therefore,
it is crystal clear that generating a WBS should be a very accurate process that does not miss
any item in the model. By using VTM or any other reliable program, the management team
will be confident of that no missed quantities as well as the communication between the team
members will be more effective due to the 3D view options. In conclusion, using BIM tools
such as Vico Takeoff Manager to generate WBS’s will provide multi-level spreadsheets that
can be later refined and used as WBS’s.

Construction companies rely on different methods for pricing the bill of quantities (BOQ)’s
activities. They can use their own data bases resulted after accumulated experience over past
years. Another method is to rely on specialized indexes offered by private agencies or public
authorities. For example, the “Engineering News Record (ENR)” website offers downloading
of “Building Costs Index” and “Construction Costs Index” for construction firms in USA
(Engineering News Record).

28
Moreover, the WBS Dictionary provides more detailed information about WBS components.
It includes, but not limited to (Project Management Institute, 2008, p. 121):

 Identifier Code;
 Description;
 In-charge organization;
 Resources required to deliver;
 Costs estimation;
 Technical data; and
 Contact info.

The second input is the PROJECT SCHEDULE. During the process of finding the best time
schedule of a project, the resources’ estimate for each activity is being generated. Thus, both
resource estimation and duration for each activity are very important for cost estimation of
such an activity. To study the influence of project time schedule on cost control, a scenario of
a project manager decision will be discussed. During the excavation phase of a construction
project, the project manager decided to change the method of excavation from method 1 into
method 2. Accordingly, the excavation subcontractor who already had equipped the site with
all necessary equipment and staff, had to increase his staff number (double the number)
which forced him to accomplish the activity in longer time and consequently in more costs
(Mikhail Chester, 2005).

The third input is the RISK REGISTER as part of risk management. Risk management is a
very important part of project management that should be applied from day one of the
planning stage. Also, there should be an awareness of this importance that leads project
management to assign risk team as a separate department. The importance of this department
comes from the uncertainty of construction projects’ nature. (Charlene De Beer, 2015)
discussed the effects of not applying risk management on projects in her conference
proceeding which also used the Sydney Opera House as a case study. Charlene defines risk
as the effect of uncertainty on a project. This effect might be positive (Opportunity) or
negative (Threat). The basics of applying risk management include determining what the
likelihood of a risk to happen is and what the consequences are. The consequences might be
29
of financial effects, on schedule effects, and/or on safety issues. The Sydney Opera House
was used as a case study where risk management was not applied at all there. The project’s
initial cost was $ AUD 7 million, and due to starting the construction before completing the
designs with a total construction duration of 14 years, the total cost of the project reached $
AUD 102 million. This shows unawareness of the risk resulting after conducting construction
of such a unique project before finishing detailed designs. (Charlene De Beer, 2015)
discusses that in this project and if there would have been a proper risk management, the top
management would be able to:

 Calculate the risk contingency amount;

 Prioritize risks using risk register;
 Financially plan for risks;
 Develop mitigation plans for risk causes;
 Assign risk accountability; and
 Decide which risks to live with, manage, transfer to others, or avoid.

The conference continued to explain the process of Risk and Opportunity (R & O)
assessment in three key steps:

1. R & O Identification: the expected risks should be identified and registered. Identified
risks should be real and detailed. Being a real risk means it is possible to quantify it
and it has an effect on the project. Many ways could be used to identify risks such as
“Risk Identification Form” and “Risk Breakdown Structure (RBS)”.
2. R & O Analysis: this process is being done in two stages:
 Qualitative analysis: which determine the likelihood and consequences of
risks; and
 Quantitative analysis: which require special skills and software tools and aim
to quantify the effects or consequences after risks happen in terms of e. g.
weekly cost overruns, schedule overruns, effect on other disciplines, the
likelihood, etc.
3. R & O Evaluation.

30
Lastly, there are other inputs that could be used for costs estimation according to construction
firms. They include, but not limited to:

 HUMAN SOURCE PLAN;

 COMPANY ENVIRONMENTAL FACTORS; and
 ORGANIZATIONAL PROCESS BELONGINGS.

TOOLS & TECHNIQUES

The people who are conducting costs estimating should be very EXPERIENCED PEOPLE
in order to decide which method will be used for estimation, so that every firm has its own
team who decide methods that are found best to the firm.

Experts also could depend on the ANALOGUS ESTIMATING technique which means that a
management team relies on previous estimating information for previous projects. Extracting
information such as scope, cost, budget, and duration are the basis for estimating using this
technique. In general, this method is used during the early phases of a project when there is
no enough info available. This method does give very accurate results especially when there
are differences between the old and new project. For example, if it cost $ USD 100,000 to
erect a tower crane a few months ago, and there is a new project requires the same type of
tower crane. The estimator will estimate again a cost of $ USD 100,000. This method can be
used for both cost and time estimation (Belinda, 2011).

Another more accurate method to estimate costs is the PARAMETRIC ESTIMATING

which relies on a unit cost and duration. Generally, it uses simple equations to calculate new
estimations based on variables. For example, if it takes 2 days to plaster a 100 m2 block wall,
then the estimator will estimate 4 days to plaster 200 m2 wall of the same material. This
method can be used for both cost and time estimation but the data used should be scalable
(Belinda, 2011).

Project managers use the BOTTOM-UP ESTIMATING method for more accurate
estimating. They start from the very detailed work packages and then sum them in order to
calculate the project’s cost. However, because of the effort needed from estimators to work

31
with this method and time required, this method is considered very time consuming. This
method is used in large, complex, and multifaceted projects.

When it comes to calculate the average of activity cost while there are many estimates,
professionals use the equation of THREE POINTS ESTIMATES which was originated with
the program (PERT). The equation is very simple and requires three variables; most likely
(CM) estimate, Optimistic (C0) estimate, and Pessimistic (CP) estimate. Costs estimation
using this equation gives more accurate results. Following is the equation:

C0+4CM+CP
𝐶𝐸 =
6

The CONTENGINCY RESERVE is the amount of money that is considered during

estimation and assigned for cost uncertainty. It could be a percentage of the estimated cost or
a fixed number. As the project progresses, the contingency reserve amount may be decreased
or increased as more information become available. Generally, there are four methods used
to estimate contingencies:
 Expert perception
 Predefined guidelines
 Simulation analysis
 Parametric modelling

The COST OF QUALITY (COQ) is also a very important part during the estimation process.
Cost of quality is divided into two categories; cost of conformance and cost of non-
conformance. Costs of conformance are mainly costs spent during the project construction in
order to avoid failures and have two types; prevention costs which are dedicated to produce a
quality product such as training, equipment, and time to do it right, and appraisal costs which
used to assess the quality of the building such as testing and inspections. On the other hand,
costs of non-performance are mainly costs spent during and after the project completion in
order to correct failures that happened and have two types; internal failure costs which found
by the project (e. g. main contractor) such as rework and scrap and external failure costs that
found by the customer such as liabilities and warranty work (Project Management Institute,
2008, p. 195).

32
Lastly, other tools that usually used for costs estimations according to construction firms are,
but not limited to:

 BIM TOOLS FOR ESTIMATING.

 VENDOR BID ANALYSIS.

OUTPUTS

The final output of any estimation should include direct and indirect costs. The indirect costs
might be included at the activity level or at the project level. Direct costs are such as labor,
material, equipment, IT, facilities, and services. Inflation rates and contingency reserves must
be considered also. As most of engineers know, the estimation is always and better to be
subjected to possibility and allowance. For example, an estimator might give an activity the
following estimation considering the uncertainty; activity A costs $10,000 (±10%) to indicate
the expected range of the cost. Also the estimator should mention the confidence level of
his/her final estimation.

4.3.3 Determine Budget Techniques

Budgeting in construction is the process of calculating and gathering all the estimated costs
of individual activities or work packages to generate cost baseline. A budget should include,
but not limited to (Northwestern University):

 Soft costs: these costs are not directly linked to activities but they are important to
accomplish the project. These costs include architects and engineers fees, surveys,
different kinds of testing, printing, etc;
 Construction costs: these costs include material, labor, equipment, and other
important costs required to accomplish the work packages or activities;
 Mobilization costs: these are moving costs for labs and offices;
 Permit fees: These are fees paid for the government as regulation fees in order to start
construction;

33
  Contingency reserves: these costs are added to the overall real estimated costs of all
the previously mentioned in order to cover unforeseen risks and uncertainties; and
 Project management fees.

INPUTS

Following are the main important things required to determine budgets for construction
projects (Project Management Institute, 2008, p. 176):

 All the estimations that have been calculated, including the activities costs and work
packages costs;
 Scope Statement: which includes limitations and funding constraints;
 Work Breakdown Structure (WBS);
 Time schedule: which includes milestones, work packages, control accounts, etc;
 Contracts; and
 Organization policies, procedures, and guidelines.

TOOLS & TECHNIQUES

The first step for generating a project budget is COST AGGREGATION of all work
packages. The work packages after that are being aggregated to higher levels. Finally, all
costs are aggregated to a project level.

Another inevitable tool is the RESERVE ANALYSIS which can be divided into two
categories; contingency reserves and management reserves. Contingency reserves are the
reserved contributions for unplanned but potential risks that identified in the risk register.
Management reserves are those assigned for unforeseen risks that fall within the project’s
scope, but they are not included in the cost baseline.

HISTORICAL INFORMATIONS can also be used as a strong tool to prepare budgets. For
example, applying old information from old models of parametric or analogous estimates can
be beneficial.

34
Lastly, other tools that usually used for preparing budgets according to construction firms
are, but not limited to:

 EXPERIENCED JUDGEMENT.
 FUNDING LIMITS COMPROMISING.

OUTPUTS

The main output in this stage is the COST PERFORMANCE BASELINE which is the
authorized budget at completion (BAC). This is also used to monitor the project’s
expenditures and displayed in the shape of S-Curve. It is important here to say that this
output considers also the project duration. Figure 4.1 shows the relationship between cost
baseline, expenditure, and funding requirements.

As shown also in the figure 4.1, the PROJECT FUNDING REQUIREMENTS which are
shown as steps following the cost baseline are another output in this stage. They include the
incremental amounts and time intervals. The management reserves are always considered out
of the cost baseline but added to it.

FIGURE 4.1 Cost Performance Baseline.

35
Source:https://www.haikudeck.com/understanding-cost-management-business-
presentation-0xpNKwU5vo

4.4 Cost Control

This section discusses the cost control practices and the difficulties faced when monitoring
costs during the construction duration. This section is divided into two parts. Firstly,
respondents’ answers to the questionnaire are presented followed by analysis of the data.
Secondly, a full explanation of successful practices used for cost control is presented.

4.4.1 Data Analysis

In the cost control section of the questionnaire, practitioners were asked to answer several
questions covering the following points:

 How often they carry out cost control during construction;

 Which method they use for that;
 What kind of computerized software they use for that;
 How satisfied they are with their software or technique; and
 How often their companies prepare cost control reports;

36
CHART 4.6 Cost control application frequency according to respondents.

Respondents were asked how often they carry out cost control during construction phases
and the answers are mentioned in chart 4.6. More than 90% are applying cost control in their
projects. This fact emphasizes the importance of cost control in project management and its
rule in achieving any project’s objectives.

Respondents were also asked about what method or technique they use for cost control. The
results are mentioned in table 4.7. Surprisingly, the Earned Value Analysis, which is
considered according to the literature review as one of the most important methods, was
selected by only 7.55% of the respondents.

37
TABLE 4.7 Cost control techniques used by respondents.

Respondents selected the kind of computerized software they use for cost control. They also
could describe their programs if not mentioned in the answers. Not surprisingly, Excel is still
at the top of the list. But also new programs were introduced that are not mentioned in the
literature review. Table 4.8 shows the responses relating the used programs.

TABLE 4.8 Computerized softwares used to control costs by respondents.

38
The author mentions some of new programs used for cost control that were introduced by the
practitioners. They are the following:

 CODA
 DBS
 COMO
 JD EDWARDS
 SAP
 DYNAMICS AX
 GIS System
 ERP

For the purpose of knowing how satisfied the practitioners are regarding their techniques and
methods used to control costs, they were asked according to chart 4.7 to measure that. The
author found from the results that achieving 100% cost control is very difficult. Only 3.77%
of the respondents are extremely satisfied regarding to their techniques. On the other hand,
37.74% are very satisfied and 49.06% are somewhat satisfied.

CHART 4.7 How are the respondents satisfied about their cost control methods?

39
Professionals were also asked how often they prepare cost control reports. 20.75% of them
said that they prepare cost control report weekly, 62.26% said they prepare them monthly,
and 18.87% said they prepare them quarterly. The author believes after studying cost control
methods that monthly reports are still valid and successful to follow up a project’s progress.
See chart 4.8 for complete results.

CHART 4.8 The Frequency of issuing cost control reports

4.4.2 Cost Control Techniques

A project management team needs to keep the project expenses according to the plan. In
other words, it needs to monitor and control the expenses during the construction duration in
order to achieve the project’s objectives and the targeted profit. To achieve that, the project
management uses different techniques and methods for cost control. In this part, the author
discusses how previous mentioned gaps in cost control that appeared after questioning the
respondents will be closed.

40
INPUTS

Generally, the project management depends on the following inputs to start the cost control
process (Project Management Institute, 2008, p. 181)

1. Project management strategy: is being done during the planning stage and it defines how
the project will be executed, monitored, and closed. It also contains the project baselines;
schedule, scope, and cost baseline (Cost Performance Baseline). A comparison should be
done regularly between the cost performance baseline and the actual costs. The project
management strategy should also contain the cost management plan that shows how the
project costs will be managed;
2. Project financial requirements: are the periodic (e.g., quarterly) funding requirements or
payments that needed to cover the project’s cost baseline;
3. Work performance information: such as the project financial progress; and
4. Organizational process assets: are divided into existing processes and procedures, and
corporate knowledge base such as lessons learned and data base.

TOOLS & TECHNIQUES

To determine the tools that will be used for cost control during construction, a clear
understanding of resources available is a must. Also, the size of a company and the type of
work are very important issues. Moreover, it has been observed after reading the literature
that quantity surveyors have only monitored costs rather than controlling them which made
the process reactive rather than proactive one (Potts, 2008, p. 198). Normally, contractors
conduct two main types of cost control systems; a monthly big review of a project status and
more detailed ones for the project sections. Following are the main tools used for controlling
costs:

EARNED VALUE MANAGEMENT (EVM)

This is one of the most common methods of cost control that is used in any industry. It
integrates time schedule, scope, and cost to assess the project performance. It uses three key
factors that can be monitored regularly (typically weekly or monthly) or cumulatively:

41
  Planned Value (PV): is the authorized assigned budget value for a WBS component
or work activity. The total amount of planned value is also called “Budget at
Completion” BAC (PM 182).
 Earned Value (EV): is the authorized completed work and its authorized budget.
Each WBS component or work activity should be assessed using this measurement
criteria. Project managers use this method to assess the current status and the long-
term performance (PM 182).
 Actual Cost (AV): is the actual incurred cost that has been spent to achieve the EV.

(Tan Chin Keng, 2015) stated that these measurements should use the same unit which can
be money (e.g. USD.) or time (e.g. day). (PM 182) stated that these measurements are being
used in determining the following variances:

 Schedule Variance (SV): indicates if the project is falling behind its planned baseline.
Equation: SV = EV – PV.
 Cost Variance (CV): equals the earned value minus the actual costs. At the end of the
project, this will be the budget at completion (BAC) minus the actual total costs of the
project. Negative CV values are often non-recoverable to the project.
Equation: CV = EV – AC.

The above variances and the following indices are very useful tools for determining the
project status in terms of cost and schedule performances.

 Schedule Performance Index (SPI): is a measure of a project progress. In other

words, it is a comparison between the achieved progress to the planned one. A value
of SPI less than 1 shows less work achieved than the planned. A value greater than 1
shows more work accomplished than the planned one. Equation: SPI = EV/PV.
 Cost Performance Index (CPI): is considered the most important measure of cost
efficiency for the work completed. A value less than 1 shows a cost overrun, but a
value greater than 1 shows a cost underrun. Equation: CPI = EV/AC.

(Tan Chin Keng, 2015) mentioned computer softwares such as Primavera and MS Project
that simplify the way practitioners work with EVM concept. EVM method is a useful method

42
for the management team or cost control department because it provides early warnings
regarding the project status such as exceeding budget or being behind the schedule (Tan Chin
Keng, 2015). Project managers also can depend on this method to make release payments to
subcontractors. Moreover, other than the traditional forecasting method, EVM provides a
clear view of project progress from cost and time perspectives.

FIGURE 4.2 Earned Value Management (EVM).

SOURCE: https://www.linkedin.com/pulse/agile-vs-waterfall-part-4-calvin-baldwin

FORECASTING

As project progresses and due to uncertainties and unforeseen risks, the already studied and
calculated budget at completion (BAC) may become not viable anymore. Therefore, the
project manager conducts a forecasted estimate at completion (EAC) to give an estimate for
the new budget. Typically, the EAC calculation is based on the actual costs up-to-the-
moment, plus an estimate to complete the remaining work (ETC). See the following
equation:

43
 𝐸𝐴𝐶 = 𝐴𝐶 + 𝐸𝑇𝐶

The earned value management (EVM) method works very well along with the EAC method
since the EVM provides initial measurements for the project’s performance and tells if there
is need to conduct EAC method. There are many calculating EAC methods that are dealing
with different risk scenarios (Project Management Institute, 2008, p. 184). But the author
mentions only the common three methods (Project Management Fundamentals):

1. ETC to be completed at budgeted rate:

This method assumes that the project team has accepted the project performance to
date and the remaining works (ETC) will be accomplished at the budgeted rate.
Equation: 𝐸𝐴𝐶 = 𝐴𝐶 + 𝐵𝐴𝐶 − 𝐸𝑉

2. ETC to be completed at the same cumulative cost performance index (CPI) :

This method assumes that the project management has accepted the accumulative
CPI.
Equation: 𝐸𝐴𝐶 = 𝐵𝐴𝐶/(𝑐𝑢𝑚 𝐶𝑃𝐼)

3. ETC to be completed considering both SPI and CPI factors:

In this method, the calculation of ETC depends on both the cost and schedule
performance indices.
Equation: 𝐸𝐴𝐶 = 𝐴𝐶 + (𝐵𝐴𝐶 − 𝐸𝑉)/(𝑐𝑢𝑚𝐶𝑃𝐼 × 𝑐𝑢𝑚𝑆𝑃𝐼)

T0-COMPLETE PERFORMANCE INDEX

When the project management after conducting the previous forecasting procedure realizes
that they need to achieve the planned budget, a new CPI must be calculated. The new CPI is
called To-Complete Performance Index (TCPI).

Equation: 𝑇𝐶𝑃𝐼 = (𝐵𝐴𝐶 − 𝐸𝑉)/(𝐵𝐴𝐶 − 𝐴𝐶)

44
If the original BAC is no longer attainable, the project management should decide on a new
estimate at completion (EAC) with other stakeholders. As a result, the new TCPI will be
calculated as follows:

Equation: 𝑇𝐶𝑃𝐼 = (𝐵𝐴𝐶 − 𝐸𝑉)/(𝐸𝐴𝐶 − 𝐴𝐶)

Figure 4.3 shows the difference between TCPI based on a new EAC and TCPI based on the
original BAC.

FIGURE 4.3 TCPI

SOURCE:http://managementyogi.blogspot.de/2015/02/To-Complete-Performance-Index-
TCPI-and-Cost-Performance-Index-CPI-Part-1.html

Other management tools that can be used to control costs are as follows:
 PERFORMANCE REVIEWS
 VARIANCE STUDY
 PROJECT MANAGEMENT PROGRAMS

OUTPUTS

Cost control is an iterative process. Around 62% of all respondents say that they prepare cost
control reports every month, 20% say every week, and 18% say every quarter. The author
believes that the bigger number of issued reports, the better forecasting of the project

45
performance. Regardless when cost control reports are issued, there are common outputs that
should be measured. The best use of cost control reports should include but not limited to
(Designing Buildings Wiki):

 The cost plan which is the best possible estimate of a cash flow of a project. It covers
the whole project’s stages;
 Regular cost control reports will be very important to:
1. Investigate up-to-date project costs and performance, CV,SV,CPI, and SPI;
2. Anticipate final budget of a project (EAC);and
3. Future cash flow.
 All decisions taken based on costs forecasting;
 Updates to cost management plan and cash flow;
 Updates to risks and contingencies management;
 Project documents updates;
 Issuing of change requests; and
 Submitting cost control reports to the client in regular basis.

4.5 Cost Overrun Factors and Mitigation Actions

In order to determine the influencing factors on cost overruns in construction, it has become
so obvious that there is a need to limit the search geographically because the main factors of
cost overruns are different from country to country. However, still construction projects share
some of those factors because they share some common characteristics. According to
(Olawale and Sun, 2010) and after conducting a questionnaire on factors affecting both time
and cost overruns, it was crystal clear that there is a strong correlation between time and cost
inhibiting factors as both share the same top and bottom factors in severity.

This section is divided into six parts. The first part is about respondents’ answers analysis.
The main purpose of this part is to highlight the top five factors leading to cost overruns. The
following five parts are discussing each factor and how to mitigate it.

46
4.5.1 Data Analysis

Respondents were asked to mention the percentage of their projects that have faced cost
overruns according to each reason listed. The author used a coding method for the
percentages for later analysis as follows:

1. 75% - 100% of the projects, with code 1.

2. 50% - 75% of the projects, with code 2.
3. 25% - 50% of the projects, with code 3.
4. 0% - 25% of the projects, with code 4.

The codes are used to calculate the weighted average for each factor. The factor with the
least weighted average is considered at the top factors causing cost overruns. Several
researches were done in the same way before but this research will give the most up-to-date
information regarding cost overruns from different international opinions. Table 4.9 shows
the different factors contributing to cost overruns, the corresponding responses, and the
weighted average for each factor.

47
TABLE 4.9 Cost Overrun Causes.

The above table shows the top contributing factors to cost overruns. Each factor will be
separately discussed in the next parts. The top five factors that will be discussed are as
follows:

 Inaccurate evaluation of project duration;

 Design changes;
 Risks and uncertainties associated with projects;
 Financial management; and
 Non-performance of sub-contractors and nominated suppliers.

48
4.5.2 Inaccurate evaluation of project’s time duration

In construction, it is very important to generate accurate estimation for the contract. Accurate
estimation for the project will be used for assessing the project performance and the
productivity of the organization. Imposing contract duration by the clients will force
contractors to neglect the specified quality standards. Moreover, accurate estimations are
required to define realistic project cost and budget. Generating accurate duration estimates
depends on but not limited to:

 Method of execution;
 Resources available;
 Project complexity;
 Site conditions and weather; and
 Imposed durations;

4.5.3 Design Changes

A lack of detailed design prompts subcontractors to increase cost margins for risks, thus the
main contractor company finds itself out of controlling its prices and profit margins
especially when they have lump-sum type of contracts. Design changes affect not only the
work package where the change happens, but also affect other work packages and over-head
costs (Construction Industry Institute). In this section the author will discuss how design
changes inhibit cost control and what the best practices and actions to mitigate them.

Design changes could lead to cost overruns. Therefore, a set of mitigation actions should be
taken. Mitigation actions are categorized as follows (Olawale and Sun, 2010):

 Preventive actions
These are actions taken during the planning process to minimize inhibiting factors to
the lowest point. Mitigating factors could be but not limited to:

49
 1. Using BIM tools in design especially 3D modelling to prevent interferences
between professions which lead to later conflicts and necessity for changes
(Construction Industry Institute);
2. In fixed priced contracts, and because of the need to make a baseline for
adjustments, the owner should require the contractor to provide the following
prior to or shortly after mobilization (Construction Industry Institute):
 WBS includes unit prices;
 Time schedule shows the critical path.

3. Detailed and elaborated planning stage

 Predictive actions
In construction field and to predict what may happen in the future, tools such as 4D
modelling techniques can be used. The fourth dimension here may be cost or time
control. Such as:

 Efficient analysis of the design change consequences on other work packages

and indirect costs (Olawale and Sun, 2010, p. 518)

 Corrective actions
They are the actions taken during the construction phase to mitigate or correct the
inhibiting factors’ influence. They act as a remedy:

1. Proposed changes should be authorized and reviewed according to the project

scope and through change management system (Construction Industry
Institute).
2. Assuring that the accompanying cost and time of a design change are
determined and agreed before going ahead with the change (Olawale and Sun,
2010, p. 518).
3. Efficient analysis of the design change consequences on other work packages
and indirect costs (Olawale and Sun, 2010, p. 518)
 Organizational actions

50
 The philosophy followed by an organization affects also the way it controls its costs.
From the author’s experience for example, sometimes companies are forced to deal in
flexible ways with clients. This leads to poor cost control because in most cases those
companies do not aim to lose their clients. Therefore, it is highly recommended from
each organization to adapt a change management system.

4.5.4 Risks and uncertainties associated with projects

The building construction is inherently risky and uncertain and this because of the nature of
the industry itself. New conditions are being evolved and emerged through a project. The
reasons for future changes could be economical, social, political, etc. (J E OKEMA). All
construction projects are facing risks and uncertainties associated with future events. Thus,
risks and uncertainties management becomes crucial for the success of construction projects.
The role of this kind of management is to control the effect of uncertainties on time, quality,
and costs associated with a project. Mainly, risk management deals with the following:

 Identification of risks and uncertainties;

 Categorization and quantification of risks;
 Conducting sensitivity analysis;
 Risks allocation and distribution;
 Response and mitigation actions by responsible people.

(J E OKEMA) gives examples on situations where risks and uncertainties increase projects’
costs over their lifecycles. For example, most developing countries import construction
equipment, material, tools, etc. to be used at construction sites. For example, in Uganda and
between 1992 and 2000 sudden changes in Petroleum Products costs had been noticed. Table
4.10 shows a sudden increment between January and May 2000 in the prices. Therefore,
many Uganda’s projects faced increments in estimated costs. For example, during the
Rehabilitation of Kafu-Karuma Road, the difference in prices amounted to about US $ 1.5
million of a contracted total US $ 18 million between October 1994 to April 1997. In another
project, Kampala – Entebbe Road, the difference in prices amounted to about US $ 450, 000

51
on a contracted total US $ 4.5 million between February 1996 to October 1997. From these
two projects, it is noticeable that risks and uncertainties management is required.

TABLE 4.10 Prices of selected petroleum products in Uganda. Source: (J E OKEMA)

Governments especially in the developing countries are still the main source of construction
projects to main contractors, but governments might face fiscal deficits as a result of
instability or government deficit, which means a direct risk and uncertainty in project
management. In Uganda for example in June 1999, the debt owed to the private sector was
reaching approximately US $ 188 Million. A big part of this debt stock is owed to
contractors, suppliers, and consultants. As a result of this kind of uncertainties, no body tries
to price bids offered and financed totally by the Uganda’s government (J E OKEMA).

Another example of risks that could face even the biggest contractors is what happened with
SBG Company for construction, which was once among the biggest construction companies
that benefit from Saudi Arabia's oil wealth. SBG accounts for about 70% of Saudi Arabia’s
construction projects. But in the past half year, it has hit hard times. In the beginning of 2016,
several subcontractors and suppliers working with SBG have not been paid for months
because Saudi government cannot finance anymore as petroleum prices went down. Finally,
hundreds of SBG workers started protesting because of unpaid salaries.

4.5.5 Financial Management

Proper financial management is required from all parties of a project. Bad financial
management could occur in the owner side where for example delays in payments may
happen and lead to disturbance in contractors’ cash flows, and therefore, some activities are

52
delayed. The major aspects in construction financial management are (Purnuş and Bodea,
2015):

 Specifying key factors in financial management and determining duties and

responsibilities;
 Monitoring and controlling the key factors and taking actions when negative values
are shown;
 Designing platforms and tools which make financial management smoothly
administered; and
 Applying risk management practices inside the financial management.

4.5.6 Non-performance of subcontractors and nominated suppliers

The ability of subcontractors to accomplish the assigned jobs is very crucial since big
construction companies depend on subcontractors to execute around 80% of the total
projects’ activities. However, most of main contractors don’t have appraisal criteria of
subcontractors, probably because they think it is not that important or because they don’t
have the time for that. Thus, main contractors should seriously consider the selection
criteria of subcontractors. Moreover, they have to monitor closely the subcontractors’
progress.

According to a questionnaire done by (S. Thomas Ng) to investigate the most influential
indicators for selecting subcontractors, many states in USA have adopted models that can
be used as appraisal criteria for nominated subcontractors such as the state of
Wisconsin’s model. The following are the main indicators for selecting proper
subcontractors:

1. Standard of workmanship: means high quality and minimum maintenance costs

associated with the subcontractor reputation. In addition, this will help
subcontractors in the future to obtain new jobs since their reputation is high;
2. Actions taken to mitigate delays: inevitably, any delay will cause financial loss,
thus this criteria is of paramount importance;

53
 3. Communication: is important since it develops a good atmosphere between all
parties at site and leads to smoothness in the workflow.
4. Informing of the potential of any problem: means that a subcontractor must share
what is happening at site. Indeed, a subcontractor has to show good
communication skills in informing about any potential of problems. Moreover,
subcontractors should propose solutions or mitigation actions; and
5. Full awareness of site safety issues and commitment to apply those rules.

4.6 Improve Costs Efficiency

This section defines construction efficiency and its importance. It also shows that
construction companies are following efficiency practices for several reasons. In addition,
this section mentions the actions taken in order to reduce construction costs during bidding
and construction stages. At last, it focuses on the use of BIM technologies at construction
sites to improve coordination and quality.

4.6.1 Data Analysis

Last part of the questionnaire is particularly about discussing the possibility of achieving cost
efficiency or cost engineering at construction sites. Cost efficiency practices are being
conducted by engineers most of the time in order to maximize the profit margins by dealing
with each activity or category alone and applying efficiency practices on it. Chart 4.9 shows
the number of respondents who have witnessed costs efficiency practices leaded to costs less
than the planned ones.

54
CHART 4.9 Construction costs efficiency among respondents.

Around 50% of the respondents have witnessed cases where costs at the end of their projects
are less than the planned ones, therefore the author asked the respondents how that could be
achieved in an open question and the answers were as following:

1. When the work goes smoothly without any unexpected overruns, the contractor could
keep the safety margin for itself. By achieving this, the total costs will be less than the
planned ones;
2. By applying value engineering to reduce the planned costs;
3. Sometimes currency changes could lower costs;
4. Sometimes changes of design could lower costs;
5. When the contractor is sure about the costs from previous projects;
6. By overestimating, but this is a risky action and might lead to losing the bid; and
7. By achieving competence among suppliers in order to get the lowest prices for the
predefined materials.

On a scale from 1 to 10, the respondents were asked to rank the performance of their
companies they work for in minimizing wastes in labor, material, time, quality, and energy.
10 points mean that the company applies 100% efficient construction. Chart 4.10 shows the
results. A trend towards applying cost efficiency in construction companies is very clear from
the chart. Applying 100% efficiency seems to be very hard due to the complexity of

55
construction projects. The main purposes from applying costs efficiency are, protecting profit
margins, increasing productivity, decreasing the planning costs, and preserving the
environment.

CHART 4.10 Applying cost efficiency inside construction companies among respondents (10
means 100% efficiency).

Following are the respondents’ actions that taken to decrease costs and increase efficiency in
both stages, bidding stage and construction stage. First, the author summarized the actions
relating bidding stage:

1. By extending the time needed for estimation;

2. By having clear specifications that being approved by the client;
3. By quantifying risks using more than one approach;
4. By perfectly understanding the scope of work;
5. By learning from previous projects;
6. By using BIM in estimation;
7. By inviting more bidders;
8. By minimizing risk factors as much as quantity surveyors can;
9. By choosing the most qualified bidders based on experience and portfolio;
10. By conducting a well study on the market;

56
 11. By obtaining assistance from consultants;
12. By involving all project parties in early stages (design); and
13. By applying value engineering: as most of the tendering teams have almost no
experience in real constructions works, they always choose extra rare cases to cover
up their responsibilities in front of the owner. Always the owner should have the
power to re-run a value engineering processes before commencing works to ensure
optimum cost is achieved against his requirements.

During the construction stage, on the other hand, there are actions to be taken in order to
decrease the costs based on respondents’ opinions:

1. By verifying that regular site reports are reflecting the real progress at site;
2. By following the project’s schedule;
3. By applying value engineering;
4. By applying excellent cost control;
5. By choosing the proper and cheapest methods to do tasks;
6. By minimizing the wastes in material and labor;
7. By seeking better opportunities and technologies;
8. By hiring good financial management;
9. By the adherence to contract terms; and
10. By supervising construction sites according to plans and schedules.

The literature covered the missing gaps and provided some other practices that could benefit
in cost efficiency. (ewhitt) identified efficiency at construction sites as practices undertaken
to minimize waste in time, labor, costs, material, energy, and skills. (ewhitt) highlights the
most important practices for that:

1. The use of interoperable technology (BIM):

Building Information modelling programs use more dimensions than before and help
the construction industry with more accurate emerged information. Examples of the
most helpful dimensions that could be used nowadays are visualization, modelling,

57
 laser scanning, cost estimating, and scheduling. The main benefits of using BIM
technologies are:

 Improve quality and speed of construction projects. BIM tools enhance

visualization which in turn improves quality;
 Improve coordination and reduce conflicts. For example SKETCHUP by
Google is considered one of the important tools for architects and it uses the
stage by stage model criteria which means that it models every stage (e. g.
planning stage) separately and allows all parties at the project to contribute in
the modelled stage;
 BIM tools save time; and
 Improve data accuracy.

Traditional 2D ways of communication lead to waste more time because there is no

integrity while communicating. In other words, using 2D plans cannot offer full
visualization of the model which can help discovering clashes. On the other hand,
BIM tools provide 3D visualization which enhance for better communication and
quicker decision making. Figure 4.4 shows the main uses of BIM tools in
construction.

2. Working toward more effective interfacing with people, processes, material,

equipment, and information;
3. The use of off-site fabrication techniques such as prefabrication and preassembly;
4. Widespread use of demonstration installation; and
5. Effective performance measurements (The use of key performance indicators).

58
FIGURE 4.4 BIM uses.
Source: http://www.tekla.com/de/bim-forum-2013/images/Construction-Management-
workflow-web_JPG.JPG.

59
 Chapter 5: Discussions

As discussed earlier, the purpose of this report was to highlight the difficulties facing the cost
control practices in construction on international level, to involve literature review and
experts in order to obtain updated information, to use literature review and experts in order to
answer questions, and to analyze the data in a way that will benefit experts from the field of
construction to better management skills and techniques.

This Report focused on discussing the importance of generating accurate cost estimates and
how this could be done. It also discussed the actions that should be taken in reaction to risks
and uncertainties. Cost control techniques and tools were also studied and presented to the
reader so that he/she will be more capable of monitoring the financial progress of a project.
Causes of cost overruns in construction projects were also discussed in this report. Lastly,
this report stated the necessity of conducting efficient management on projects’ resources and
particularly costs.

Around 50% of the respondents to the questionnaire could not have achieved the planned
milestones and budgeted costs. This indicates the presence of a big problem in construction.
Planned milestones and budgeted costs, according to this report, are attached, which means
any increment in one of them will lead to an increment in the other. Although time and cost
are affected and exceeded the planned values, quality remains unaffected probably because
of the predefined standards prior to construction. In order to generate accurate estimates,
project teams should use BIM tools which help in generating automatic WBS’s. This
research shows that not using BIM tools and not considering contingency reserves in
estimation process are of significant risk to a project on the long run and particularly on the
cost control process. Most of construction companies are using “Safety Factor” values or
percentages in order to deal with risks and uncertainties during the initial stages of a project.
This requires from professionals to learn and study the techniques used to generate accurate
safety factors. Practitioners should also acknowledge that risk management could help in
identifying not only threats but also opportunities. This research emphasizes on the

60
importance of using more than 1 method in estimating costs, practitioners should combine
methods in order to obtain more accurate results. Planning for costs in early stages should
include not only estimates and budget but also funding requirements.

This report refers to the lack of using earned value management (EVM) principles in cost
control. The using of traditional methods such as Microsoft Excel is currently dominating.
The author insists on learning and applying the EVM principles as the basis of cost control.
The importance of EVM technique comes from providing a clear view of a project status
from cost and time perspectives. New softwares for cost control are introduced in this report
which apply the EVM principles. Achieving 100% cost control in construction projects is
almost impossible, therefore professionals should always consider safety factors. The
literature review revealed that quantity surveyors are advised to do more cost control rather
than monitoring costs. In other words, they should be more proactive rather than reactive as
cost control helps in taking decisions and affects the final budget on completion (BAC).

This report revealed the top five factors causing cost overruns in construction projects. They
are; inaccurate evaluation of project duration, design changes, risks and uncertainties,
financial management, and the non-performance of subcontractors and suppliers. Accurate
estimates are critical in order to define realistic project costs and budget. Usually, imposed
durations force the contractors to neglect quality standards. Risk margins increase with the
lack of detailed design, thus minimizing profit margins. Using of BIM technologies prevent
conflicts and interferences between different professions during design stages. This leads to
less design changes. Design changes should be reviewed according to the project’s scope,
determined, and addressed before implementing the change. Rick management is important
to predict and mitigate uncertainties and to keep the project in progress without stop. Main
contractors should conduct appraisal criteria for subcontractors and suppliers because the
non-performance of them is one of the factors causing cost overruns.

There is a trend towards applying cost efficiency among construction companies according to
this research. Construction companies aim to protect profit margins, increase productivity,
and protect the environment. Therefore, they are taking actions during bidding and
construction stages as listed in this report. This research also discusses the importance of
61
using BIM technologies in order to improve coordination and reduce conflicts. At last, some
other practices are discussed such as the use of off-site fabrication technologies and its rule in
more efficient construction.

62
 Chapter 6: Conclusions

The study found that around half of the respondents to the survey are confronting expenses
and time overruns. The outcomes demonstrated an absence of utilizing BIM in estimating
construction costs. Material costs information, work costs learning, and the decision of work
methods are vital for accurate estimates. The outcomes revealed that adding a safety factor to
cost estimates is the most utilized technique in response to risks and uncertainties. In
addition, it was found that the vast majority of the respondents don't apply earned value
management (EVM) techniques in cost control process. The study uncovered the main five
contributing elements to cost overruns; mistaken assessment of task span, design changes,
risks and uncertainties, financial management, non-performance of subcontractors and
nominated suppliers. The results demonstrated that there is a pattern towards expanding
efficiency and diminishing costs among construction associations.

The recommendations were that, estimators ought to utilize BIM tools to produce more
precise estimates and minimize clashes between various departments, they should combine
more than one estimating technique at the same time, risk administration could help
distinguishing dangers as well as opportunities, security margins ought to be studied in light
of the fact that it is critical because of risks and uncertainties, budgets should also include
funding requirements, the earned value management (EVM) method is highly recommended
to be utilized as the basis of costs control, at last, the cost control procedure ought be not only
responsive, but also proactive as it impacts the last spending sum (final budget).

Recommendations for further studies are; the utilization of earned value management (EVM)
method in construction firms, the building information modelling (BIM) rule in cost control,
and the accuracy of using BIM technologies in estimating construction costs. The author also
recommends applying case studies in further researches.

63
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Vico Software, Inc Vico Office Takeoff Manager | Model-Based Quantities | Quantity Takeoff
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manager/tabid/85287/Default.aspx (Accessed 10 April 2016).

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 Appendix A: Survey Letter

Cost Control in Building Construction : Inhibiting

Factors and Potential Improvements.

Aws Harb
Aristotelessteig 6, 10318 Berlin
WEM: 788-10-01-12-0
Germany
Email: harb84aws@gmail.com
Handy: +491797182995

Dear Sir/Madam,

This Questionnaire is part of a master thesis project at Berlin University for Applied Sciences,
aimed to investigate the cost control practices inside construction international firms during
construction phases, discuss the importance of costs estimation, determine cost overruns
factors and how to mitigate them, and best techniques and software’s for that. Your responses
are important in enabling me to obtain as full an understanding as possible of this topical
issue. People who can indeed add value to this research are who have worked in the
construction field especially who have worked in positions required them to control costs of
projects such as projects CEO's, Project Managers, Construction Managers, Operation
Managers, Financial Managers, Site Managers/Engineers, Quantity Surveyors, Procurement
Managers/Engineers, Cost Control Managers/Engineers, Planners, etc.

The questionnaire should take you about five to ten minutes to complete and it consists of six
small sections. Most of the questions are multiple choice and the others are for you to
comment. The information you provide will be treated in the strictest confidence. You will
notice that you are not asked to your name or address anywhere on the questionnaire.

The answers from your questionnaire and others will be used as the main data set for my
research project for my master degree in construction and real estate management at Berlin
University for Applied Sciences.

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I hope that you find completing the questionnaire enjoyable. Please complete the questionnaire
as soon as possible. It would also be great if you contribute to this research by distributing it
through your network in order to enrich it with more respondents from the field of building
construction.

If you have any question, please contact me on the underlined contact information. Looking
forward to hearing from you.

Yours faithfully

Aws Harb

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Appendix B: Survey Questionnaire

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