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By
A DISSERTATION
MASTERS TECHNOLOGIAE
in
CONSTRUCTION MANAGEMENT
in the
at the
UNIVERSITY OF JOHANNESBURG
2014
A DISSERTATION submitted in fulfilment of the requirements for the award of the degree
Masters Technologiae in Construction Management in the Faculty of engineering and the
built environment, Department of Construction Management and Quantity Surveying at the
University of Johannesburg, Republic of South Africa.
DECLARATION
I, MUKUKA MULENGA JOSEPH, do hereby declare that this dissertation is the result of
my own investigation and research, except to the extent indicated in the references and by
comments included in the body of the report and that it has not been presented elsewhere for
a similar purpose. It was submitted to the University of Johannesburg (Department of
Quantity Surveying and Construction Management), as a requirement to obtain a MASTERS
OF TECHNOLOGIAE degree in Construction Management.
Signature
Date
University of Johannesburg,
Doornfontein Campus
ACKNOWLEDGEMENTS
My gratitude to the Almighty God for guiding me this far in life. Without him I would have
not been able to do anything. I am also grateful to Him for granting me the strength to carry
out this research study.
I wish to express my sincere thanks and appreciation to the following people for their
assistance, guidance and contribution to this study:
My supervisor, Dr. Clinton Aigbavboa, for his professional and expert guidance
throughout the course of this study.
My co-supervisor, Professor Wellington Didibhuku Thwala for the support and
guidance during this study.
Statkon for data input and analysis. My special thanks go to Richard Devey for the
countless hours spent working with me.
All the respondents for their time in completing the questionnaire.
My brother and sisters for their support and encouragement (Silvia Mukuka, Peter
Chisulo Mukuka, Bwalya Elizabeth Mukuka, Chileshe Mukuka and Chibesa
Mukuka).
Dr. Innocent Musonda (Bashi Nkatya) for his expert guidance.
The Musonda Family: Patricia Musonda, Nkatya Musonda and Nkumbu Musonda.
Abena Munkonge too numerous to mention, but each and every one nakalebalika.
My friends: Gift Siwale, Mandisa Sibiya, Liphadzi Murendeni, Livhuwani Tshikhudo,
Justice Kekana, Tshomarelo Nchoe, Lugisile Maseko, Lerato Ngwenya, George
Kekana and Eke Chikezie.
My boss, Stewart Horne for the support and encouragement to always work hard.
Finally, I would like to express my profound gratitude to the Department of
Construction Management and Quantity Surveying, University of Johannesburg,
South Africa for giving me the opportunity to study with them.
ii
DEDICATION
I dedicate this Dissertation to my parents, Elias Chisulo Mukuka and Mary Bupe Mutangashi.
Tata na Mayo, nakalebalika.
iii
ABSTRACT
The construction industry is a key sector in the development and economic growth of South
Africa. However, the industry has not escaped the challenges facing other countries
worldwide in terms of delivering construction projects within budget and on time as
stipulated in the contracts. This study assesses the causes, effects and measures of minimising
construction projects cost and schedule overruns in the Gauteng Province of South Africa.
The data used in this study were derived from both primary and secondary sources. The
secondary data was collected via detailed review of related literature. The primary data was
collected through a questionnaire which was distributed to construction professionals. Out of
the 200 questionnaires sent out, 146 were received representing a 73% response rate.
Findings revealed that inadequate planning, change in project design, poor project
management, inadequate financial provision and inaccurate estimates were the major causes
of construction projects cost overruns. Furthermore the study also showed that the causes of
construction projects schedule overruns in Gauteng province included: slowness in decision
making process, reworks due to errors during construction, delays in approving major
changes in the scope of work, delay in material delivery, shortage of skilled equipment
operators and low productivity level of workers. Additionally, it was observed that
construction project delays, increased project cost due to extension of time, liability of
companies to bad debt and project abandonment. The study also revealed that extension of
time, cost overruns, loss of profit, disputes and poor quality of work due to hurrying the
project were the major effects of construction projects schedule overruns. Likewise, the study
revealed that adequate planning, proper pre-contract planning, proper project implementation
and management and good workmanship were the most effective ways of minimising
construction projects cost overruns. Finally the results revealed that proper project planning
and scheduling, effective strategic planning, site management and supervision, frequent
coordination between the construction team, availability of clear information and
communication channels were the most effective ways of minimising construction projects
schedule overruns in the Gauteng Province of South Africa. It is recommended that all
members of construction teams be trained and educated of the factors that cause project cost
and schedule overruns in order to minimise these overruns.
Key Words: Cost Overruns, Construction Industry, Gauteng Province, Schedule Overruns,
South Africa.
iv
TABLE OF CONTENTS
DECLARATION ..................................................................................................................................... i
ACKNOWLEDGEMENTS .................................................................................................................... ii
DEDICATION ....................................................................................................................................... iii
ABSTRACT........................................................................................................................................... iv
TABLE OF CONTENTS ........................................................................................................................ v
LIST OF TABLES ................................................................................................................................. xi
LIST OF FIGURES .............................................................................................................................. xii
LIST OF MAPS ................................................................................................................................... xiii
LIST OF ABBREVIATIONS ...............................................................................................................xiv
CHAPTER ONE ................................................................................................................................... 1
INTRODUCTION................................................................................................................................. 1
1.1
BACKGROUND ........................................................................................................................ 1
1.1.1
1.1.2
1.2
1.3
1.4
RESEARCH QUESTIONS......................................................................................................... 3
1.5
1.6
1.7
1.8
1.8.1
1.8.2
1..8.3
1. 8.4
1.8.5
LIMITATIONS ....................................................................................................................... 5
1.8.6
1.9
1.10
2.2
2.3
2.4
2.5
2.6
2.7
2.7.1
2.7.2
2.7.3
2.7.4
2.7.5
2.7.6
2.7.7
2.8
2.8.1
2.8.2
2.8.3
2.8.4
2.9
2.10
2.11
2.12
3.1
3.2
3.3
3.4
3.5
3.6
vi
3.7
3.8
3.9
3.10
CHAPTER FOUR............................................................................................................................... 37
CONSTRUCTION PROJECTS COST AND SCHEDULE OVERRUNS IN NIGERIA ............ 37
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
5.1
5.1.1
5.1.2
5.1.3
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
vii
5.11
6.2
6.3
6.4
6.5
6.6
SAMPLE ................................................................................................................................... 62
6.7
6.8
6.9
6.10
6.11
CONSISTENCY ....................................................................................................................... 66
6.12
6.13
6.14
6.15
7.2
7.2.1
7.3
8.2
8.2.1
8.3
Findings............................................................................................................................. 95
8.3.1
Findings............................................................................................................................. 96
8.4.1
8.5
8.5.1
8.6
Findings........................................................................................................................... 100
Findings........................................................................................................................... 101
8.6.1
Findings........................................................................................................................... 101
ix
8.7
CONCLUSIONS..................................................................................................................... 102
8.7.1
8.7.2
8.7.3
8.7.4
8.7.5
8.8
8.9
8.10
LIST OF TABLES
Table 6.1: Questionnaire survey .............................................................................................. 64
Table 6.2: Consistence test using the Cronbach's Alpha ......................................................... 67
Table 7.1: Causes of construction projects cost overruns ........................................................ 80
Table 7.2: Owner related causes of construction projects schedule overruns ......................... 82
Table 7.3: Contractor related causes of construction projects schedule overruns ................... 83
Table 7.4: Consultant related causes of construction projects schedule overruns ................... 84
Table 7.5: Material related causes of construction projects schedule overruns ....................... 85
Table 7.6: Equipment related causes of construction projects schedule overruns ................... 86
Table 7.7: Labour related causes of construction projects schedule overruns ......................... 87
Table 7.8: Causes of construction projects schedule overruns by external factors ................. 88
Table 7.9: Health and Safety related causes of construction projects schedule overruns ........ 89
Table 7.10: Effects of construction projects cost overruns ...................................................... 90
Table 7.11: Effects of construction projects schedule overruns .............................................. 91
Table 7.12: Measures of minimising construction projects cost overruns............................... 92
Table 7.13: Measure of minimising construction projects schedule overruns......................... 94
xi
LIST OF FIGURES
Figure 2. 1: Types of schedule overruns .................................................................................. 21
Figure 7.1: Respondents Gender ............................................................................................. 71
Figure 7.2: Respondents' age group ......................................................................................... 72
Figure 7. 3: Respondent's ethnicity .......................................................................................... 72
Figure 7. 4: Respondents' professional qualification ............................................................... 73
Figure 7. 5: Respondents' years of experience ......................................................................... 74
Figure 7. 6: Respondents' Education qualification .................................................................. 74
Figure 7. 7: Respondents' current employer ............................................................................ 75
Figure 7. 8: Respondents' construction projects involved in ................................................... 75
Figure 7. 9: Construction projects beyond original contract sum ............................................ 76
Figure 7. 10: Construction projects amounts overruns ............................................................ 77
Figure 7. 11: Construction projects behind schedule ............................................................... 77
Figure 7. 12: Period of schedule overrun ................................................................................. 78
Figure 7. 13: Types of projects which experience cost overruns ............................................. 79
Figure 7. 14: Types of projects that experience schedule overruns ......................................... 79
xii
LIST OF MAPS
Map 6.1: Map of Gauteng Province, South Africa .................................................................. 61
xiii
LIST OF ABBREVIATIONS
EOT
Extension of Time
FDOT
GDP
Rank
SA
South Africa
SD
Standard deviation
SPSS
UJ
University of Johannesburg
USA
ZAR
xiv
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND
This dissertation is on the causes, effects and measures of minimising construction projects
cost and schedule overruns in South Africa. This introductory chapter outlines the basic
background information of the study. This chapter highlights various components of the study
and provides the structure which the study followed. The components of the study included
the research problem, research questions, the objectives of the study, the purpose, rationale,
scope and limitations and definitions of key terms. In order to bring about some background
information, this chapter highlights the importance of delivering construction projects within
budget and on time.
Memon, Rahman and Abdul Azis (2011:58) argue that cost is among the major
considerations throughout the project management life cycle and can be regarded as one of
the most important parameters of a project and the driving force of project success. Olawale
and Sun (2010) state that despite the availability of various control techniques and project
control software many construction projects still do not achieve their cost objectives. Hence,
despite its proven importance, it is not uncommon to see a construction project failing to
achieve its objectives within the specified cost (Memon, Rahman, Asmi, and Azis, 2010:42).
Like other countries, construction industry in South Africa is also facing a lot of challenges
such as the delay in completing projects on time, expenditure exceeding budgets and building
defects that are seen too soon after completion of projects. To avoid construction cost
1
overruns, the very first and most important step is to identify and understand the factors
responsible for the overruns (Memon, Rahman, Asmi and Azis 2010:1). According to Love,
Sing, Wang, Irani and Thwala (2014:141) reworks during construction as a result of design
changes, errors and omission are the major contributors of overruns in projects. Park and
Papadopoulou (2012:196) state that construction cost overruns mean negative publicity for
the design team and loss of client confidence. The repercussions for contractors are similar as
they see their profit margins shrink. Hence the first aim of this study was to identify the
causes, effects and measures that need to be taken to minimise construction cost overruns in
the Gauteng Province of South Africa.
overruns as an act or event that extends the time to complete or perform an act under the
contract. Also, Assaf and Al-Hejji (2006: 349), define schedule overruns as the time overrun
either beyond completion date specified in a contract, or beyond the date that the parties
agreed upon for delivery of a project. It is basically a project slipping over its planned
schedule and is considered as common problem in construction projects worldwide. Assaf
and Al-Hejji (2006: 349) further illustrate that, to the owner, schedule overruns means loss of
revenue through lack of production facilities and rent-able space or a dependence on present
facilities. In some cases, to the contractor, schedule overruns means higher overhead costs
because of longer working periods, higher material costs through inflation, and due to labour
cost increases. Alkhathami (2004:14) states that schedule overruns can be defined as extra
time required to finish a given construction project beyond its original planned duration,
whether compensated for or not.
Theodore (2009: 25) classifies delays in project completion time into two, those caused by
the client and those caused by the contractor. Delays caused by the client such as late
submission of drawings and specifications, frequent change orders, and incorrect site
information generates claims from both the main contractors and sub-contractors which many
times entail lengthy court battles with huge financial repercussions (Theodore, 2009: 25).
Delays caused by contractors can generally be attributed to poor managerial skills. Lack of
planning and a poor understanding of accounting and financial principles have led to many a
contractors downfall (Theodore, 2009: 25). The desire to finish a project on time, under the
2
planned budget, with the highest quality, and in a safe manner are common goals for all
contract parties, including the owner, contractor, and consultant (Alkhathami, 2004:14).
Hence, the second aim of this research was to identify the causes of schedule overruns in the
South African construction industry and the types of schedule overruns that occur during the
construction process. Further, it aimed at identifying the effects of these schedule overruns
and eventually establish the measures that can be taken to remedy late delivery of
construction projects in South Africa.
1.2
The aim of this study is to gain insight into the causes cost and schedule overruns in the
South African construction industry. The second aim of the research is to further add to the
knowledge base on the effects of cost and schedule overruns in the South African
construction industry. This study will also investigate measures of minimising construction
projects cost and schedule overruns in the South African construction industry.
1.3
PROBLEM STATEMENT
Most construction projects in South Africa are faced with a number of problems. However,
cost and schedule overruns are the most significant problems faced by the industry. Cost and
schedule overruns impact negatively on the construction industry; hence the need to find
solutions to factors that cause these overruns. The problem investigated in this research
project was to determine the factors causing construction projects cost and schedule overruns,
determine their effects and further determine measures of minimising cost and schedule
overruns in South Africa.
1.4
RESEARCH QUESTIONS
The following set of questions were used to guide the integrated study of cost and schedule
overruns on construction projects in South Africa.
1. What are the factors that cause cost overruns on construction projects in South Africa?
2. What are the factors that cause schedule overruns on construction projects in South
Africa?
3. What are the effects of cost overruns on construction projects in South Africa?
4. What are the effects of schedule overruns on construction projects in South Africa?
5. What measures can be taken to minimise cost and schedule overruns on construction
projects in South Africa?
3
1.5
1. To determine the factors that causes cost overruns on construction projects in South
Africa.
2. To determine the factors that causes schedule overruns on construction projects in
South Africa.
3. To analyse the effects of cost overruns on construction projects in South Africa.
4. To ascertain the effects of schedule overruns on construction projects in South Africa.
5. To establish measures that can be taken to minimise cost and schedule overruns on
construction projects in South Africa.
1.6
The motivation for conducting this research was to improve the knowledge base of cost and
schedule overruns in the South African construction industry. The results of this study will
contribute towards a better understanding of the causes, effects and measures on minimising
construction projects cost and schedule overruns by construction professionals. Furthermore,
this study will help construction professionals in understanding the different factors that
cause cost and schedule overruns during the construction processes.
1.7
Project successes are usually measured on the basis of time, quality and works done within
budget, hence the need to overcome cost and schedule overruns on construction projects.
Cost and schedule overruns on construction projects can lead to disputes among construction
parties, escalations of original contract price and contract terminations if not well managed.
Therefore, the purpose of this study is to determine the factors causing project cost and
schedule overruns, analyse their effects and ascertain measures of minimising cost and
schedule overruns in Gauteng Province of South Africa.
1.8
population sample. The instruments used in collecting data and methods implemented to
maintain validity and reliability of the instruments are also described.
1.8.5 LIMITATIONS
This research assessment was on construction professionals in Gauteng Province in South
Africa, with the respondents being architects, quantity surveyors, civil engineers, construction
managers, construction project managers, project managers and other professionals that are
involved in construction projects in the province. This study determines the factors causing
construction projects cost and schedule overruns and their effects. It, however, establishs the
measures that will be employed to minimise cost and schedule overruns in Gauteng Province,
South Africa.
participants who responded to the research questionnaire, was that their input would be kept
confidential and only used for academic purposes. Respondents to the questionnaire had the
right not to answer questions that they felt were not appropriate without any coercion.
1.9
OVERVIEW OF CHAPTERS
CHAPTER 1
Introduction
This chapter defines the problem that the researcher aimed to investigate and shows how the
investigation of the problem was done. The introduction gives an overview of the problem
and the research questions. This chapter, therefore, gives a framework of the whole study.
CHAPTER 2
This chapter reviews literature on the same topic by scholars and researchers in the field of
Construction Management. Literature review gives the readers knowledge and ideas that have
been established by other researchers on the topic. Hence this chapter gave the readers an
understanding of the causes of project cost and time overruns, their effects and further the
measures of minimising cost and time overruns in the construction industry.
CHAPTER 3
This chapter reviews literature on the same topic by accredited scholars and researchers in
Malaysia. Hence this chapter gives the reader an understanding of the causes of construction
projects cost and time overruns, their effects and further, the measures of minimising cost and
time overruns in the Malaysian construction industry.
CHAPTER 4
This chapter reviews literature on the same topic by scholars and researchers in Nigeria.
Hence this chapter gives the reader an understanding of the causes of construction projects
cost and time overruns, their effects and further the measures of minimising cost and time
overruns in the Nigerian construction industry.
CHAPTER 5
This chapter reviews literature on the same topic by scholars and researchers in the field.
Literature review gives the readers knowledge and ideas that have been established by other
researchers on the topic. This chapter will present the concept of cost and schedule overruns
in South Africa, Uganda, Ghana, America and India using case studies.
CHAPTER 6
Research Methodology
This chapter shows the methods and plans that the researcher used to obtain participants and
further collect information from the participants. In this study, the researcher focused on
literature review and the questionnaire survey targeted at construction professionals in
Gauteng, South Africa. Furthermore, statistical methods were used to analyse the data
collected from the questionnaire survey are described in this chapter.
CHAPTER 7
Once an appropriate design and suitable means of measuring relevant variables had been
identified and adopted, the findings were analysed using an appropriate procedure. Statistical
techniques were adopted to analyse data and drew up findings. The analysed results then
provided a feedback with respect to the originally formulated questions.
CHAPTER 8
In Chapter 8 the findings analysed in Chapter 7 are discussed and linked to the literature
reviewed in order to establish if the research objectives were achieved and that all the
research questions were answered.
1.10
CHAPTER SUMMARY
In this chapter, the various components of the study were introduced. The research problem,
rationale, research questions and the structure of the study was discussed. It is against this
background that an understanding of the present research was attained. This chapter also
highlighted the importance of delivering construction projects on time and within budget.
The next chapter literature related to constructions project cost and schedule overruns from
various developed and developing countries are presented.
CHAPTER TWO
OVERVIEW OF THE CAUSES, EFFECTS AND MEASURES OF
MINIMISING CONSTRUCTION PROJECTS COST AND SCHEDULE
OVERRUNS
2.1
CHAPTER INTRODUCTION
This chapter gives a theoretical review and conceptual perspective of construction projects
cost and schedule overruns in the construction industry. Previous theories of construction
projects cost and schedule overruns, such as causes of cost and schedule overruns, effects of
cost and schedule overruns and measures of minimising cost and schedule overruns in the
construction industry are discussed in this chapter as well.
2.2
Cost is among the major considerations throughout the project management life cycle and can
be regarded as one of the most important parameters of a project and the driving force of
project success. Despite its proven importance, it is not uncommon to see a construction
project failing to achieve its objectives within the specified cost (Memon et al, 2010:42). AlNajjar (2008:5) defines cost overruns as the change in contract amount divided by the
original contract award amount. However, Zhu and Lin (2004) argue that cost overrun can be
defined as excess of actual cost over budget.
2.3
Cost overruns do not just occur naturally. There are a number of factors during the
construction process that when not managed properly can lead to cost overruns. Al-Najjar
(2008:117) identified a total of forty two factors that cause cost overruns and ranked them as
follows: technical incompetence, poor organizational structure, and failures of the enterprise;
lack of cost reports during construction stage; inadequate project preparation, planning and
implementation; delays in issuing information to the contractor during construction stage;
lack of coordination at design phase; change in the scope of the project or in Government
policies; Some tendering manoeuvres by contractors, such as front- loading of rates;
incomplete design at the time of tender; bad allocation of labour inside the site and delays in
decisions making by Government were ranked the top ten causes of cost overruns. Other
8
maintenance period "one year "; and over time work hours of supervising engineer are paid
by the contractor. Further, Subramani, Sruthi and Kavitha (2014:5) says that the major cause
of cost overruns in India are slow decision making by clients, poor design or delay in
providing design and non-performance of sub-contractors. Furthermore, Enshassi, Al-Najjar
and Kumaraswamy (2009:143) state that the major causes of cost overruns in Gaza include:
escalation of materials prices due to continuous border closures, delay in construction, supply
of raw materials and equipment by contractors, fluctuations in the cost of building materials,
project materials monopoly by some suppliers and unsettlement of the local currency in
relation to dollar value.
However, these factors generally not in keeping with the factors identified in the study by
Azhar, Farooqui and Ahmed (2008:504) in which the top ten factors were ranked as follows:
fluctuation in prices of raw materials; unstable costs of manufactured materials; high cost of
machinery; lowest bidding procurement method; poor project management and poor cost
control; long periods between design and time of bidding or tendering; wrong method of cost
estimation; additional work; improper planning and inappropriate government policies.
Further, Alhomidan (2013:4) says that the critical factors that cause cost overruns include:
internal administrative problems, payments delay, poor communication between construction
parties and delays in decision making.
The study by Olawale and Sun (2010:17) used both a questionnaire survey and interviews,
the study obtained the following results which were ranked as follows: design changes; risk
and uncertainty associated with projects; inaccurate evaluation of projects time or duration;
non-performance of subcontractors and nominated suppliers; complexity of works; conflict
9
2.4
Effects are the consequences that will be encountered when cost overruns occur in a
construction project. Nega (2008:63) states that cost overruns have obvious effects for the
key stakeholders in particular, and on the construction industry in general. To the client, cost
overruns imply added costs over and above those initially agreed upon at the onset, resulting
in less returns on investment. To the end user, the added costs are passed on as higher rental
or lease costs or prices. To the professionals, cost overruns imply inability to deliver value for
money and could well tarnish their reputation and result in loss of confidence reposed in them
by clients. To the contractor, it implies loss of profit for non-completion, and defamation that
could jeopardize his or her chances of winning further jobs, if at fault. To the industry as a
whole, cost overruns could bring about project abandonment and a drop in building activities,
bad reputation, and inability to secure project finance or securing it at higher costs due to
added risks (Nega, 2008:63).
The study of Nega (2008:103) further identified the following effects of cost overruns: delays
during construction; supplementary agreement; additional cost, budget short fall; adversarial
relationship between participants of the project; loss of reputation to the consultant, the
consultant will be viewed as incompetent by project owners; high cost of supervision and
contract administration for consultants; delayed payments to contractors; the contractor will
suffer from budget short fall of the client; poor quality workmanship; dissatisfaction on the
part of project owners and consequently end users; negative attitude towards the construction
10
industry by the higher public authority and by the society as a whole; the contribution of the
construction industry to the growth of national economy of the country will be less; cost
overruns in construction projects prevent the planned increase in property and service
production from taking place, and this phenomenon in turn affects, in a negative way, the rate
of national growth; weakens the growth of the construction industry by eroding mutual trust
and respect; pours money unnecessarily to the project at hand at the expense of other new
projects; distorts fair and equitable resource distribution; discourage investment, the
investment on building construction by public clients will be less, hence the number of
projects will decrease in the future; creates sceptical outlook on appraisal of other new
construction projects; some project owners (clients) become reluctant to effect additional
payments to contractors and they view the cost overrun as a fabricated thing. This will propel
delays on the project and becomes a source of dispute among participants of the project; and
creates frustration on stakeholders (Nega, 2008:103).
The study by Eshofonie (2008:20) identifies four effects of cost overruns and defines them as
follows:
Company or firm liability to insolvency and liability of the companies or firms to bad
debt: Any company is vulnerable to the threat of bankruptcy and insufficient cash
flows that could halt its otherwise timely and safe operations. Cash flows of its
construction projects should therefore receive full attention. They must be optimized
within their constraints framework that is set by a schedule that comprises many cost
inducing activities of a productive or an administrative nature, milestones, and
deadlines; and a budget with its financial terms and conditions that are specific to the
market, the company, or its planned project, for example, available credit and interest
rates. However, cash flows themselves have proven to be notoriously difficult to
model in an integrated manner as their individual elements are of very different
natures; some of them are fixed while others are variable, conditional, or even cursive
(Eshofonie, 2008:20).
11
Increased project cost due to extension of time: Longer project duration means that
more resources will need to be allocated to the project, which then increases the
project costs (Eshofonie, 2008:20).
2.5
When all the causes and effects of cost overruns and been identified, it is necessary to also
identify measures of minimising cost overruns on construction projects. The study by Arcila
(2012:34) identified the following as the measures that can be used to minimise cost
overruns: adequacy of funding; adequacy of plans and specifications; budget updates;
constructability; economic risks; owner's involvement and frequent feedback; owner's
commitment to established schedules and budget; project manager commitment and
involvement; project manager competency and experience; realistic obligations and clear
objectives and risk identification and management. Kamaruzzaman (2010:113) discuss that
the major measures of minimising cost overruns on construction projects include: proper
project costing and financing; competent personnel; appropriate scope definition; proper cost
control and risk management during project execution.
However, the study by Olawale and Sun (2010:24) identifies four categories of measures that
can be used to minimise cost overruns on construction projects, these were explained as
follows:
Preventive measures: These are precautionary measures that are put in place as a
defence to the inhibiting factors. Most of these measures are active measures that
would be put in place during the planning stage of a project. (Olawale and Sun,
2010:24).
Predictive measures: Predictive measures are put in place in order to spot potential
problems to the control process in the future so that they can be stopped from
12
happening or be prepared for them should they happen. Most of these measures
actually utilise some tools or techniques to look into the current situation in a bid to
spot potential future problems (Olawale and Sun, 2010:24).
Corrective measures: These are measures that are utilised to mitigate the effect of
the project control inhibiting factors by acting as a remedy. These measures are
reactive measures that only act after the event. They may not be as effective as
preventive or predictive measures but they aim to bring the situation back on track or
at least stop the rot (Olawale and Sun, 2010:24).
2.6
The aim of any construction project is to successfully complete the project on time, within
budget and with high quality. This section focuses on the completion of projects on schedule
thus overcoming delays. Alkhathami (2004:14) defines schedule overruns as extra time
required to finish a given construction project beyond its original planned duration, whether
compensated for or not. Mohamad (2010:1) says schedule overruns are an act or event that
extends the time to complete or perform an act under the contract. Also, Assaf and Al-Hejji
(2006:349), defined schedule overrun as the time overrun either beyond completion date
specified in a contract, or beyond the date that the parties agreed upon for delivery of a
project. It is basically a project slipping over its planned schedule and is considered as
common problem in construction projects worldwide.
13
2.7
Causes of schedule overruns are factors or events that occur before and during the
construction process that will affect the time of completing a project. Ali, Smith, Pitt, and
Choon (2012:2) states that there are four factors that causes schedule overruns and
categorized them into the following categories: contractor- related factors, consultant-related
factors, client-related factors and external factors. Motaleb and Kishk (2010:1154) five
factors that can cause schedule overrun and these include change orders, slow decision
making by clients, lack of capability of client representative, construction financial
difficulties and late delivery of materials. Furthermore, Sambasivan and Soon (2007:524),
describe the following as the main causes of construction project schedule overruns:
contractors improper planning; contractors poor site management; inadequate contractor
experience; clients finance and payments for completed work; problems with subcontractors;
material shortages ; labour supply; equipment availability and failure; lack of communication
between parties; mistakes during the construction stage.
Hoverer; the current study adopted the categories studied by Theodore (2009:25-36) as they
were more comprehensive categories of causes of construction projects schedule overruns.
clients irregular payment to the main contractor are the major owner-related causes of
schedule overruns. The study by Theodore (2009) identified nine causes of schedule overruns
in this category and ranked them as follows:
15
16
The list below shows the causes identified by Theodore (2009), and they include:
of equipment as the top most causes of schedule overruns and they were both ranked first in
the study. Low level of equipment-operators skill was also identified as a major cause of
schedule overruns related to equipment.
Equipment breakdowns;
Shortage of equipment;
Shortage of labour;
Wei (2010:44) identified low productivity level of workers as the second highest cause of
schedule overruns on construction projects.
18
Theodore (2009) identified the following causes of schedule overruns cause by external
factors:
2.8
There are a number of activities which, when not managed properly, can lead to schedule
overrun in the construction industry worldwide. According to Wie (2010:5) the classification
of schedule overruns is dependent upon the type and magnitude of the effect that an activity
will have on the project and who is responsible for the overrun among the stakeholders.
This research adopts a more comprehensive categorises of schedule overruns as outlined
below and discussed in detail in the subsequent session:
I.
Critical or non-critical
II.
Excusable or non-excusable
III.
Compensable or non-compensable
IV.
Concurrent or non-concurrent
b.
c.
19
d.
The physical constraint of the project, i.e. how to build the job from a practical
perspective.
Saleh, Abdelnaser and Abdul (2009:267) states that non-excusable schedule overruns are
caused solely by the contractor or its suppliers. The contractor is generally not entitled to
relief and must either make up the lost time through acceleration or compensate the owner.
Non-excusable delays are events that are within the contractors control or that are
foreseeable. These are some examples or non-excusable delays are: late performance of subcontractors, untimely performance by suppliers and faulty workmanship by the contractor or
sub-contractors (Theodore, 2009:25).
overruns are caused by the owner or the owner's agents. An example of this would be the late
release of drawings from the owner's architect.
Non-compensable schedule overruns mean that although an excusable overrun may have
occurred, the contractor is not entitled to any additional compensation resulting from the
excusable schedule overrun (Theodore, 2009:25).
Figure 2.1 summarises the types of construction projects schedule overruns. The figure
illustrates that there are two different types of excusable schedule overruns and these are
compensable excusable schedule overruns and non-compensable schedule overruns.
Compensable excusable schedule overruns are overruns that are beyond the control of the
contractor, however, they are within the control of the owner hence the contractor is entitled
to compensation. Non-compensable excusable schedule overruns are beyond the control of
21
both the contractor and the owner, hence no compensation is due to any party. Figure 2.1
further illustrates that the second type of schedule overruns is non-excusable overruns. Nonexcusable schedule overruns are within the control of the contractor, hence the owner may be
entitled to compensation.
2.9
Effects of schedule overruns are the consequences that will occur when the causes of
schedule overruns are not identified and worked on effectively. Pourrostam and Ismail
(2011:454) identify and rank the effects of construction project schedule overruns as follows;
1. Time overrun: When the stipulated completion time is pushed forward, the project is
said to have experienced schedule overrun (Sunjka and Jacob, 2013:7). Schedule
overrun refers to the late completion or late delivery, from the time specified or
agreed by all parties of the construction project. The main causes for the schedule
overrun are financial problems, late payments for the completed work and on-going
work, change orders, organizational changes etc. (Haseeb et al, 2011:34).
2. Cost overrun: When a project is completed at a cost higher than what was budgeted,
it is said to experience a budget overrun (Sunjka and Jacob, 2013:7). Ramabodu and
Verster (2010) cited in Kikwasi (2012:54) identify critical factors that cause cost
overruns in construction projects as changes in scope of work on site, incomplete
design at the time of tender, contractual claims (extension of time with cost), lack of
cost planning and monitoring of funds, delays in costing variations and additional
works. These critical factors in turn are the delay factors. According to Pourroustam
and Ismail (2011), cost overruns can be traced back to root causes that are often
associated with the preliminary phases, project planning or design, that such root
causes include; poor estimation of quantities, design variations or errors, project
schedule changes, scope changes, unexpected site conditions, rising costs of materials
and labour (largely due to inflation), and or unforeseen events. Pourroustam and
Ismail (2011:450) identify the following as the causes of cost overruns; increase in
cost of labour, working force, materials and equipment and other factors. The main
causes of the cost overrun are change orders, mistakes in the contract, changes in
drawings etc. (Haseeb et al, 2011:34).
22
3. Dispute and Claims: Disputes and claims arise because of the losses incurred
through schedule overruns (Sunjka and Jacob, 2013:7). Disputes normally come down
in assessing three aspects of overruns: whose fault was it or who caused the overrun,
how much delay occurred and, consequently, what monetary awards should be made
(Ahmed et al, 2002:12). The Critical Path Method is primarily useful in addressing
the second of these conditions and in some cases can be used to assist in determining
at least a portion of the monetary awards (Ahmed et al, 2002:12). The main causes of
disputes are slow or late payments for completed or ongoing work, client interference,
neighbor issues, change in requirements, distribution of work, less communication
within parties, subcontractor issues etc. (Haseeb et al, 2011:34).
4. Arbitration: the study by Sunjka and Jacob (2013:7) states that projects would have
extra costs and time consequences related to the engagement of professional
arbitrators in cases of disputes that go through arbitration.
5. Litigation: Disputes, due to schedule overruns, can lead to court cases for resolution
especially when large penalties are at stake (Sunjka and Jacob, 2013:7). Haseeb et al
(2011:34) defines litigation as negotiations and going to court to solve the problems
and it takes a long time to solve the problems. The main causes are late or no
payments for completed work or on-going work and change orders (Haseeb et al,
2011:34).
2.10
Wei (2010:18) illustrates that when construction schedule overrun occurs, there is no
question that the owner suffers financially. But the extent to which the owner can recover loss
of income from the contractor, and more importantly minimise the risk that such overruns
will occur, depends largely on how the construction contract is drawn up.
Tabish and Jha (2011):66) identify five successful criterions that can be used to deliver
construction projects within schedule. The study further revealed that there are independent
measures that can be taken in each category to reduce schedule overruns. These criteria are as
follows: schedule performance criterion, cost performance criterion, quality performance
criterion, safety performance criterion and no-dispute performance criterion (Tabish and Jha,
2011:67).
24
Aiyetan, Smallwood, and Shakantu (2011:25) identified twelve factors that would influence
project delivery time, these includes: construction planning and control techniques;
management style; economic policy; the quality of management during construction; site
access conditions; site ground conditions; motivation of workers, constructability of designs;
socio and political conditions; client understanding of the design;
procurement and
construction processes; the quality of management during design; and physical environmental
conditions. Saleh et al. (2009:270) reveal that construction schedule overruns can be
mitigated by applying the flowing factors on construction projects: making risk management;
proper planning; proper payment from client; prepare insurance claims; good scheduling
programme; client representative for project; selecting expert understand their assignment;
clear contract and BOQ and compute the amount of financial damages.
Wei (2010:57) identify fifteen ways of minimising schedule overruns and ranks them as
follows;
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
This study adopted these ways, as they were more comprehensive factors that can minimise
construction project schedule overruns. These measures of minimising construction schedule
overruns are in agreement with the study by Majid L.A. (2002), where these measures were
identified as the most effective ways of reducing construction project schedule overruns.
25
2.11
LESSONS LEARNT
The literature reviewed in this chapter showed that the major causes of cost overruns include
the following: Technical incompetence, poor organizational structure, and failures of the
enterprise; lack of cost reports during construction stage; inadequate project preparation,
planning and implementation; delays in issuing information to the contractor during
construction stage; lack of coordination at design phase; change in the scope of the project, in
Government policies; some tendering manoeuvres by contractors, such as front- loading of
rates; incomplete design at the time of tender; bad allocation of labour inside the site and
delays in decisions making by Government, failure of specific coordinating were the top ten
identified causes of cost overruns. The effects of construction project cost overruns were also
identified in the literature and they include the following: delays; supplementary agreement;
additional cost, budget short fall; adversarial relationship between participants of the project;
loss of reputation to the consultant, the consultant will be viewed as incompetent by project
owners; high cost of supervision and contract administration for consultants; delayed
payments to contractors; the contractor will suffer from budget short fall of the client; poor
quality workmanship and dissatisfaction by project owners and consequently by end users
were the top ten effects of cost overruns.
The study further identified the following as the measures that can be used to minimise cost
overruns: Adequacy of funding; adequacy of plans and specifications; budget updates;
constructability; economic risks; owner's involvement and frequent feedback; owner's
commitment to established schedules and budget; project manager commitment and
involvement; project manager competency and experience; realistic obligations and clear
objectives and risk identification and management.
The literature further revealed that the causes of schedule overruns can be categorised into
seven groups namely: owner related, contractor related, consultant related, material related,
equipment related, labour related and causes by eternal factors. Further, literature showed that
there in independent causes of schedule overruns in each of the seven groups. In the owner
related category of schedule overruns, Delay in progress payments by owner were identified
by most scholars as the major cause of schedule overruns associated with the client.
Furthermore, in the contractor related category, delays in sub-contractors work was
identified as the major cause of schedule overruns. The study found that poor contract
management was the major cause of schedule overruns by consultants. However, late
26
approval of changes in the scope of works by consultants and late delivery of materials to site
showed to be the major cause of schedule overruns related to materials. Additionally, in the
equipment related causes of schedule overruns, equipment breakdowns was identified as the
major cause of schedule overruns. Labour supply and effects of subsurface and ground
conditions were identified by the scholars as the major causes of schedule overruns in the
labour related category and causes of schedule overruns by external factors category
respectively.
2.12
CHAPTER SUMMARY
From the review of literature in this section, it was found that construction project cost and
schedule overruns impact negatively on the construction industry and the economy of any
country with devastating implications such as extension on time, cost overruns, disputes and
claims and can eventually lead to total abandonment of construction projects. The next
chapter reviews literature related to cost and schedule overruns in Malaysia.
27
CHAPTER THREE
CONSTRUCTION PROJECTS COST AND SCHEDULE OVERRUNS IN
MALAYSIA
3.0
CHAPTER INTRODUCTION
This chapter gives a theoretical review and conceptual perspective of construction projects
cost and schedule overruns in the Malaysian construction industry. Previous theories of
construction projects cost and schedule overruns in Malaysia, such as causes of cost and
schedule overruns, effects of cost and schedule overruns and measures of minimising cost
and schedule overruns in the Malaysian construction industry are discussed in this chapter.
However, very few or no studies have been done with regards to effects of cost overruns.
3.1
The construction industry is one of the main contributors towards the development of nations,
providing the necessary infrastructure and physical structures for activities such as
commerce, services and utilities (Papargyropoulou, Preece, Padfield and Abdullah, 2011:2).
The overview on Malaysian construction sector report (2012:8) states that the Malaysian
construction sector is divided into four subsectors; residential, non-residential, civil
engineering and special trade works. Special trade works refer to mainly maintenance
activities such as electrical, tiling, plumbing, painting and carpentry. The report further
revealed that since the 1990s, the construction sector in Malaysia has undergone a series of
ups and downs. In the period of 1989 to 1997, the construction sector registered a
commendable growth of 14.3% vis--vis economic growth of 9.2%. The boom was caused by
the implementation of several large-scale projects such as the Kuala Lumpur International
Airport, Petronas Twin Towers, Sepang International Circuit and the development of
Putrajaya and Cyberjaya which today stand as the countrys famous iconic buildings.
Furthermore, after this boom period, from 2000 to 2006, the number of construction projects
went down tremendously as most of the large-scale projects had been completed and
contractors were going through a difficult time particularly after the Asian Financial Crisis,
during this time, the construction sector grew marginally by 0.7%. However, construction of
new infrastructure projects between the years 2007 to 2011 resulted in an average growth rate
28
of 5.9%. During this period, the country saw many developments in the rail, road and housing
sectors. The Governments stimulus package implemented during 2008/2009 also played an
important role in reviving the construction industry and subsequently the economy as a
whole.
The overview on Malaysian construction sector report (2012:8) further revealed that the year
2011 also saw recovery in the residential and non-residential sectors. The public civil
engineering projects moderated as compared to the private projects. Private sector
construction activities have increased especially in the area of LNG regasification (oil and
gas) and the development of oil terminal. Other activities that supported the growth of the
construction sector included upgrading, repair and maintenance works of public buildings,
construction of rural roads and works on improving the rural basic infrastructure. Due to
favourable business activities and increased consumer spending, there was also demand for
retail spaces, thus the number of shopping complexes and hotels also increased during this
period. The Malaysian construction industry further expanded strongly in 2012 by 18.9% in
the first half of the year supported by strong activities in the residential and civil engineering
subsectors. The future of the sector is foreseen to be robust given many construction projects
in the pipeline (The overview on Malaysian construction sector report, 2012:8).
3.2
The problem of overruns in the construction industry is a global phenomenon and the
construction industry in Malaysia is no exception (Sambasivan and soon, 2006:1). The
construction industry is a highly dynamic sector and plays very important role in the
development of any country and hence in Malaysia, construction industry started a rapid
growth since its independence. However, the construction industry in Malaysia is facing
chronic problems including poor performance of time and cost, construction waste, poor
productivity and over dependent of foreign workers. Of these challenges, poor time and cost
performance is considered as a critical issue (Memon, Rahman and Azis, 2012:45). Cost and
schedule overruns problems significantly affect the final prices of construction projects. This
trend of overruns in construction projects has become a global concern, it also has negative
impacts on low or middle class people in achieving the basic need for prosper life like house
(Memon and Rahman, 2013:78).
29
Like other countries, the construction industry in Malaysia also faces a lot of challenges such
as delays in the completion of projects on time, the expenditure exceeding the budget, the
building defects and over dependent of foreign workers. The ultimate effects of project delay
also results in exceeding cost. This leads to serious need of addressing the critical issue of
construction cost overrun. To avoid construction cost overrun, very first and most important
step is to identify and understand the causes and factors responsible for that (Memon,
Rahman and Azis, 2011:1).
3.3
Causes of cost overruns on construction projects are those factors that lead to an overrun in
the original budget. The study by Rahman, Memon and Abd. Karim (2013:290) identified the
following as the top ten causes of cost overruns in large construction projects in Malaysia:
fluctuation of prices of material; cash flow and financial difficulties faced by the contractor;
poor site management and supervision; lack of experience; schedule delay; inadequate
planning and scheduling; incompetent subcontractors; mistakes and errors in design; frequent
design changes and poor financial control on site. Ali and Kamaruzzaman (2010:112) discuss
the following as the major causes of construction project cost overruns in Malaysia:
inaccurate or poor estimation of original cost; inflation of project costs; improper planning;
fluctuation in price of raw materials; poor project management; lack of experience; obsolete
or unsuitable construction equipment and methods; unforeseen site conditions; mistake in
design; insufficient fund; poor contract management; high cost of machineries and
construction cost underestimation. These results were not in agreement with the results of
Memon el al (2011:65) where poor design and delays in design; unrealistic contract duration
and requirements imposed; lack of experience; late delivery of materials and equipment;
relationship between management and labour; delay in preparation and approval of drawings;
inadequate planning and scheduling; poor site management and supervision; mistakes during
construction and changes in material specification and type were identified as the top causes
of cost overruns in the Malaysian construction industry. Furthermore, Memon et al. (2012:48)
revealed that design and documentation issues; financial resource management; project
management and contract administration; contractors site management; information and
communication technology; material and machinery resource; labour (human) resource and
external factors as the major factors affecting cost performance on construction projects.
30
3.4
When all the causes of cost overruns have been identified and understood into details, it is
now necessary to identify the measures of mitigating these costs and schedule overruns.
Memon et al, (2012:50) identified the following as the measures of mitigating cost overruns
in Malaysia: effective strategic planning; proper project planning and scheduling; effective
site management and supervision; frequent progress meeting; proper emphasis on past
experience; use of experienced subcontractors and suppliers; use of appropriate construction
methods; use up to date technology utilization; clear information and communication
channels; frequent coordination between the parties; perform a preconstruction planning of
project tasks and resources needs; developing human resources in the construction industry;
comprehensive contract administration; systematic control mechanism and improving
contract award procedure by giving less weight to prices and more weight to the capabilities
and past performance of contractors (Memon et al, 2012:50). The study by Ali and
Kamaruzzaman (2010:113) discuss the following as the measures of minimising cost
overruns on construction projects: proper project costing and financing; competent personnel;
appropriate scope definition; proper cost control; risk management during project execution;
appropriate contractual framework; increase supply of materials; realistic cost estimation and
efficient management.
Azis, Memon, Rahman and Abd. Karim (2013:2625) identified fifteen measures of mitigating
construction cost overruns and ranked them as follows; effective strategic planning; proper
project planning and scheduling; effective site management and supervision; frequent
progress meeting; proper emphasis on past experience; use of experienced subcontractors and
suppliers; use of appropriate construction methods; use up to date technology utilization;
clear information and communication channels; frequent coordination between the parties;
perform a preconstruction planning of project tasks and resources needs; developing human
resources in the construction industry; comprehensive contract administration; systematic
control mechanism and improving contract award procedure by giving less weight to prices
and more weight to the capabilities and past performance of contractors.
31
3.5
The problem of schedule overruns in the construction industry is a global phenomenon and
the construction industry in Malaysia is no exception (Sambasivan and Soon, 2007:517).
Schedule overruns on construction projects is a situation where the project cannot be
completed under the planned time. It is a common issue faced in the construction industry all
over the world especially in developing countries. In the Malaysian construction industry,
17.3% of construction projects experience more than 3 months schedule overrun and some of
them are abandoned (Ali, Smith, Pitt and Choon, 2012:10). Schedule overrun can be defined
as late completion of works as compared to the planned schedule or contract schedule. It
occurs when the progress of a contract falls behind its scheduled program. It may be caused
by any party to the contract and may be a direct result of one or more circumstances (Memon
et al, 2012: 46).
Abedi, Fathi and Mohammad (2011:3) states that projects success is basically to gain the
project objectives that are classically defined by the need to complete a project on time,
within the budget, and with appropriate quality. Hence any disruptions to the project
objectives will certainly contribute to project schedule overrun with its specified adverse
effects on project objectives. Delays can give rise to disruption of work and loss of
productivity, late completion of project, increased time related costs and third party claims
and abandonment or termination of contract.
3.6
Ramanathan, Narayanan and Idrus (2012:51) revealed one hundred and thirteen factors that
can lead to schedule overruns with the top ten factors being: slow payment for completed
works; contractor financial difficulties; cash problems during construction; inflation;
financial difficulties to owner; necessary variations of works; obsolete technology;
unsatisfactory site compensation; lack of involvement through project life and incompetence
project team. However, Ali, Smith, Pitt and Choon (2012):10) show that labour shortage;
contractors financial difficulties; construction mistakes and defective works; coordination
problem; material shortage and poor site management are the major factors that contribute to
schedule overruns con construction projects in Malaysia. Furthermore, Memon et al.
(2012:48) revealed that design and documentation issues; financial resource management;
project management and contract administration; contractors site management; information
32
and communication technology; material and machinery resource; labour (human) resource
and external factors as the major factors affecting time performance on construction projects.
The study by Pourrostam and Ismail (2011:453) shows the following as the top ten causes of
schedule overruns in Malaysia: poor site management; delay in progress payments by client;
change orders by client during construction; ineffective planning and scheduling of project by
contractor; financial difficulties by contractor; slowness in decision making process by client;
delays in producing design documents; late in reviewing and approving design documents by
client; poor contract management by consultant and problems with subcontractors.
Alaghbari, Kadir, Salim, Ernawati (2007) categorised causes of schedule overruns into four
categories namely; owner related causes, consultant related causes, contractor related causes
and external factors causes of schedule overruns. The study ranked the causes of schedule
overruns in each of the categories as follows: contractor related causes of schedule overruns,
owner related causes of schedule overruns, consultant related causes of schedule overruns
and causes of schedule overruns by external factors (Alaghbari et al., 2007:200). The study of
Alaghbari et al. (2007:202) further combined the above categories and arrived at the
following as the top ten causes of schedule on construction projects: Financial difficulties and
economic problems; financial problems; supervision too late and slowness in making
decisions; slow to give instructions; lack of materials on market; poor site management;
materials shortages on site; construction mistakes and defective work; delay in delivery of
materials to site; slowness in making decisions; lack of consultants experience and
incomplete documents.
3.7
Ali et al (2012: 11) revealed that the effects construction projects schedule overruns in
Malaysia include: cost overrun; extension of time (E.O.T); late payment; rescheduling; affect
company reputation and lost productivity and efficiency. However, Pourrostam and Ismail
(2011:454) reveal that time overrun is the number one effect that is encountered when
schedule overruns occur. The study further ranks and shows that time overrun; cost overrun;
disputes; arbitration; litigation and total abandonment of projects are the major effects of
construction projects schedule overruns. These findings agree with the findings from the
study done by Sambasivan and Soon (2006:523). Wei (2010:55) studied and ranked effects of
schedule overruns in Malaysia as follows: time overrun; cost overrun; disputes; litigation;
total abandonment of projects and arbitration.
33
3.8
There are many factors that contributed to causes of schedule overruns in construction
projects. These range from factors inherent in the technology and its management, to those
resulting from the physical, social, and financial environment. Schedule overruns can give
rise to disruption of work and loss of productivity, late completion of project, increased time
related costs and third party claims and abandonment or termination of contract. Schedule
overruns are costly and often result in disputes and claims. Hence, the need to identify the
mitigation measures that will lead to timely delivery of construction projects (Abedi, Fathi
and Mohammad, 2011:3).
The study by Memon et al, (2012:50) outlined the following to be the most effective ways of
minimising schedule overruns in Malaysia: proper planning work; committed leadership and
management; send clear and complete message to worker to ensure effective communication;
hire skilled workers to achieve good progress, avoid poor quality of work, more rectification
and double handling; close monitoring; training and development of all participants to
support delivery process; focus on the quality, cost and delivery of the project; use new
construction technologies; adoption of tools and techniques like value management, lean
thinking, total quality management; provide knowledge/training to unskilled workers based
on their scope of work; fully utilize the construction team; focus on clients need and measure
performance against other projects. However, these findings are similar to those identified by
Wei (2010:57) with the following being the top ten measures of minimising schedule over
runs on construction projects in Malaysia: site management and supervision; effective
strategic planning; clear information and communication channels; collaborative working in
construction; proper project planning and scheduling; frequent coordination between the
parties involved; complete and proper design at the right time; use appropriate construction
methods; accurate initial cost estimates; and proper material procurement.
Abedi, Fathi and Mohammad (2011:5) identified thirty measures that can be taken to
minimise construction schedule overruns in Malaysia: accurate initial cost estimates;
adopting a new approach to contract award procedure by giving less weight to prices and
more weight to the capabilities and past performance of contractors; perform a
preconstruction planning of project tasks and resource needs; selection of a competent
consultants and reliable contractors to carry out the work; allocation of sufficient time and
money at the design phase; availability of adequate resources; commitment to projects;
34
3.9
LESSONS LEARNT
Literature reviewed showed that there are a number of factors that causes construction
projects cost overruns in Malaysia. These factors include: improper planning; fluctuation in
price of raw materials; poor project management; lack of experience; late delivery of
materials and equipment; delay in preparation and approval of drawings; financial resource
management; project management and contract administration; contractors site management;
information and communication technology; material and machinery resource and slowness
by supervisors in giving instructions among others. Literature further showed that there are
numerous factors that can help minimise construction project cost overruns in Malaysia.
These included: proper project planning and scheduling; effective site management and
supervision; frequent progress meeting; proper emphasis on past experience; use of
experienced subcontractors and suppliers; use of appropriate construction methods; up to date
technology utilization; clear information and communication channels and frequent
coordination between the parties to name but a few.
Furthermore it was revealed that there are a number of factors that causes schedule overruns
on construction projects in Malaysia. These included: labour shortage; contractors financial
difficulties; construction mistakes and defective works; coordination problem; slowness in
decision making process by client; delays in producing design documents; late in reviewing
and approving design documents by client; poor contract management by consultant and
35
problems with subcontractors among others. Scholars further showed that these schedule
overruns have devastating effects on projects such as time overrun; cost overrun; disputes;
arbitration; litigation and total abandonment of projects. Literature further showed that there
are numerous factors that can help minimise construction project schedule overruns in
Malaysia, these include: selection of a competent consultant and a reliable contractor to carry
out the work; allocation of sufficient time and money at the design phase; availability of
resources; commitment to projects; competent project managers and comprehensive contract
documentation.
3.10
CHAPTER SUMMARY
This chapter discussed the cost and schedule overruns in the Malaysian construction industry.
Literature showed that construction project cost and schedule overruns impact negatively on
the construction industry and the economy of Malaysia with devastating implications such as
extension of time, cost overruns, disputes and claims and can eventually lead to total
abandonment of construction projects. The next chapter reviews literature related to cost and
schedule overruns in Nigeria.
36
CHAPTER FOUR
CONSTRUCTION PROJECTS COST AND SCHEDULE OVERRUNS IN NIGERIA
4.0
CHAPTER INTRODUCTION
This chapter will present the concept of cost and schedule overruns in Nigeria. This chapter
gives a theoretical review and conceptual perspective of construction projects cost and
schedule overruns in the Nigerian construction industry. Previous theories of construction
projects cost and schedule overruns in Nigeria, such as causes of cost and schedule overruns,
effects of cost and schedule overruns and measures of minimising cost and schedule overruns
in the Nigerian construction industry are discussed in the chapter. However, very few or no
studies have been done with regards to effects of cost overruns.
4.1
The building and construction industry in Nigeria is a fast growing sector of the economy
which recorded a growth rate of more than 20% between 2006 and 2007. This growth has,
however, not been commensurate with the growth of Nigerias total GDP as the overall
contribution of the construction sector to the countrys GDP remains very low at 1.83% in
2008 (Adelekan, 2013:2). However, the contribution of the construction industry to national
economic growth necessitates improved efficiency in the industry by means of costeffectiveness and timelines and would certainly contribute to cost savings for the country as a
whole (Aibinu and Jagboro, 2002:593). Adelekan (2013:2) states that the real estate sector in
Nigeria comprises two main segments- residential and non-residential. The residential real
estate segment accounted for 93.3% of real estate construction in the country in 2008, while
the non-residential real estate sector was distributed among commercial 4.6%, industrial 0.5%
and others were 1.6% for roads, bridges, ports and airports etc. Three areas of significant
growth in building and construction activities in Nigeria are included Lagos, the commercial
nerve-centre of the country; Abuja, the Federal Capital Territory which has witnessed a major
rise in construction activities in the past decade, especially as population influx into the city
has necessitated expansion into new towns and the Niger-Delta region, base of Nigerias oil
industry.
37
4.2
Ubani, Okorocha and Emeribe (2013:73) state that the successful execution of construction
projects and keeping them within estimated cost and prescribed schedules depend on a
methodology that requires sound engineering judgments. Many projects experience extensive
delays, exceed initial time schedule and cost estimate to the dislike of clients, contractors and
consultants. This problem is more evident in the traditional and public sector type of projects
in where contract are awarded to the lowest bidder. This is the contract awarding strategy of
the majority of public projects in developing countries including Nigeria.
The construction industry in Nigeria is of paramount importance for employment and
economic growth, Therefore, efforts geared towards improving construction efficiency by
means of cost-effectiveness and timeliness would be worthwhile and certainly contribute to
cost savings for the country as a whole (Ogunsemi and Jagboro, 2006:253). The major
challenges facing the construction industry in developing countries like Nigeria is the chronic
problem of cost and schedule overruns (Kasimu, 2012:775).
4.3
Causes of cost overruns are those factors that make the projects costs exceed the originally
budgeted cost. Eshofonie (2008:32) revealed a total of forty causes of cost overruns in
Nigeria, with the top ten causes being the following: cost of materials; incorrect planning;
wrong method of estimation; contract management; fluctuation of prices of materials;
previous experience of contractor; absence of construction cost data; additional cost and
project financing. However, the study of Ameh, Soyingbe and Odusami (2010:61) identified
factors that cause cost overruns, these factors were then categorised in five categories
namely:
38
data; material fluctuation; soil and land stability; social and cultural impacts and law
and regulations.
39
management and planning; method of estimate adopted; high interest rates charges by
banks on loan; taxes increase and insurance cost.
According to Olawale and Sun (2008:523) the factors that affect schedule on construction
projects in Nigeria include: design changes; inaccurate evaluation of projects time or
duration; complexity of works; risk and uncertainty associated with projects; nonperformance of subcontractors and nominated suppliers; lack of proper training and
experience of project managers; discrepancies in contract documentation; low skilled
manpower; conflict between project parties and unpredictable weather conditions among
others were ranked the top ten factors that cause schedule overruns.
4.4
Measures of minimising projects cost overruns in Nigeria are those steps that can be taken to
remove or reduce the factors that affect cost overruns. The study by Eshofonie (2008:35)
shows the following top ten measures of minimising cost overruns on projects in Nigeria:
Ensuring efficient time management through proper resource planning, duration estimation
and schedule development and control; ensuring adequate site supervisions to minimize poor
quality workmanships and idle times and hiring and motivating experienced and qualified
workforce to improve productivity and quality of workmanship. The others include, selecting
suitable contractors not only on the basis of price and time offerings, but also in experience,
financial standing, capacity and expertise; ensuring realistic estimates through proper
resource cost studies; allowing sufficient time for feasibility studies, design, planning and
tender submission; minimize propensity for late changes by ensuring a holistic assessment of
client real and stated needs; aiming at the economy in design by exploring alternatives and
doing detailed investigations and analyses; ensuring comprehensive articulation and
communication of own and end - user needs and requirements during briefing sessions and
minimize conflicts with subcontractors, which could undermine onsite productivity and
progress of work (Eshofonie, 2008:36)
40
4.5
The Nigerian construction industry continues to occupy an important position in the nations
economy even though it contributes less than the manufacturing or other service industries.
The contribution of the construction industry to national economic growth necessitates
improved efficiency in the industry by means of cost-effectiveness and timelines and would
certainly contribute to cost savings for the country as a whole, however, the major criticism
facing the Nigerian construction industry is the growing rate of delays in project delivery
(Aibinu and Jagboro, 2002:593).
4.6
Causes of schedule overruns are factors that lead to construction projects not being finished
according to the planned scheduled time at the inception of projects in Nigeria.
Ade-ojo and Babalola (2013:4) state that there are six major causes that would lead to
schedule overruns, the identified causes were ranked as follows: design error; poor site
condition; delay in payment; financial incapability of clients; financial incapability of
contractor and non-availability of subcontractor and supplier. However, Omoregie and
Radford (ND:88) identified the following causes of scheduling overruns using the mean
severity index magnitudes ranking: price fluctuations; financing and payment of completed
works; poor contract management; delays; changes in site conditions; inaccurate estimates;
shortages of materials; use of imported materials and plant items; additional work; design
changes; inexperienced subcontractors and nominated suppliers; weather conditions; non
adherence to contract conditions; mistakes and discrepancies in contract document and
fraudulent practices and kickbacks.
Akinsiku and Akinsulire (2012:28) show that, financial or cash flow difficulties; financial
difficulties faced by contractors and public agencies; frequent change order and design;
failure to pay for completed works; shortages of resources; considerable additional work;
escalations of material prices; increases in the scope of work; delay in design work and late
delivery of materials are the top ten causes of schedule overruns on construction projects. the
other causes of schedule overruns identified by Akinsiku and Akinsulire (2012:28) include:
fluctuations in resources cost; improper financial and payment arrangement; organizational
deficiencies; poor contract management; client initiated variations; resources management
problems; planning and scheduling problem; slowness in decision making by project teams;
inadequate contractor's experience; poor site management and supervision; inaccurate cost
41
Furthermore, Jonathan (2013:5) identified the following as the major causes of schedule
overruns on construction projects in Nigeria: inadequate fund to finance the project;
ineffective project planning; lack of commitment by the contractors; project management
problem; fluctuation; lack of equipment; change of drawings; non-availability of detailed
drawing from architect; unstable economy; fraud; variations; communal conflict; change of
government; lack of information from consultants; use of sub-standard materials; lack of
manpower; inclement weather and war. The study of Non-Excusable Delay in Lagos Nigeria
by Ibironke, Oladinrin, Adeniyi and Eboreime (2013:65) showed that the major causes of
schedule overruns include: insufficient amount of equipment; inaccurate time estimates;
monthly payment difficulties; change orders; inaccurate cost estimates; poor site management
and supervision; inadequate modern equipment; shortage of construction materials;
incompetent project team; improper planning and scheduling; contractor's financial
difficulties; unreliable subcontractors; labour productivity; frequent equipment breakdown;
late delivery of material; shortage of skilled labour; poor design or delays in design; slow site
clearance; labour supply; slow decision making by client and lack of communication and
coordination.
4.7
Effects of schedule overruns are the consequences that will occur when the project deadlines
are not achieved. The major effects of time overruns on construction projects in Nigeria are
the following: time overrun; cost overrun; dispute; arbitration; litigation and total
abandonment (Aibinu and Jagboro, 2002:595), these results were in general agreement with
the study done by Jonathan (2013:6). Akinsiku and Akinsulire (2012:29) identified seventeen
42
effects of construction projects schedule overruns and ranked them as follows; extension of
time on the project; cost overruns due to inflation and fluctuations; accumulations of interest
rate on the capital to the project; wastage and under- utilization of manpower resources;
claims on the disturbance of regular progress work by the main contractor; under-utilization
of equipment and plant purchased for the project; loss of confidence in the contract, thereby
jeopardising the reputation of contractor in case of future tendering chances; late returns of
income for private developers; reduction in employment opportunities; dispute between the
parties involved; aids the decrease in tempo of economic activities in the nation; additional
insurance charges; extra taxes and dues due to delay; insolvency of the contractor; inability
to meet the minimum living standard; arbitration and litigation and total abandonment of
projects (Akinsiku and Akinsulire, 2012:29). According to Sunjka and Jacob (2013:7) the
effects of schedule overruns can be defined as follows:
1. Time overrun: When the stipulated completion time is pushed forward, the project is
said to have experienced time overrun (Sunjka and Jacob, 2013:7).
2. Cost overrun: When a project is completed at a cost higher than what was budgeted,
it is said to experience a budget overrun (Sunjka and Jacob, 2013:7).
3. Dispute and Claims: Disputes and claims arise because of the losses incurred
through delays (Sunjka and Jacob, 2013:7).
4. Arbitration: Sunjka and Jacob (2013:7) states that projects would have extra costs
and time related to the engagement of professional arbitrators in cases of disputes that
go through arbitration.
5. Litigation: Disputes, due to delays, can lead to court cases for resolution especially
when large penalties are at stake (Sunjka and Jacob, 2013:7).
arbitration and litigation. Ibironke et al (2013:67) further revealed that arbitration, litigation
and alternative dispute resolution (ADR) are the methods of dispute resolution in the
construction industry. ADR is a voluntary process in which the parties are assisted in solving
their disputes by a neutral third party without the need of a judge or arbitrator. ADR
techniques are mediation, conciliation, adjudication and executive tribunal. ADR procedures,
unlike litigation and arbitration, are not binding until a mutually agreed settlement is reached
and put in writing, that is to say, either party can resort to other methods of dispute resolution
if the ADR procedure fails.
4.8
Measures of minimising scheduling overruns are the steps taken to reduce the factors that
cause schedule overruns on construction projects. Ade-ojo and Babalola (2013:4) identify six
measures that can reduce schedule overruns on construction projects, these include: accurate
design; prompt payment; financial capability of client; financial capability of contractor;
favourable site condition; favourable weather and availability of subcontractor and supplier.
Jonathan (2013:7) states that effective project planning; adequate funding to finance project
to completion and ensuring that project parties play their role on project execution are the
most effective ways of reducing schedule overruns on construction projects in Nigeria.
However, Aibinu and Jagboro (2002:597) state that acceleration of site activities and
contingency allowance would reduce schedule overruns on construction projects in Nigeria.
Furthermore, Ibironke et al (2013:68) in a study of measure of minimising Non-Excusable
schedule overruns in Nigeria revealed that the following measures can be used to minimise
schedule overruns: ensuring adequate and available sources of finance; competent project
managers; availability of resources; frequent progress meetings; awarding bids to the right
and experienced consultants and contractors; use of experienced subcontractors and suppliers;
multidisciplinary and competent project team; accurate initial cost estimates; competent and
capable client representatives; use of appropriate construction methods; performing
preconstruction planning of project tasks and resource needs; project management assistance;
adopting new approaches to contracting such as Design-Build and Construction Management
(CM) types of contracts; acceleration of site clearance and allocation of sufficient time and
money at the design phase.
44
4.9
LESSONS LEARNT
Literature reviewed showed that there are a number of factors that cause construction projects
cost overruns in Nigeria. These factors include: cost of materials; incorrect planning; wrong
method of estimation; contract management; fluctuation of prices of materials; previous
experience of contractor; absence of construction cost data design changes; inaccurate
evaluation of projects time or duration; complexity of works; risk and uncertainty associated
with projects; non-performance of subcontractors and nominated suppliers and lack of proper
training and experience of project managers. Literature further showed that there are
numerous factors that can help minimise construction project cost overruns in Nigeria, these
included: Ensuring efficient time management through proper resource planning, duration
estimation and schedule development and control; ensuring adequate site supervisions to
minimize poor quality workmanships and idle times and hiring and motivating experienced
and qualified workforce to improve productivity and quality of workmanship.
Furthermore it was revealed that there are a number of factors that causes schedule overruns
on construction projects in Malaysia, these included: poor contract management; client
initiated variations; resources management problems; planning and scheduling problem;
slowness in decision making by project team; inadequate contractor's experience; poor site
management and supervision; inaccurate cost estimates; lack of communication; lack of
equipment; change of drawings; non-availability of detailed drawing from architect; unstable
economy; fraud and variations. The literature further showed that these schedule overruns
have devastating effects on projects such as time overrun; cost overrun; disputes; arbitration;
litigation and total abandonment of projects. Literature further showed that there are
numerous identified factors that can help minimise construction project schedule overruns in
Nigeria, these include: accurate design; prompt payment; financial capability of client;
financial capability of contractor; favourable site condition; ensuring adequate and available
sources of finance; competent project managers; availability of resources; frequent progress
meetings; awarding bids to the right and experienced consultants and contractors; use of
experienced subcontractors and suppliers; multidisciplinary and competent project team and
accurate initial cost estimates.
45
4.10
CHAPTER SUMMARY
This chapter gave an in-depth discussion of cost and schedule overruns in the Nigerian
construction industry. Literature showed that construction project cost and schedule overruns
impact negatively on the construction industry and the economy of Nigeria with devastating
implications such as extension on time, cost overruns, disputes and claims and can eventually
lead to total abandonment of construction projects. The next chapter reviews literature related
to cost and schedule overruns in selected countries including South Africa.
46
CHAPTER FIVE
CONSTRUCTION PROJECTS COST AND SCHEDULE OVERRUNS: CASE
STUDIES FROM DEVELOPED AND DEVELOPING COUNTRIES
5.0
CHAPTER INTRODUCTION
Chapter 5 gives a theoretical review and conceptual perspective of construction projects cost
and schedule overruns in South Africa, Uganda, Ghana, America and India using case
studies. Previous theories of construction projects cost and schedule overruns, such as causes
of cost and schedule overruns, effects of cost and schedule overruns and measures of
minimising cost and schedule overruns are discussed in this chapter. However, very few
studies have been done with regards to cost and schedule overruns such as effects and
measures of minimising cost and schedule overruns. This chapter will present the concept of
cost and schedule overruns in South Africa, Uganda, Ghana, America and India using case
studies. These will be discussed based on the objective of the study, methodology, findings
and implication of the study.
5.1
The construction industry plays a vital role in South Africa's economy and is a significant
contributor to economic growth in the country (Construction Industry Development Board
[CIDB], 2012). The South African construction industry was particularly hard hit when the
infrastructure development highs leading up to the 2010 FIFA World Cup were followed by a
global recession and depressed growth (PWC, 2013:5). According to the Industry Insight
(2012:23) Investment in the construction sector (including residential, non-residential and
civil construction works) and civil works recorded an increase in the fourth quarter of 2011.
However, the industry recorded a decrease in investment in residential buildings during the
same quarter. However, despite these positives and negatives, the construction industry in
South African faces numerous challenges which have been highlighted in section 5.1.2 of this
chapter.
47
To promote, establish or endorse uniform standards and ethical standards that regulate
the actions, practices and procedures of parties engaged in construction contracts.
To regulate the behaviour and promote minimum standards and best practice of
contractors.
To store and provide data on the size and distribution of contractors operating within
the industry and the volume, nature, performance and development of contractors and
target groups.
To enable access by the private sector and thus also facilitate private sector
procurement (CIDB Act, 2000).
Moreover, Windapo and Cattell (2013:73) add that the top five challenges faced in the South
African construction industry are; increases in the costs of building materials, access to
affordable mortgage or credit, high interest rates, high rate of enterprise failure or delivery
capacity and performance and mismatches between available skills and required skills.
Furthermore, Mofokeng and Thwala (2012:718) educates that the major challenges in the
49
poor
financial
management, lack of skilled people, weaknesses in the tendering processes and lack of
business management. However, the current study will only focus on the challenges relating
to cost and schedule overruns on construction projects in South Africa.
A study by Baloyi and Bekker (2011:53) on the construction of 2010 FIFA world cup stadia
in south Africa revealed that the construction exceeded the budgeted costs on all the stadia as
shown in the table below.
50
Table 2.1: Budgeted versus indicated final costs of the ten FIFA 2010 stadia
Stadium
R 2.2 billion
R 3.7 billion
R 240 million
R 253 million
R 1.6 billion
R 3.1 billion
Mombela Nelspruit
R 600 million
R 1 billion
R 2.9 billion
R 4 billion
R 2.1 billion
Not known
R 1.3 billion
Not known
R 360 million
R 483 million
Mangaung Bloemfontein
R 245 million
R 359 million
R 122 million
R 131 million
Furthermore, a study by Baloyi and Bekker (2013:60) revealed the following factors as
causes that led to cost overruns: increase in material cost; inaccurate material estimates;
shortage of skilled labour; clients late contract award; project complexity; increase in labour
cost; inaccurate quantity take-off; difference between selected bids and the consultants
estimates; change orders by clients during construction and shortage of manpower.
The construction of the stadia further did not escape from schedule overruns as most stadiums
were not ready for the FIFA Confederations Cup. In Baloyi and Bekkers (2013:8) study on
the schedule overruns on the 2010 FIFA World Cup stadia in South Africa, the following
were revealed as the factors that caused schedule overruns: incomplete drawings; design
changes; clients slow decision-making; late issue of instructions; shortage of skilled labour;
poor planning and scheduling; labour disputes and strikes; shortage of manpower; changing
of orders by client during construction; poor information dissemination and delay in work
approval.
51
5.2
LESSONS LEARNT
The lessons learnt from the South African case stadia on the construction of the 2010 world
cup stadia are that there were various factors that led to cost overruns during the construction
works. These factors included: increase in material cost; inaccurate material estimates;
shortage of skilled labour; clients late contract award; project complexity; increase in labour
cost and inaccurate quantity take-off among other factors. The case study further showed that
there were also numerous factors that led to schedule overruns during the construction of the
2010 world cup stadia, these factors were incomplete drawings; design changes; clients slow
decision-making; late issue of instructions; shortage of skilled labour; poor planning and
scheduling; labour disputes and strikes; shortage of manpower; changing of orders by client
during construction; poor information dissemination and delay in work approval.
Furthermore, it was noted that when these identified factors are monitored and managed
properly cost and schedule overruns can be minimised of construction projects.
5.3
There is great concern in Uganda about schedule and cost overruns in public sector
construction projects because such projects are implemented using taxpayers' money. At the
national and international levels, there is considerable debate regarding how to minimise
project schedule and cost overruns (Alinaitwe, Apolot and Tindiwensi, 2013:33). According
to Alinaitwe et al (2013:34) most construction projects in Uganda have had problems with
delays in completion and cost overruns, which has caused considerable concern. The debate
in the construction industry on how to minimise or eliminate schedule and cost overrun has
continued for some time among professionals, clients, end users and policy makers. Further,
Alinaitwe et al (2013:35) concludes that cost and schedule overruns can occur for a wide
variety of reasons on various types of projects. If project costs or schedules exceed their
planned targets, client satisfaction could be compromised. The funding profile may no longer
match the budget limit and further slippage in the schedule could result. The resulting effects
are detrimental, especially in the case of developing countries, the measure of whose wealth
is greatly dependent on their performance in providing infrastructure through the construction
industry.
The study by Alinaitwe et al (2013:41) revealed that the five most frequent causes of
schedule overruns in Uganda are delayed payments, inadequate or inefficient equipment, the
need to repeat work due to poor-quality work, bureaucracy and changes in the work scope.
52
Further, it revealed the five highest factors in terms of their impact on schedule overruns
which included: delayed payments to contractors, political insecurity and instability,
inadequate or inefficient equipment, changes in the work scope and disputes among the
parties involved in the project. Alinaitwe et al (2013:41) showed the five factors that were
ranked the highest in terms of their importance to schedule overruns in Uganda included
changes of the work scope, delayed payments to contractors, poor monitoring and control,
high inflation and interest rates and political insecurity and instability. The study furthermore
showed that the five most frequent causes of cost overruns in Uganda are changes in the work
scope, high inflation and interest rates, poor monitoring and control, delayed payments to
contractors and fuel shortages. Further, it revealed the five highest ranked factors in terms of
their impact on cost overruns were changes in the work scope, high inflation and interest
rates, fuel shortages, poor monitoring and control and delayed payments to contractors.
Alinaitwe et al (2013:41) showed the five factors that were ranked the highest in terms of
their importance to cost overruns included changes in the work scope, high inflation and
interest rates, poor monitoring and control, delayed payments to contractors and deficiencies
in contract documents. Alinaitwe et al (2013:41) furthermore revealed the four factors that
were ranked as very important in terms of their effects on schedule and cost overruns were
changes in the work scope, delayed payments to contractors, poor monitoring and control and
high inflation and interest rates.
5.4
LESSONS LEARNT
The lesson learnt from the Uganda cause study was that there a various factors that cause cost
overruns in the Ugandan construction industry. These factors were changes in the work
scope, high inflation and interest rates, poor monitoring and control, delayed payments to
contractors and fuel shortages. Further, the study showed that the major causes of schedule
overruns in the Ugandan construction industry included delayed payments, inadequate or
inefficient equipment, the need to repeat work due to poor-quality work, bureaucracy and
changes in the work scope. Furthermore the case study illustrated factors that are important in
terms of their effects on cost and schedule overruns. These factors included changes in the
work scope, delayed payments to contractors, poor monitoring and control and high inflation
and interest rates. It was noted that when these identified factors are monitored and managed
properly cost and schedule overruns can be minimised of construction projects.
53
5.5
According Ofori (2012: 6) for Ghana to be able to realise its aim of being the Gateway to
West Africa, it must have a good infrastructure. There are several reasons for this need.
First, a high quality of physical infrastructure would attract foreign investors to (re)locate
their operations in this country, as their overall costs would be low, thus enhancing their
global competitiveness. The costs of local firms would similarly be lower, with the same
result. Second, with a good infrastructure, networks of firms would be more effective as
supply chain management issues would be easier to deal with, and many factors in the
operating environment of companies more predictable. Finally, a high quality physical
infrastructure will earn Ghana much revenue as the ports of Tema and Takoradi could be
transhipment hubs, especially given the number of landlocked countries in the region and
finally to establish the physical infrastructure, an efficient construction industry is necessary.
Sutton and Kpentey (2012:109) states that the share of GDP associated with the building and
construction sector increased from 4.5% in 1975 to 8.5% in 2000. Over the next few years,
the sector continued to grow rapidly, but the annual growth rate slowed from 15% in 2007 to
12% in 2008, and since then the sector has contracted somewhat. The government is the
major sponsor of infrastructure projects (building and construction) and dominates the sector.
The construction industry provides means of production for other industries or commodities
to be consumed. As Ghana aspires to become a middle income nation by 2015, and with the
recent discovery of oil in commercial quantities, the role of the construction industry is
absolutely important. It is against this backdrop that investigating the factors responsible for
schedule and cost overruns in building construction and recommending measures to eradicate
or minimize them assume tremendous importance (Fugar and AgyakwahBaah, 2010:104).
Project success can be defined as meeting goals and objectives as prescribed in the project
plan. A successful project means that the project has accomplished its technical performance,
maintained its schedule, and remained within budgetary costs. Project management tools and
techniques play an important role in the effective management of a project. Therefore, a good
project management lies in the management tools and techniques used to manage the project.
(Frimpong, Oluwoye and Crawford, 2003:321). According to Alexander (2011:2) assessing
both construction projects cost and time is critical in todays market-driven economy. The
relationship between construction projects schedule and cost is called time-cost trade-off
decisions, which has been investigated extensively in the construction management literature.
Time-cost trade-off decisions are complex and require selection of appropriate construction
54
method for each project task. Time-cost trade-off, in fact, is an important management tool
for overcoming one of the critical path method limitations of being unable to bring the project
schedule to a specified duration. To maximize long-term return on this public investment,
government agencies have recently started utilizing new types of contracting methods that are
designed to achieve multiple project objectives, including minimizing construction cost and
duration, while maximizing its quality (Alexander, 2011:2).
Frimpong et al. (2003:324) revealed that the factors responsible for project schedule and cost
overruns according to contractors, consultants and owners in Ghana are: planning and
scheduling deficiencies; deficiencies in cost estimates prepared; inadequate control
procedures; delays in work approval; waiting for information; mistakes during construction;
delays in inspection and testing of work; cash flow during construction; frequent breakdowns
of construction plant and equipment; shortages of technical personnel; labour shortages;
monthly payment difficulties; poor contract management; shortage of materials, plant or
equipment parts and contractors financial difficulties. The other factors responsible for
schedule and cost overruns in Ghana identified by Frimpong et al. (2003:324) include: low
bid; material procurement; imported materials; late delivery of materials and equipment;
escalation of material prices; slow decision-making; inflation; difficulties in obtaining
construction materials at official current prices; ground problems; bad weather and
unexpected geological conditions.
5.6
LESSONS LEARNT
The lessons learnt from the case study of the Ghanaian construction industry were that there
are numerous factors that cause both cost and schedule overruns. These factors were planning
and scheduling deficiencies; deficiencies in cost estimates prepared; inadequate control
procedures; delays in work approval; waiting for information; mistakes during construction;
delays in inspection and testing of work; cash flow during construction; frequent breakdowns
of construction plant and equipment; shortages of technical personnel; labour shortages;
monthly payment difficulties; poor contract management; shortage of materials, plant or
equipment parts and contractors financial difficulties among other factors that were
identified as the major causes of cost and schedule overruns in Ghana. When these identified
factors that cause cost and schedule overruns are monitored and managed properly cost and
schedule overruns can be minimised in Ghana.
55
5.7
Shanmugapriya and Subramanians (2013:738) study revealed twenty factors that lead to cost
overruns and ranked them as follows: high transportation cost; change in material
specification; escalation of material price; frequent breakdown of the construction plant and
equipment; reworks; lack of coordination at design stage; fluctuation in money exchange
rate; material fluctuation; additional work at owners request and high maintenance cost of
machinery were ranked as the top ten overall causes of cos overruns in India. Other causes
cost overruns factors identified by Shanmugapriya and Subramanian (2013:738) include:
shortage of materials; lack of coordination between designers; lack of information flow
between parties; lack of financial management and planning; incomplete design; high
quality of work required; difficulties on importing equipment and material; high cost of
machinery; mistakes during construction and wastages on site.
56
Shanmugapriya and Subramanians (2013:737) study further revealed the factors that are
responsible for schedule overruns and they include the following: material market rate;
contract modification; high level of quality requirement; project location; dependence on the
freshers to bear whole responsibility; rework of bad quality performance; often change of
subcontractors; lack of technical skills; lack of experience in similar projects and shortage of
experienced staff and labour were ranked as the top ten causes of schedule overruns in India.
Other causes schedule overruns factors identified by Shanmugapriya and Subramanian
(2013:738) include: high quality of work requirements; labour strikes; lack of sub-contractors
skills; unclear specifications; owners delay in freeing the contractor financial payment;
incomplete drawings; equipment shortage; poor productivity of material and labour; poor
scheduling of labour and material for work and poor documentation and no detailed written
procedures.
5.8
LESSONS LEARNT
The lessons learnt from the Indian case study on cost and schedule overruns were that there
are various factors that led to cost overruns on construction projects. These factors were high
transportation cost; change in material specification; escalation of material price; frequent
breakdown of the construction plant and equipment; reworks; lack of coordination at design
stage; fluctuation in money exchange rate; material fluctuation; additional work at owners
request and high maintenance cost of machinery were ranked as the top ten overall causes of
cos overruns in India. The case study further revealed that there are numerous factors that
cause schedule overruns in India and they included the following: material market rate;
contract modification; high level of quality requirement; project location; dependence on the
freshers to bear whole responsibility; rework of bad quality performance; often change of
subcontractors; lack of technical skills; lack of experience in similar projects and shortage of
experienced staff and labour were ranked as the top ten causes of schedule overruns in India.
5.9
According to Vidalis and Najafi (2002:2) completing transportation projects on time and
within budget has been a chronic problem for the Florida Department of Transportation
(FDOT). This is due to delays that cause schedule and cost overruns in highway construction
projects such as design error, poor coordination, inadequate scope, weather damages, and
other project changes. Delays can result in loss of time and money as well as inconveniences
57
to the public and they are caused externally or internally. External causes of delays are
originated outside of highway construction projects that are caused by various parties such as
utility companies, government, subcontractors, suppliers, weather, etc. Internal causes of
delays are harder to depict and are due to problems that may have been started by the
designers, owners, or contractors within the highway construction project. According to
Vidalis and Najafi (2002:2) further revealed that performance measures in Florida projects
indicated that cost and time overruns had shown a decrease from the past five fiscal years.
Even though the government and highway contractors try to avoid overruns in construction
and try to minimize the time and costs associated with overruns, they often find it difficult to
control the circumstances causing these overruns. To identify the reasons why authorities in
Florida have experienced cost and schedule overruns in transportation projects, an
examination of 708 recently completed projects that had experienced cost and schedule
overruns was conducted. Contract costs, time durations, and the causes of overruns were
taken from these various projects from the Florida authorities within the fiscal years from
1999 to 2001. The original contract amount for these projects over the two years exceeded
$1.9 billion. The cost overrun exceeded $200 million over the original contract amount. The
schedule overruns were 17% of the original contract time.
Results from the study of Vidalis and Najafi (2002:5) revealed that the major causes of cost
overruns in Florida included errors and omissions in plans and modifications; changed
environmental conditions; actions and inactions; minor changes; weather damages; claims;
invalid reasons and utility delays. The study further revealed the following as causes of
schedule overruns: changed environmental conditions; errors and omissions in plans and
modifications; actions and inactions; minor changes; utility delays; invalid reasons and
weather damages.
Vidalis and Najafi (2002:8) furthermore recommended measures that can be taken to
minimise cost and schedule overruns. These measures included developing goals before
planning start to minimize delays; design plans should be reviewed carefully when there are
increasing use of consultants; review design related problems from past projects; conduct
additional preliminary research and investigations on-site before bidding; minimise
construction conflict with involved parties by creating better communication and
coordination; develop innovative contracting methods; improve quality of design plans; make
use of experienced staff and consultants; emphasize on meeting project completion date;
58
perform constructability reviews that can examine whether projects can be built as designed;
prior to any project construction, local government requirements should be incorporated into
its design plans to make sure that utility lines have been identified or moved before
construction; utility companies should take responsibility for reviewing design plans and
paying their cost to move utility lines and delays from change conditions in work or work
orders can be reduced by carefully defining the work scope and predict changes in work
scope prior to construction.
5.10
LESSONS LEARNT
Lessons learnt from the case study of cost and schedule overruns in Florida, United States of
America were that there are various causes of cost overruns in America which included errors
and omissions in plans and modifications; changed environmental conditions; actions and
inactions; minor changes; weather damages; claims; invalid reasons and utility delays.
Further the case study showed that changed environmental conditions; errors and omissions
in plans and modifications; actions and inactions; minor changes; utility delays; invalid
reasons and weather damages were the major causes schedule overruns in America.
Furthermore, the case study revealed that there a number of measures that can be taken to
minimise cost and schedule overruns in America, these included: developing goals before
planning start to minimize delays; design plans should be reviewed carefully when there are
increasing use of consultants; review design related problems from past projects; conduct
additional preliminary research and investigations on-site before bidding; minimise
construction conflict with involved parties by creating better communication and
coordination; develop innovative contracting methods; improve quality of design plans; make
use of experienced staff and consultants; emphasize on meeting project completion date and
perform constructability reviews that can examine whether projects can be built as designed
among other measure that where revealed in the case study.
5.11
CHAPTER SUMMARY
This chapter gave an in-depth literature review of case studies in Uganda, Ghana, India and
South Africa. Findings revealed that the challenges faced in South Africa in terms of
delivering construction projects on time and within budget were similar to the challenges
faced by other countries in the world. The next chapter will discuss the research methodology
and the procedure followed during the study in order to achieve the goal of the study.
59
CHAPTER SIX
RESEARCH METHODOLOGY AND DESIGN
6.1
CHAPTER INTRODUCTION
This chapter explains the research methodology used in carrying out this study. The
geographical area where the study was conducted, the study design and population sample are
also described. Furthermore, the instrument used in collecting the data, including methods
implemented to maintain validity and reliability of the instruments are described in order to
carry out the evaluation of the causes, effects and methods of minimising construction project
cost and schedule overruns in South Africa with specific reference to Gauteng Province.
6.2
The rationale of the current study is to contribute to the body of knowledge on the subject of
cost and scheduling overruns using the Gauteng Province of South Africa as a case study.
6.3
Burns and Grove (1993:777) define quantitative research as a formal, objective, systematic
process to describe and test relationships and examine causes and effects interactions among
variables. Hence, the current study adopted the Quantitative research approach to determine
the causes, effects and measures of minimising construction projects cost overruns in
Gauteng, South Africa. However, Polit and Hungler (1993:148) states that a quantitative
research is a survey to obtain information from a sample of people by means of self-report,
that is, the people respond to a sequence of questions posed to them by the researcher. The
current study collected information through a well-structured questionnaire which was
distributed to the respondents by the researcher.
A descriptive survey was selected because it gives an accurate account of the characteristics,
for example behaviour, opinions, abilities, beliefs and knowledge of a particular individual,
situation or group. This method was chosen to meet the objectives of this study, namely to
identifying the causes of cost and scheduling overruns, further, identify the effects of these
cost and scheduling overruns and eventually establish the measures that can be taken to
remedy cost and scheduling overruns in Gauteng, South Africa.
60
6.4
RESEARCH AREA
The study was carried out in Gauteng Province in, South Africa. The research incorporated
all construction professionals practicing in Gauteng. The province was selected for the
current study because the research was familiar with the area and there was easy accessibility
to the target area. The province was also selected because of the high number of construction
projects that were taking place at the time of the study. The target group in the research area
were architects, quantity surveyors, civil engineers, construction managers, construction
project managers, project managers and other professionals that are involved in construction
projects in Gauteng Province, South Africa.
6.5
TARGET POPULATION
Burns and Grove (1993:779) define a population as the total of all the individuals who have
certain characteristics and are of interest to the researcher that meets the sample criteria for
inclusion in a study. The target population is defined as groups or individuals to whom the
survey applies. However, this can also be described as groups or individuals who are in a
position to answer the questions and to whom the results of the survey relate (Burns and
Grove, 1993:779).
The target population for the current study were architects, quantity surveyors, civil
engineers, construction managers, construction project managers, project managers and other
professionals that are involved in construction projects in Gauteng province, South Africa.
This was accomplished with the aid of a well-structured questionnaires distributed to the
respondents who are professionals in the field of construction in Gauteng, South Africa. This
yardstick was considered vital for the survey in order to have a true reflection of the causes,
effects and methods of minimising construction project cost and scheduling overruns.
6.6
SAMPLE
Teddlie and Yu (2007:77) state that there are two ways of statistical sampling strategy in the
social sciences: probability sampling and purposive sampling. Probability sampling
techniques are generally used in quantitative research. The random sampling technique was
preferred and adopted in the current study rather than the stratified sampling, cluster sampling
and sampling using multiple probability techniques. Random sampling was adopted because
it gave all the participants an equal of chance to be selected and all the participants were
selected with the same criteria which was that the participants had to be a construction
professional practicing in Gauteng, South Africa. This method is usually adopted when the
target population presents the same performance or qualifications, or the sampling size is
very large to represent the entire population efficiently and each member of the entire
population has an equal chance of being selected as a sampling respondent.
62
6.7
DATA COLLECTION
A list of potential respondents was generated after the questionnaire was approved for data
collection by the main supervisor of the current study. The questionnaires were distributed to
the respondents in two ways namely: hand delivery and through emails. After completing
filling in the questionnaires, the respondents emailed them back to the research; other
respondents hand delivered the questionnaires while others were physically collected by the
researcher from the respondents.
Data collection took approximately two months as the respondents were free to take their
time when filling in the questionnaires without any coercion though it took an average of
twenty five minutes to complete one questionnaire. A total of 142 questionnaires were
received back from the respondents.
6.8
A questionnaire was chosen for this research as a data collection instrument for the current
study. Burns and Grove (1993:368) define a questionnaire as a printed self-report form
designed to draw information that can be obtained through the written responses of the
subject. Burns and Grove (1993:368) further state that information obtained through a
questionnaire is similar to that obtained through an interview, but the questions tend to have
less depth.
Data was collected with the aid of a questionnaire to evaluate the causes, effects and methods
of minimising construction project cost and scheduling overruns in Gauteng, South Africa.
There are two types of questionnaires, that is, the closed-ended and the open-ended
questionnaires. In the open-ended questionnaires the respondents are required to respond in
writing in their own words and providing more details as they wish, whereas in the closedended questionnaires, the respondents are given options related to the research topic which
are determined by the researcher (Burns and Grove 1993:370). Therefore, a closed-ended
questionnaire was used in this research because it is easier to administer and analyse.
The questionnaire was in designed English as all the respondents are educated construction
professionals; therefore, they could read and answer the questions. The respondents were
assured of anonymity of their responses. The questionnaire consisted of seven sections A, B,
C, D, E, F and G. Section A was aimed at gaining demographic data such as sex, age, level of
63
education etc. This information would assist the researcher when interpreting the results;
Section B was aimed at evaluating the causes of construction project cost overruns; Section C
was aimed at evaluating the causes of construction project scheduling overruns; Section D
aimed at assessing the effects of construction project cost overruns; Section E aimed at
assessing the effects of construction project scheduling overruns; Section F of the
questionnaire explored methods of minimising construction project cost overruns and Section
G of the questionnaire explored methods of minimising construction project scheduling
overruns in Gauteng, South Africa. Instructions and guidelines were attached to the
questionnaires to guide the respondents on how to answer the questionnaires.
Out of the two hundred copies of the questionnaire sent out, one hundred and forty six were
received back which represent 73% response rate. These formed the basis of this study as
summarised in Table 6.1 below. This was considered adequate for analysis based on the
assertion by (Moser and Kalton, 1971) that the result of a survey could be considered as
biased and of little value if the return rate was lower than 30 to 40%.
Respondents
200
146
Usable questionnaire
146
73%
The collected data from the respondents was then cleaned and screened before analysis could
take place. Frequency analysis of the raw data was then done using Statistical Package for
Social Sciences (SPSS).
6.9
PERIOD OF COLLECTION
The data was collected by the researcher in the months of May to July, 2014.
64
6.10
A five point Likert scale was used to determine the causes, effects and methods of
minimising construction project cost and schedule overruns in the Gauteng Province of South
Africa with respect to the identified factors from the reviewed literature. The adopted scales
were as follows;
1.
= Strongly disagree
2.
= Disagree
3.
= Neutral
4.
= Agree
5.
= Strongly agree
= Extremely unlikely
2.
= Unlikely
3.
= Neutral
4.
= likely
5.
= Extremely likely
The five-point scale was transformed to mean item score (MIS) for each of the factors of
causes, effects and methods of minimising cost and schedule overruns as assessed by the
respondents. The indices were then used to determine the rank of each item. The ranking
made it possible to cross reference the relative importance of the items as perceived by the
respondents. This method was used to analyse the data collected from the questionnaires
survey.
The computation of the relative mean item score (MIS) was calculated from the total of all
weighted responses and then relating it to the total responses on a particular aspect. This was
based on the principle that respondents scores on all the selected criteria, considered
together, are the empirically determined indices of relative importance. The index of MIS of a
particular factor is the sum of the respondents actual scores (on the 5-point scale) given by
all the respondents as a proportion of the sum of all maximum possible scores on the 5-point
scale that all the respondents could give to that criterion. A weighting was assigned to each
response ranging from one to five for the responses of strongly disagree to strongly agree
65
and Extremely unlikely to Extremely likely. This is expressed mathematically below. The
mean item score (MIS) was calculated for each item as follows;
Where;
n1
n2
n3
n4
n5
After mathematical computations, the criteria are then ranked in descending order of their
mean item score (from the highest to the lowest).
6.11
CONSISTENCY
An internal consistence check was conducted using the consistence and reliability statistic
measure of the Cronbach's Alpha. According to Tavakol and Dennick (2011: 53) the
Cronbachs alpha measures the internal consistency of a test or scale; it describes the extent
to which all the items in a test measure the same concept or construct and hence it is
connected to the inter-relatedness of the items within the test. The current study adopted the
Cronbach's Alpha to check internal consistence, the results of the internal consistence for
each category of questions are shown in table 6.2 below.
66
Cronbach's Alpha
0.883
0.823
0.861
0.861
0.910
0.854
0.819
0.875
0.901
0.855
0.920
0.930
0.929
Gliem and Gliem (2003: 87) state that an alpha of 0.8 is probably a reasonable goal. George
and Mallery (2003) further note that the value of the Cronbach's Alpha above 0.7 is
acceptable. Hence the current study proceeded with analysis as the internal consistence tests
revealed that the Cronbach's Alpha was within the acceptable values, hence all items in the
study were measuring the same concept and all the items were inter-related.
6.12
DATA ANALYSIS
Data collected from the respondents was cleaned and screened before analysis could take
place. Raw data was then entered onto a statistical Package for social sciences (SPSS) for
frequency analysis. Data presentation and analysis made use of frequency distributions and
percentages of all the respondents. Frequency tables were drawn and from there the data was
presented in pie chart diagrams, bar graphs and tables.
67
6.13
This research assessment was only based on the construction professionals in Gauteng
Province in South Africa, with the respondent being architects, quantity surveyors, civil
engineers, construction managers, construction project managers, project managers and other
professionals that are involved in construction projects in Gauteng Province, South Africa.
This study only determined factors causing construction project cost and schedule overruns,
their effects and further determined measures of minimising cost and schedule overruns in
Gauteng Province, South Africa.
6.14
ETHICAL CONSIDERATION
The current study did not encounter or identify any ethical issues, however, the ethical
considerations in this research took into account the obligations to the professional in the
industry whose work that had contributed to the literature was properly cited and
acknowledged. The obligation to the participants in the research questionnaire, was that their
input was be kept confidential and only used for academic purposes. Respondents to the
questionnaire had the right not to answer questions that they felt were not appropriate without
any coercion.
A written cover letter of permission to carry out this research study was obtained from the
University of Johannesburg, Department of Construction Management and Quantity
Surveying, Doornfontein Campus which was affixed to the questionnaires sent out.
6.15
CHAPTER SUMMARY
In this chapter, the research methodology used for the study was described, including the
population, sample, data collection instruments as well as strategies used to ensure ethical
standards and also why questionnaires were adopted for the research. The next chapter of this
study presents the data analysis and discussion.
68
CHAPTER SEVEN
QUESTIONNAIRE SURVEY RESULTS
7.1
CHAPTER INTRODUCTION
This chapter presents the results of data obtained from the well-structured questionnaires,
which were circulated to the research respondents, who included: architects, quantity
surveyors, civil engineers, construction managers, construction project managers, project
managers and other professionals that are involved in construction projects in Gauteng
province, South Africa. The analysis of the data and interpretation of the results were
obtained from the questionnaire study and it served as the basis of this quantitative data
collection. All questions in the questionnaires were answered and it comprised of twenty
questions. The analysis was based on one hundred forty six completed questionnaires out of
two hundred that were sent out, which reflects a 73% response rate.
The first section of the questionnaire explored the background information of the
respondents. The second section looked at the major causes of cost overruns in construction
industry in Gauteng, South Africa. The third section explored the causes of construction
schedule overruns in the construction industry in Gauteng, South Africa. The fourth section
explored the effects of cost overruns in the construction industry in Gauteng, South Africa.
The fifth section looked at the effects of schedule overruns in the construction industry in
Gauteng, South Africa. The sixth section explored the measures of minimising cost overruns
in the construction industry in Gauteng, South Africa, while the seventh section explored the
measures of minimising construction schedule overruns in Gauteng, South Africa.
7.2
BIOGRAPHICAL DATA
This section discusses the profile of the respondents with regard to their demographic
attributes, namely, gender, race, age group, professional qualification, years of experience,
highest qualification and type of employer.
69
Furthermore, results revealed that 56.8% of the respondents had experience that ranged from
1-5 years, 20.5% had experience in the range of 6-10 years, 11.6% had experience that
ranged between 11-15 years, 6.2% had more than 20 years experience and 4.8% had
experience that ranged from 16-20 years in the construction industry. Further, 46.6% of the
respondents had bachelors degrees, 32.2% had diplomas, 12.3% of the respondents had
masters degrees, 4.1% of the respondents had doctorate degrees and 4.8% of the respondents
only had metric (grade 12) certificates. Furthermore, it was revealed that 35.6% of the
respondents were employees of contractors, 34.9% of the respondents were employees of
consultants and 20.5% were government employee, 8.2% were employed by clients and 0.7%
of the respondents were self-employed.
70
7.3
DATA ANALYSIS
Figure 7.1 reveals that out of the 146 respondents 59.6% were male, while 40.4% were
female.
Female
40,4%
Male
59,6%
Findings relating to the respondents age group as shown in Figure 7.2 below revealed that
29.5% of the respondents were in the age group of 20-25 years old, 26.7% of the respondents
were in the age group 26-30 years old, 17.1% were in the age group 31-35 years old, 11.6%
were in the age group 36-40 years old, 6.2% of the respondents were in the age group 41-45
years old, 4.1% were in the age group 46-50 years old, 3.4% of the respondents were above
50 years old and 1.4% of the respondents were between 51-55 years old.
71
3,4%
1,4%
51 years 55 years
4,1%
46 years 50 years
6,2%
41 years 45 years
11,6%
36 years 40 years
17,1%
31 years 35 years
26,7%
26 years 30years
29,5%
20 years 25 years
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Figure 7.3 shows the respondents ethnicity, it reveals that 76.7% of the respondents were
black, 14.4% were white, 4.8% were either Indian or Asian and 4.1% of the respondents were
coloured.
80.0
76,7%
70.0
60.0
50.0
40.0
30.0
14,4%
20.0
4,8%
4,1%
10.0
0.0
Black
White
Coloured
Indian or Asian
72
Figure 7.4 represents the professional qualification of the sampled respondents and it reveals
that 38.3% were quantity surveyors, 20.5% were civil engineers, 11% were project managers,
10.3% were construction managers, 8.9% were construction project managers, 5.5% were
architects and 5.5% selected others, which included an artisan, a building inspector, electrical
contractors, a safety consultant and a site agent.
5,5%
Others
8,9%
10,3%
Construction Manager
11,0%
Project Manager
20,5%
Civil Engineer
38,3%
Quantity- Surveyor
5,5%
Architect
0.0
5.0
Figure 7.5 shows the working experience of the respondents sampled in the industry, it
revealed that 56.9% had experience that ranged from 1-5 years, 20.5% had experience in the
range of 6-10 years, 11.6% had experience that ranged between 11-15 years, 6.2% had more
than 20 years experience and 4.8% had experience that ranged from 16-20 years in the
construction industry.
73
60.0
56,9%
50.0
40.0
30.0
20,5%
20.0
11,6%
4,8%
10.0
6,2%
0.0
1 - 5 years
20 years &
above
Figure 7.6 represents the educational qualifications of the respondents and it showed that
46.6% of the respondents had bachelors degrees, 32.2% had diplomas, 12.3% of the
respondents had masters degrees, 4.1% of the respondents had doctorate degrees and 4.8% of
the respondents only had metric (grade 12) certificates.
4,1%
Doctorate
12,3%
M-degree
46,6%
B-Degree
32,2%
Diploma
4,8%
10.0
20.0
30.0
40.0
74
50.0
The figure7.7 shows respondents current employers and it indicates that 35.6% of the
respondents were employees of contractors, 34.9% of the respondents were employees of
consultants and 20.6% were government employee, 8.2% were employed by clients and 0.7%
of the respondents were self-employed.
35,6%
34,9%
40.0
35.0
30.0
20,6%
25.0
20.0
15.0
10.0
8,2%
0,7%
5.0
0.0
Client
Consultant
Contractor
Government
Others
Figure 7.8 represents the number of construction projects that the respondents were involved
in and it showed that 47.2% of the respondents were involved in 1-2 projects, 31.5% were
involved in 3-4, 9.6% were involved in 5-6 projects, 6.2% were involved in more than 8
projects, 4.8% of the respondents were not involved in any projects and 0.7% of the
respondents were involved in 7-8 projects.
6,2%
0,7%
7 8 projects
9,6%
5 6 projects
31,5%
3 4 projects
47,2%
1 2 projects
4,8%
None
0.0
10.0
20.0
30.0
40.0
50.0
The figure 7.9 below shows the number of construction projects that the respondents were
involved in and were beyond the original contract sum. It was revealed that 56.2% of the
respondents were involved in 1-2 projects that were beyond the contract sum, 27.1% did not
have projects that were beyond the contract sum, 13.9% were involved in 3-4 projects that
were beyond the contract sum, 1.4% were involved in more than 8 projects that were beyond
the original contract sum and 0.7% were involved in 5-6 and 7-8 projects that were beyond
the original contract sum.
1,4%
7 8 projects
0,7%
5 6 projects
0,7%
13,9%
3 4 projects
56,2%
1 2 projects
27,1%
None
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Figure 7.10 reveals the amounts in overruns that construction projects encounters. It shows
that 23.6% of the respondents were involved in projects that were experiencing cost overruns
of over R500 000.00, 22.9% of the respondents were involved in projects that had no cost
overruns, 20.8% were involved in projects that had cost overruns of between R50 001.00R100 000.00, 17.4% were involved in projects that had cost overruns between R0-R50
000.00, 8.3% were involved in projects that had cost overruns between R100 001.00-R200
000.00, 3.5% were involved in project that had cost overruns between R200 001.00-R300
000.00 and another 3.5% were involved in projects that had cost overruns between R300
001.00-R500 000.00.
76
23,6%
3,5%
3,5%
8,3%
20,8%
17,4%
R0 R50 000.00
22,9%
None
0.0
5.0
10.0
15.0
20.0
25.0
The figure 7.11 below shows the number of construction projects that the respondents were
involved in and were behind schedule. It was revealed that 54% of the respondents were
involved in 1-2 projects that were behind schedule, 31.2% did not have projects that were
behind schedule, 11.1% were involved in 3-4 projects that were behind schedule, 2.1% were
involved in 5-6 projects that behind schedule and 0.7% were involved in more than 8 projects
that were behind schedule.
54,9%
60.0
50.0
40.0
31,2%
30.0
11,1%
20.0
2,1%
10.0
0,7%
0.0
None
77
Figure 7.12 shows the period of schedule overruns on construction projects that the
respondents were involved in. It reveals that 72.1% of the respondents said their projects are
behind schedule by 0-6 months, 18.6% said 7-12 months, 4.3% said 13-18 months, 2.9% said
19-24 months, 1.4% said more than 3 years and 0.7% said their projects were behind
schedule by 25-30 months.
80.0
72,1%
70.0
60.0
50.0
40.0
30.0
18,6%
20.0
10.0
4,3%
2,9%
0,7%
13 18
Months
19 24
Months
25 30
Months
1,4%
0.0
06
Months
7 12
Months
More than
3 years
Figure 7.13 shows the types of construction projects that experience cost overruns. It reveals
that 14.4% of the respondents said renovations experience the most cost overruns. 12.7% said
construction of shopping complexes, 12.1% said road construction, 11.9% said construction
of housing estates, 11.3% said construction of schools, 11.0% said construction of hospitals,
10.7% said other civil works like dam construction, 10.2% said construction of government
offices and 5.5% said stadia construction experiences more cost overruns.
78
12.7%
Shopping complexes
5.5%
Stadia
14.6%
10.2%
Government offices
10.7%
12.1%
Road construction
11,9%
Housing estates
11.0%
Hospitals
11.3%
Schools
0.0%
2.0%
4.0%
6.0%
8.0%
Figure 7.14 shows the types of projects that encounter schedule overruns. It reveals that
15.1% of the respondents said renovations experience more schedule overruns, 14.2% said
shopping complexes, 12% said road construction, 11.1% said housing estates, 11.1% said
other civil works like dam construction, 10.7% said construction of schools, 9.5% said
construction of hospitals, 9.5% said construction of government offices, and 6.8% said
construction of stadia experiences more schedule overruns.
14.2%
Shopping complexes
6.8%
Stadia
15.1%
9.5%
Government offices
11.1%
12.0%
Road construction
11.1%
Housing estates
9.5%
Hospitals
10,7%
Schools
0.0%
2.0%
4.0%
6.0%
8.0%
7.3.2 Section B: Causes of construction projects cost overruns in Gauteng, South Africa
Table 7.1 reveals the respondents ranking of factors that cause cost overruns in Gauteng,
South Africa. It reveals that inadequate planning was ranked first with a mean score of 4.27
and standard deviation (SD) = 0.889; change in project design was ranked second with a
mean score of 4.19 and SD = 0.908; poor project management assistance was ranked third
with a mean score of 3.98 and SD = .960; inadequate financial provision was ranked fourth
with a mean score of 3.94 and SD = 0.830 and inaccurate estimates was also ranked fourth
with a mean score of 3.94 and SD = 0.919. The table further reveals that shortage of skilled
workers was ranked eighth with a mean score 3.74 and SD = 1.053; insufficient time for
estimation was ninth with mean score 3.71 and SD = 1.017 and lack of executive capacity by
the employer was ranked tenth with a mean score of 3.69 and SD = 0.965. Moreover, the
table shows that breach of local regulations was ranked sixteenth with a mean score of 3.40
and SD = 1.026; unsteady economy was ranked seventeenth with a mean score of 3.20 and
SD = 1.112, project site location was raked eighteenth with a mean score of 3.16 and SD =
1.106 and shortage of unskilled site workers was raked the least with a mean score of 3.12
and SD = 1.207.
Inadequate planning
0.889
4.27
0.908
4.19
0.960
3.98
0.830
3.94
Inaccurate estimates
0.919
3.94
Variation orders
0.913
3.93
Contractors inexperience
1.078
3.93
Poor workmanship
0.891
3.92
Overdesign
1.092
3.76
1.053
3.74
1.017
3.71
0.965
3.69
10
(Professionals/Consultants)
80
Project complexity
1.000
3.69
10
0.978
3.61
11
1.150
3.61
11
1.053
3.57
12
1.064
3.55
13
0.951
3.53
14
Inflation
0.905
3.46
15
1.026
3.40
16
Unsteady economy
1.112
3.20
17
1.106
3.16
18
1.207
3.12
19
The respondents were further asked to rank causes of schedule overruns related to the owners
in Gauteng. The following results as shown in Table 7.2 were obtained: slowness in decision
making process was ranked first with a mean score of 4.15 and standard deviation (SD) =
0.802; change in design by the owner during construction was also ranked first with a mean
score of 4.15 and SD = 0.839; poor project coordination was ranked second with a mean
score of 4.13 and SD = 0.892; late revising and approving of design documents was ranked
third with a mean score of 4.08 and SD = 0.835 and poor communication was ranked fourth
with a mean score of 4.01 and SD = .0924. Table 7.2 additionally shows that delay in handing
over the site was ranked seventh with a mean score of 3.80 and SD = 0.929; delay in
approving shop drawings was ranked eighth with a mean score of 3.78 and SD = 0.854 and
delay in approving sample materials was ranked the least with a mean score of 3.74 and SD =
0.965.
81
0.802
4.15
0.839
4.15
0.892
4.13
0.835
4.08
0.924
4.01
0.997
3.89
1.105
3.85
0.929
3.80
0.854
3.78
0.965
3.74
team
82
0.771
4.23
Poor coordination
0.769
4.19
Poor communication
0.822
4.18
0.796
4.14
0.915
3.99
Contractors experience
1.034
3.98
0.840
3.94
0.940
3.94
0.886
3.92
0.901
3.92
0.858
3.86
0.960
3.78
10
1.059
3.68
11
0.985
3.60
12
project
Conflicts between contractor and other parties
(Construction team members)
The respondents were furthermore asked to rank causes of schedule overruns related to the
consultants in Gauteng. The following results as shown in Table 7.4 were obtained: delay in
approving major changes in the scope of work was raked first with a mean score of 4.14 and
standard deviation (SD) = 0.905; unclear and inadequate details in drawings was ranked
second with a mean score of 4.12 and SD = 0.840; poor communication was ranked third
with a mean score 4.10 and SD = 0.823; poor coordination was ranked fourth with a mean
score of 4.06 and SD = 0.848 and delay in producing design documents was ranked fifth with
a mean score of 4.01 and SD = 0.881. Additionally, Table 7.4 shows that insufficient data
collection and survey before design was ranked eighth with a mean score of 3.92 and SD =
83
0.921 and lack of advanced engineering design software was ranked the least with a mean
score of 3.50 and SD = 1.008.
0.905
4.14
0.840
4.12
Poor communication
0.823
4.10
Poor coordination
0.848
4.06
0.881
4.01
0.833
4.00
0.937
3.96
0.921
3.92
1.008
3.50
84
0.847
4.09
0.920
4.01
0.885
3.97
0.964
3.88
0.968
3.88
0.981
3.87
0.928
3.86
0.916
3.81
1.047
3.65
1.101
3.63
1.028
3.52
10
market
Availability of improved materials on the market
Furthermore, the respondents were asked to rank causes of schedule overruns related to
equipment in Gauteng. The following results as shown in Table 7.6 were obtained: shortage
of skilled operators was ranked first with a mean score 3.88 and standard deviation (SD) =
0.949; shortage of equipment was also ranked first with a mean score of 3.88 and SD =
0.954; equipment breakdowns was ranked second with a mean score of 3.79 and SD = 0.966;
low productivity and efficiency of equipment was ranked third with a mean score of 3.72 and
SD = 0.963; use of wrong equipment was ranked fourth with a mean score of 3.61 and SD =
1.082; use of absolute equipment was ranked fifth with a mean score of 3.43 and SD = 0.970
and lack of high-technology equipment was ranked the least with a mean score of 3.35 and
SD = 1.071.
85
0.949
3.88
Shortage of equipment
0.954
3.88
Equipment breakdowns
0.966
3.79
0.963
3.72
1.082
3.61
0.970
3.43
1.071
3.35
86
0.822
4.05
Inexperience of workers
0.832
3.96
0.892
3.91
0.835
3.80
Shortage of labour
1.142
3.73
0.999
3.62
1.079
3.40
immigrant workers
X = Standard deviation; x = Mean item score; R = Rank
The respondents were asked to rank causes of schedule overruns related to external factors in
Gauteng. The following results as shown in Table 7.8 were obtained: delay in obtaining
permits from municipality was ranked first with a mean score of 3.98 and standard deviation
(SD) = 0.835; weather effects on construction activities was ranked second with a mean score
of 3.77 and SD = 0.951; delay in performing final inspection and certification was ranked
third with a mean score of 3.76 and SD = 0.992; effects of subsurface and ground conditions
was ranked fourth with a mean score of 3.71and SD = 0.883 and delay in providing services
from utilities was ranked fifth with a mean score of 3.62 and SD = 0.931. Further, the table
reveals that change in economic factors was ranked eighth with a mean score of 3.60 and SD
= 1.059; change in government regulations and laws was ranked ninth with a mean score of
3.51 and SD = 1.016 and traffic control and restriction at site was ranked the least with a
mean score of 3.42 and SD = 1.019.
87
0.835
3.98
0.951
3.77
0.992
3.76
0.883
3.71
0.931
3.62
Natural disasters
1.139
3.63
Political interference
1.071
3.61
1.059
3.60
1.016
3.51
1.019
3.42
10
88
Table 7.9: Health and Safety related causes of construction projects schedule overruns
X
0.969
3.73
1.024
3.72
1.024
3.69
0.922
3.64
1.065
3.57
1.015
3.54
1.013
3.53
1.093
3.51
0.998
3.46
1.117
3.10
10
regulations
7.3.4 Section D: Effects of construction projects cost overruns in Gauteng, South Africa
Table 7.10 reveals the respondents ranking of effects of cost overruns in Gauteng, South
Africa. It shows that construction project delays was ranked first with a mean score of 4.26
and standard deviation (SD) = 0.856; increased project cost due to extension of time was
ranked second with a mean score of 4.13 and SD = 0.871; liability of companies or firms to
bad debt was ranked third with a mean score of 4.03 and SD = 0.930; project abandonment
was ranked fourth with a mean score of 3.91 and SD = 0.975; company or firm insolvency
was ranked fifth with a mean score of 3.89 and SD = 0.865; under-utilisation of plant and
equipment purchased for the project was ranked sixth with a mean score of 3.82 and SD =
0.955; tying down clients capital was ranked seventh with a mean score of 3.78 and SD =
0.954 and under-utilisation of manpower resources was ranked the least with a mean score of
3.78 and SD = 0.972.
89
0.856
4.26
0.871
4.13
0.930
4.03
Project abandonment
0.975
3.91
Company/firms insolvency
0.865
3.89
0.955
3.82
0.954
3.78
0.972
3.78
Furthermore, the respondents were asked to rank the effects of construction projects schedule
overruns in Gauteng, South Africa. Table 7.11 reveals that extension of time was ranked first
with a mean score of 4.33 and standard deviation (SD) = 0.829; cost overruns was also
ranked first with a mean score of 4.33 and SD = 0.846; loss of profit was ranked second with
a mean score of 4.16 and SD = 0.939; disputes was ranked third with a mean score of 4.11
and SD =0.831 and poor quality of work due to hurrying the project was ranked fourth with a
mean score of 4.10 and SD = 0.837. Table 7.11 likewise reveals that delaying in getting profit
by the contractor was ranked ninth with a mean score of 3.92 and SD = 0.884; creates stress
on the contractor was also ranked ninth with a mean score of 3.92 and SD = 0.949; delaying
the client to repay back bank loans was ranked tenth with a mean score of 3.90 and SD =
0.995 and bad reputation with the client was ranked eleventh with a mean score of 3.89 and
SD = 1.008. The table additionally shows that total project abandonment was ranked
sixteenth with a mean score of 3.70 and SD = 1.075; loss of skilled employees was also
ranked sixteenth with a mean score of 3.69 and SD = 1.077; negative social impact was
ranked eighteenth with a mean score of 3.54 and SD = 0.904 and loss of un-skilled
employees was ranked the least with a mean score of 3.10 and SD = 1.099.
90
Extension of time
0.829
4.33
Cost overruns
0.846
4.33
Loss of profit
0.939
4.16
Disputes
0.831
4.11
0.837
4.10
0.931
4.01
Acceleration losses
0.826
3.98
0.944
3.96
Claims
0.974
3.95
0.884
3.92
0.949
3.92
0.995
3.90
10
1.008
3.89
11
Termination of contracts
1.075
3.83
12
Arbitration
0.875
3.81
13
1.050
3.80
14
Idling resources
0.877
3.71
15
Litigation
0.994
3.70
16
1.075
3.70
16
1.077
3.69
17
0.904
3.54
18
1.099
3.10
19
91
Adequate planning
0.691
4.48
0.765
4.36
0.714
4.31
Good workmanship
0.762
4.31
0.867
4.31
0.751
4.30
0.800
4.30
0.789
4.27
0.757
4.26
0.713
4.22
0.871
4.20
0.766
4.18
92
0.808
4.17
10
0.824
4.13
11
Adequate designs
0.806
4.11
12
0.891
4.10
13
0.779
4.08
14
0.846
4.06
15
0.898
4.06
15
0.850
4.05
16
1.009
3.87
17
team
tender document
The respondents were asked to rank the measures of minimising schedule overruns in
Gauteng. Table 7.13 reveals that proper project planning and scheduling was ranked first with
a mean score of 4.57 and standard deviation (SD) = 0.686; effective strategic planning was
ranked second with a mean score of 4.53 and SD = 0.678; site management and supervision
was ranked third with a mean score of 4.48 and SD = 0.738; frequent coordination between
the construction team was ranked fourth with a mean score of 4.44 and SD = 0.677 and
availability of clear information and communication channels was ranked fifth with a mean
score of 4.42 and SD = 0.734. The table further shows that collaborative working by the
entire construction team was ranked eighth with a mean score of 4.36 and SD = 0.799; proper
material procurement was ranked ninth with a mean score of 4.29 and SD = 0.720 and
appropriate construction methods was ranked tenth with a mean score of 4.24 and SD =
0.847. Table 7.13 likewise reveals that use of up-to-date technology was ranked thirteenth
with a mean score of 3.90 and SD = 0.951 and fast-tracking construction was ranked the least
with a mean score of 3.83 and SD = 1.028.
93
0.686
4.57
0.678
4.53
0.738
4.48
0.677
4.44
0.734
4.42
0.732
4.39
0.794
4.39
0.727
4.37
0.800
4.37
0.799
4.36
0.720
4.29
0.847
4.24
10
0.847
4.19
11
0.980
3.94
12
0.951
3.90
13
Fast-tracking construction
1.028
3.83
14
MEASURES
OF
MINIMISING
SCHEDULE
OVERRUNS
channels
7.4
CHAPTER SUMMARY
Data obtained from the well-structured questionnaire sent out and completed by the
architects, quantity surveyors, civil engineers, construction managers, construction project
managers, project managers and other professionals that are involved in construction projects
in Gauteng was presented and analysed in this chapter. The next chapter will focus on the
discussion of the findings from the research analysis in relation to the research questions and
the research objectives that were formulated in Chapter One. The purpose for this is to
establish if the research objectives were met.
94
CHAPTER EIGHT
8.1
CHAPTER INTRODUCTION
Chapter eight discusses the findings from the research analysis in relation to the research
questions. The findings are further discussed in relation to the reviewed literature in Chapters
2, 3, 4 and 5. This is with the view of ascertaining if the defined research problems have been
answered from the findings analysis in Chapter Seven. Results have been presented in
relation to the research question and the relevant data as required. This chapter also presents
conclusions based on the research objectives and finally gives a general research conclusion.
8.2
RESEARCH QUESTION 1
What are the factors that cause cost overruns on construction projects in South Africa?
8.2.1 Findings
Based on the ranking (R) using the calculated standard deviation (SD) and mean scores (x)
for the listed causes of construction projects cost overruns, it was observed that the most
dominant causes include: inadequate planning (SD=0.889; x=4.27; R=1), change in project
design (SD=0.908; x= 4.19; R=2), poor project management assistance (Professionals or
Consultants) (SD=0.960; x=3.98; R=3), inadequate financial provision (SD=0.830; x=3.94;
R=4), inaccurate estimates (SD=0.919; x=3.94; R=4), variation orders (SD=0.913; x=3.93;
R=5), contractors inexperience (SD=1.078; x=3.93; R=5); poor workmanship (SD=0.891;
x=3.92; R=6), overdesign (SD=1.092, x=3.76; R=7) and shortage of skilled site workers
(SD=1.053; x=3.74; R=8). These findings were similar to the findings by Eshofonie
(2008:32), where cost of material, incorrect planning and poor contract management were
revealed to be the major causes of construction projects cost overruns. Similarly, the results
were similar to the results shown in the study of Frinpong et al. (2003:324) where planning
and scheduling deficiencies was identified as the major cause of construction projects cost
overruns. However, the results were not in agreement with the study by Baloyi and Bekker
(2013:60) where increase in material cost and inaccurate material estimates were identified as
the major causes of construction projects cost and schedule overruns. Further, the results in
the current study did not agree with the study by Ali and Kamaruzzama (2010:112) where
95
inaccurate estimate of original cost, inflation of project costs and improper planning were the
major causes of cost overruns.
8.3
RESEARCH QUESTION 2
What are the factors that cause schedule overruns on construction projects in South Africa?
8.3.1 Findings
Based on the complex nature of construction project schedule overruns, in order to rightly
answer this research question, the factors that cause construction schedule overruns were
categorised into: owner related; contractor related; consultant related; material related;
equipment related; labour related; causes by eternal factors and health and safety causes of
schedule overruns. The findings relating to the present research question are thus presented as
such.
96
97
98
99
8.4
RESEARCH QUESTION 3
What are the effects of cost overruns on construction projects in South Africa?
8.4.1 Findings
Based on the ranking (R) using the calculated standard deviation (SD) and mean scores (x)
for the listed effects of construction projects cost overruns in Gauteng, it was revealed that
the effects of cost overruns include: construction projects delays (SD=0.856; x=4.26; R=1),
increased project cost due to extension of time (SD=0.871; x=4.13; R=2), liability of
companies or firms to bad debt (SD=0.930; x=4.03; R=3), project abandonment (SD=0.975;
x=3.91; R=4), company or firms insolvency (SD=0.965; x=3.89; R=5), under-utilisation of
plant and equipment purchased for the project (SD=0.955; x=3.82; R=6), tying down clients
capital (SD=0.954; x=3.78; R=7) and under-utilisation of manpower resources (SD=0.972;
x=3.78; R=7). These findings were in agreement with the studies by Nega (2008: 103) where
delays during construction were identified as the major effect of cost overruns. However, the
findings were not in agreement with the study by Eshofonie (2008:20) where company or
firm liability to insolvency was identified as the major effect of construction projects cost
overruns.
100
8.5
RESEARCH QUESTION 4
What are the effects of Schedule overruns on construction projects in South Africa?
8.5.1 Findings
Furthermore, the respondents were asked to rank the effects of construction projects schedule
overruns in Gauteng, the results obtained included the follows: extension of time (SD=0.829;
x=4.33; R=1), cost overruns (SD=0.846; x=4.33; R=1), loss of profit (SD=0.939; x=4.16;
R=2), disputes (SD=0.831; x=4.11; R=3), poor quality of work due to hurrying the project
(SD=0.837; x=4.10; R=4), creates stress to the client (SD=0.931; x=4.01; R=5), acceleration
losses (SD=0.826; x=3.98; R=6), bad reputation with contraction team (SD=0.944; x=3.96;
R=7), claims (SD=0.974; x=3.96; R=8) and delay in getting profit by the client (SD=0.884;
x=3.92; R=9) were the top ten effect of construction projects effects in Gauteng. The findings
were similar to the results in the study by Sunjka and Jacob (2013: 7), Aibinu and Jagboro
(2002: 595), Motaleb and Kishk (2010:1155) and Pourrostam and Ismail (2011:454) were
time overrun and cost overruns was identified as the major effects of construction projects
schedule overruns.
8.6
RESEARCH QUESTION 5
What measures can be taken to minimize cost and schedule overruns on construction projects
in South Africa?
8.6.1 Findings
Based on the ranking (R) using the calculated standard deviation (SD) and mean scores (x)
for the listed measures of minimising construction projects cost overruns in Gauteng, results
showed that the most effective measures include the following: adequate planning
(SD=0.691; x=4.48; R=1), proper pre-contract planning (SD=0.765; x=4.36; R=2), proper
project implementation and management (SD=0.714; x=4.31; R=3), good workmanship
(SD=0.762; x=4.31; R=3), appointment of experienced contractors (SD=0.867; x=4.31; R=3),
ordering the right materials (SD=0.751; x=4.30; R=4), completed designs at the time of
tender (SD=0.800; x=4.30; R=4), timely supply of material (SD=0.789; x=4.27; R=5), use of
appropriate construction methods (SD=0.757; 4.26; R=6) and employment of experienced
site workers (SD=0.713; x=4.22; R=7). These findings were in agreement with the results in
the study by Menon et al (2012:50) where effective project planning was highlighted as the
most effective measure of minimising construction projects cost overruns. However the
101
findings were not in agreement with the study by Arcila (2012: 34) and Azis et al
(2013:2625) where adequate funding and proper costing and financing respectively were
identified as the major measure of minimising construction projects cost overruns.
Furthermore, the respondents were asked to ranks the measures that can be undertaken to
minimise construction projects schedule overruns. The survey revealed the following factors
as the top ten measure of minimising construction projects schedule overruns in Gauteng:
proper project planning and scheduling (SD=0.686; x=4.57; R=1), effective strategic
planning (SD=0.678; x=4.53; R=2), site management and supervision (SD=0.738; x=4.48;
R=3), frequent coordination between the construction team (SD=0.677; x=4.44; R=4),
availability of clear information and communication channels (SD=0.734; x=4.42; R=5),
complete and proper design at the right time (SD=0.732; x=4.39; R=6), frequent progress
meeting (SD=0.794; x=4.39; R=7), adherence to construction specifications (SD=0.727;
x=4.37; R=8), building according to the construction drawings (SD=0.800; 4.37; R=9) and
collaboration working by the entire construction team (SD=0.799; x=4.36; R=10). These
findings were similar to the findings of Jonathan (20013:7) and Memon et al (2012:50) where
effective project planning was identified as the most effective way of minimising
construction projects schedule overruns. However, the study by Wei (2010:57) identified site
management and supervision as the most effective measure of minimising construction
projects schedule overruns.
8.7
CONCLUSIONS
The aim of the current research study was to explore the causes, effects and methods of
minimising construction project cost and schedule overruns in Gauteng, South Africa. In this
chapter the conclusions and recommendations of the research study are presented and
discussed in relation to the objectives of the study. In order to accomplish this purpose, the
specific objectives of the study were:
102
To establish measures that can be taken to minimize cost and schedule overruns on
construction projects in Gauteng, South Africa.
Below the researcher demonstrates how the current study objectives were answered.
Literature revealed that the major causes of construction cost overruns include: fluctuation in
prices of raw materials, unstable cost of manufactured materials, high cost of machineries,
lowest bidding procurement method, poor project management and poor cost control, design
changes, risk and uncertainty associated with projects, inaccurate evaluation of projects time
or duration, non-performance of subcontractors and nominated suppliers, complexity of
works, additional work, inappropriate government policies and priorities and improper
planning were among the identified causes of cost overruns.
Findings from the questionnaire survey results obtained from the respondents showed that
inadequate planning, change is project design, poor project management, inadequate financial
provision,
inaccurate
estimates,
variation
orders,
contractors
inexperience
poor
workmanship, overdesign and shortage of skilled site workers were the top ten causes of
construction projects cost overruns in Gauteng revealed from the questionnaire survey. Hence
the research objective was achieved from both literature review and from a well-structured
questionnaire.
103
From the survey results obtained from the respondents, slowness in decision making process,
reworks due to errors during construction, delay in approving major changes in the scope of
work, delay in material delivery, shortage of skilled equipment operators, low productivity
level of workers, delay in obtaining permits from municipalities and workers risky behaviour
on sites were the major causes of construction projects schedule overruns in Gauteng, South
Africa. Therefore, it can be inferred that the research objective was met based on the findings
form the structured questionnaire survey.
Literature on the effects of construction cost overruns revealed that additional cost, budget
short fall, adversarial relationship between participants of the project, loss of reputation to the
consultant and project abandonment were among the effects of construction projects cost
overruns.
Findings from the questionnaire survey revealed that construction projects delays, increased
project cost due to extension of time, liability of companies or firms to bad debt, project
abandonment, company or firms insolvency, under-utilisation of plant and equipment
purchased for the project, tying down clients capital and under-utilisation of manpower
104
resources were the effects of construction projects cost overruns in Gauteng, South Africa.
Hence the objective of the study was achieved from both literature review and from a wellstructured questionnaire.
Literature revealed that there are various effects of construction projects schedule overruns.
The following were identified as some of the effects of construction project delays according
to literature; time overrun (extension of time), cost overrun, disputes, arbitration, litigation,
total abandonment and claims.
From the questionnaire survey obtained from the respondents, it was revealed that extension
of time, cost overruns, loss of profit, disputes, poor quality of work due to hurrying the
project, creates stress to the client, acceleration losses, bad reputation with contraction team,
claims and delay in getting profit by the client were the top ten identified effects of
construction projects cost overruns in Gauteng, South Africa. Therefore, the research
objective was achieved in the current study.
Literature reviewed revealed the following among others as the major measures that can be
taken to minimise construction projects cost overruns: adequacy of funding, adequacy of
plans and specifications, budget updates, constructability, economic risks, owner's
involvement and frequent feedback, owner's commitment to established schedules and
budget, project manager commitment and involvement, project manager competency and
experience, realistic obligations and clear objectives and risk identification and management.
Furthermore, literature identified the following as some of the measure that can be taken to
minimise construction projects schedule overruns; site management and supervision,
effective strategic planning, clear information and communication channels, collaborative
105
From the survey results obtained from respondents it was observed that adequate planning,
proper pre-contract planning, proper project implementation and management, good
workmanship, appointment of experienced contractors, ordering the right materials,
completed designs at the time of tender, timely supply of material, use of appropriate
construction methods and employment of experienced site workers.
Furthermore, the questionnaire survey revealed the following as the top ten measures that can
be undertaken to minimise construction projects schedule overruns in Gauteng, South Africa:
proper project planning and scheduling, effective strategic planning, site management and
supervision, frequent coordination between the construction team, availability of clear
information and communication channels, complete and proper design at the right time,
frequent progress meeting, adherence to construction specifications, building according to the
construction drawings and collaboration working by the entire construction team. Therefore it
can be concluded that the research objective was achieved from both literature review and
from a well-structured questionnaire.
8.8
Literature review revealed that there are a number of factors that causes construction projects
cost overruns. The causes identified from the literature were similar to those identified in the
current study. Further, the literature review showed that the causes of construction projects
schedule overruns are found at different levels ranging from those caused by the client or
owner to those that are caused by other external factors. The literature showed that each
category of the causes of schedule overruns had different factors that can lead to schedule
overruns on construction projects. This study examined causes of construction project
schedule overruns from the seven identified categories as compiled from an extensive
literature review. Findings from the study supported work done by previous researchers and
scholars that not a singular factor is responsible for causing schedule overruns on
construction projects.
106
Furthermore findings revealed that there are corresponding negative effects of both cost and
schedule overruns on construction projects in Gauteng, South Africa. However, the study
identified measures that can be taken by construction professional to avoid and eventually
reduce construction projects cost and schedule overruns. The empirical study indicate
findings of the causes, effects and methods of minimising construction projects cost and
schedule overruns in Gauteng, South Africa. Therefore, the results revealed in this study
contributes to the body of knowledge and gives valuable suggestions on running construction
projects in way that minimises cost and schedule overruns.
8.9
RECOMMENDATIONS
Construction project cost and schedule overruns usually occur during the construction phase
and they are mostly caused by inadequate planning, change is project design, poor project
management, inadequate financial provision, inaccurate estimates slowness in decision
making process, reworks due to errors during construction, delay in approving major changes
in the scope of work, delay in material delivery, shortage of skilled equipment operators, low
productivity level of workers, delay in obtaining permits from municipalities and workers
risky behaviour on sites among other causes. Therefore,
107
channels, use proper and modern construction equipment, and proper project planning
and scheduling among other identified measures.
8.10
Further study should be conducted to evaluate the extent to which cost and schedule
overruns can be mitigated if only experienced and financially sound contractors are
always appointed.
The current study revealed that late ordering and late delivery of materials are major
causes of schedule overruns. A study should therefore be conducted on the
effectiveness of the procurement systems in South Africa.
Further research should be conducted to evaluate the extent to which cost and
schedule overruns would be reduced when effective health and safety measures are
implemented on construction sites.
108
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construction project objectives. The First Iranian Students Scientific Conference in
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Abedi, M., Fathi, M.S. and Mohammad, M.F. (2011). Major mitigation measures for delays
in construction projects. The First Iranian Students Scientific Conference in Malaysia:
9 and 10 Apr 2011: UPM, Malaysia.
Ade-Ojo, C.O. and Babalola, A.A. (2013). Cost and Time performance of construction
projects under the due process reform in Nigeria. Research Inventy: International
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MUKUKA M.J.
120
APPENDIX 2: Questionnaire
QUESTIONNAIRE ON COST AND SCHEDULE OVERRUNS ON CONSTRUCTION PROJECTS IN
SOUTH AFRICA
INSTRUCTIONS:
PLEASE ANSWER THE FOLLOWING QUESTIONS BY CROSSING (X) ON THE RELEVANT
BLOCK OR WRITTING DOWN YOUR ANSWER IN THE SPACE PROVIDED.
EXAMPLE of how to complete this questionnaire:
Your gender? If you are female:
Male
Female
1
2
SECTION A - BACKGROUND INFORMATION
This section of the questionnaire refers to background or biographical information. Although we are aware of
the sensitivity of the questions in this section, the information will allow us to compare groups of respondents.
Once again, we assure you that your response will remain anonymous. Your cooperation is appreciated.
1.
Gender
Male
Female
2.
1
2
3.
Ethnicity
Black
White
Coloured
Indian or Asian
4.
1
2
3
4
5
6
7
8
1
2
3
4
1
2
3
4
5
6
7
121
5.
6.
7.
1
2
3
4
5
6
7
8.
State the number of construction project you are currently involved in.
None
1 2 projects
3 4 projects
5 6 projects
7 8 projects
More than 8 projects
9.
1
2
3
4
5
1
2
3
4
5
6
How many of these projects are beyond the original contract sum?
None
1 2 projects
3 4 projects
5 6 projects
7 8 projects
More than 8 projects
1
2
3
4
5
6
10. State the amount of cost overruns that your project is experiencing
None
R0 R50 000
R50 001 R100 000
R100 001 R200 000
R200 001 R300 000
R300 001 R500 000
Over R500 000
1
2
3
4
5
6
7
122
1
2
3
4
5
6
1
2
3
4
5
6
7
13. What type of construction projects frequently encounter cost overruns? ( you can select more than one option)
Schools
Hospitals
Housing estates
Road construction
Other civil works (Dams etc.)
Government offices
Renovations (Residential, civil etc)
Stadia
Shopping complexes
Others, specify:
1
2
3
4
5
6
7
8
9
10
14. What type of construction projects frequently experience schedule overruns? ( you can select more than one
option)
Schools
Hospitals
Housing estates
Road construction
Other civil works (Dams etc.)
Government offices
Renovations (Residential, civil etc)
Stadia
Shopping complexes
Others, specify:
1
2
3
4
5
6
7
8
9
10
123
To what extent do you agree with each of the following statements? Please indicate your answers using the
following 5-point scale where:
1 = Strongly disagree (SD)
2 = Disagree (D)
3 = Neutral (N)
4 = Agree (A)
5 = Strongly agree (SA)
15. What are the major causes of cost overruns on construction projects in South Africa?
CAUSES OF COST OVERRUNS
SD
1
Contractors inexperience
1
CCO1
2
Inadequate planning
1
CCO2
3
Inflation
1
CCO3
4
Variation order
1
CCO4
5
Change in project design
1
CCO5
6
Project complexity
1
CCO6
7
Shortening of contract period
1
CCO7
8
Insufficient time for estimation
1
CCO8
9
Unstable economy
1
CCO9
10
Shortage of skilled site workers
1
CCO10
11
Shortage of unskilled site workers
1
CCO11
12
Poor project management assistance
1
CCO12
(Professionals/Consultants)
13
Inaccurate estimate
1
CCO13
14
Overdesign
1
CCO14
15
Project site location
1
CCO15
16
Material price fluctuations
1
CCO16
17
Site conflicts among construction parties
1
CCO17
18
Poor workmanship
1
CCO18
19
Inadequate financial provision
1
CCO19
20
Unsteady material supply
1
CCO20
21
Inclement weather condition
1
CCO21
22
Breach of local regulation
1
CCO22
23
Lack of executive capacity by employer
1
CCO23
124
D
2
2
2
2
2
2
2
2
2
2
2
2
N
3
3
3
3
3
3
3
3
3
3
3
3
A
4
4
4
4
4
4
4
4
4
4
4
4
SA
5
5
5
5
5
5
5
5
5
5
5
5
2
2
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
5
5
2.
= Disagree (D)
3.
= Neutral (N)
4.
= Agree (A)
5.
16. What are the major causes of schedule overruns on construction projects in South Africa?
CATEGORY
OwnerRelated
DOR1
DOR2
2
3
DOR3
DOR4
DOR5
DOR6
DOR7
DOR8
DOR9
DOR10
4
5
6
7
8
9
10
categories
Contractorrelated
DCR1
DCR2
DCR3
DCR4
DCR5
DCR6
DCR7
DCR8
DCR9
DCR10
DCR11
DCR12
DCR13
DCR14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
SD
1
D
2
N
3
A
4
SA
5
1
1
2
2
3
3
4
4
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
SD
1
1
1
D
2
2
2
N
3
3
3
A
4
4
4
SA
5
5
5
1
1
2
2
3
3
4
4
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
1
1
2
2
3
3
4
4
5
5
125
Consultantrelated
DCOR1
DCOR2
DCOR3
DCOR4
DCOR5
DCOR6
DCOR7
DCOR8
DCOR9
DMR1
Materialrelated
DMR2
DMR3
DMR4
DMR5
DMR6
DMR7
DMR8
DMR9
DMR10
DMR11
Equipmentrelated
DER1
DER2
DER3
DER4
DER5
Labourrelated
1
2
3
4
5
6
7
8
9
1
2
3
4
5
6
7
8
9
10
11
1
2
3
4
5
DER6
DER7
6
7
DLR1
1
2
DLR2
DLR3
DLR4
DLR5
DLR6
DLR7
3
4
5
6
7
SD
1
D
2
N
3
A
4
SA
5
1
1
1
1
2
2
2
2
3
3
3
3
4
4
4
4
5
5
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
SD
1
D
2
N
3
A
4
SA
5
1
1
2
2
3
3
4
4
5
5
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
SD
1
1
1
1
D
2
2
2
2
N
3
3
3
3
A
4
4
4
4
SA
5
5
5
5
1
1
2
2
3
3
4
4
5
5
SD
1
1
D
2
2
N
3
3
A
4
4
SA
5
5
1
1
1
1
1
2
2
2
2
2
3
3
3
3
3
4
4
4
4
4
5
5
5
5
5
126
External
factors
DEF1
DEF2
DEF3
DEF4
DEF5
DEF6
DEF7
Health and
safetyrelated
1
2
3
4
5
6
7
DEF8
DEF9
DEF10
8
9
10
HSR1
HSR2
1
2
3
HSR3
HSR4
HRS5
HSR6
HSR7
HSR8
HRS9
HSR10
4
5
6
7
8
9
10
SD
1
1
D
2
2
N
3
3
A
4
4
SA
5
5
1
1
1
1
1
2
2
2
2
2
3
3
3
3
3
4
4
4
4
4
5
5
5
5
5
1
1
1
2
2
2
3
3
3
4
4
4
5
5
5
SD
1
1
1
D
2
2
2
N
3
3
3
A
4
4
4
SA
5
5
5
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
2.
= Unlikely (U)
3.
= Neutral (N)
4.
= likely (L)
5.
ECO1
ECO2
ECO3
ECO4
ECO5
ECO6
ECO7
1
2
3
4
5
6
7
ECO8
127
EU
1
1
1
1
1
1
1
U
2
2
2
2
2
2
2
N
3
3
3
3
3
3
3
L
4
4
4
4
4
4
4
EL
5
5
5
5
5
5
5
2.
= Unlikely (U)
3.
= Neutral (N)
4.
= likely (L)
5.
18. What are the effects of construction project schedule overrun in South Africa?
EU
EL
ED1
Extension of Time
ED2
Cost overrun
ED3
Disputes
ED4
Arbitration
ED5
ED6
Litigation
ED7
Claims
ED8
ED9
ED10
10
Termination of contracts
ED11
11
Loss of profit
ED12
12
ED13
13
ED14
14
ED15
15
Idling resources
ED16
16
ED17
17
ED18
18
ED19
19
ED20
20
ED21
21
ED22
22
Acceleration losses
128
EU
EL
MMCO1
MMCO2
Adequate planning
MMCO3
MMCO4
MMCO5
MMCO6
MMCO7
MMCO8
MMCO9
MMCO10
10
MMCO11
11
MMCO12
12
MMCO13
13
Adequate Designs
MMCO14
14
MMCO15
15
MMCO16
16
Good workmanship
MMCO17
17
MMCO18
18
MMCO19
19
MMCO19
20
MMCO20
21
129
EU
EL
MMD1
MMD2
MMD3
MMD4
MMD5
MMD6
MMD7
MMD8
MMD9
MMD10
10
MMD11
11
MMD12
12
MMD13
13
Fast-tracking construction
MMD14
14
MMD15
15
MMD16
16
Thank you for your co-operation in completing this questionnaire and for also helping the construction
industry with the knowledge of construction projects cost and schedule overruns.
130