The Principal Causes Of Cost Overruns And Delays On Construction Projects

Abstract

Delay and cost overrun are common to most construction projects despite the knowledge

attained in project management .Although some authors argue that this is negligible ,It is

important to understand that because of the physical and economic scale of most projects being

driven under the concept of profit to the parent organization and of natonal interest (for

government projects) by the degree of success defined within the iron triangle of cost ,time and

scope (flyvbjerg, 2009).This essay looks at four possible causes of project delay and cost

overrun.

Design Errors

Design errors is one of the major factors which contribute to cost overrun in most projects . It is

important that the client's requirements are represented properly to achieve good technical input

to project execution , therefore a design with errors practically means wrong or insufficient

representation of project works.Normally this would lead to wrong application of techniques in

acheiving result,as the actual project execution begins the subsequent correction of these errors

would lead to cost overrun and delay .Addditionally because project estimations are done based

on the design , errors within the design in the form of ommision or misrepresentation will mean

that the estimation for the project cost will also include these said omissions therefore leading to

extra works etc.

Scope changes

The scope of works is the term that defines the entire project deliverables which is expected at

the end of the project .The scope of works usally details all project plans , estimation , schedule ,

quality and base lines. Any changes which is made to the scope of works during execution will

mean that the entire project plan would have to be looked over , this would mean that more time

and resources would be needed ." With each scope change, precious project resources are diverted to

activities that were not identified in the original project scope, leading to pressure on the project schedule

and budget” (Narayans, 2010).Project scope change sometimes is caused by a wrong initial scope

definition , sudden change of interest etc. This may lead to changes in project deliverables hence

affecting project cost and time completion, therefore proper scope management is necessary to avoid

these setbacks .

Inappropriate And Inadequate procurement and faulty contractual management system

The contract basically underlines payment terms , pricing and service levels . A contract that does not

highlight the entire project clearly subsquently leads to disputes. For example if the contract does not

specify the relevant scope of works , then this may lead to a series negotiations , arbitrations or

mitigation because of work change orders. Additionally ambiguos contratual aggrement with unclear

clauses can lead to potential dispute therefore playing a role in project delay and cost overrun ." It is

important to note that procurement process and contract management is critical to the successful

completion of projects. Thus poor selection of contractors due to low bids, with no technical capability to

handle the project will lead to cost overruns, schedule delays, poor quality, and a final result that is not

acceptable" (PMI, 2010).

The Complexity of the project

The complexity of the project also plays a substantal role in delay and cost overrun .Changes in material

prices and exchange rates may cause subsquent adjustments to the initial budget. Also projects with a

high degree of complexity usually requires complex plans , schedules and estimations, if enough focus

is not placed on them , certain aspects may be ommited from the project plan thereby leading to change

orders , cost overrun and delay .

Conclusion

Although being a very common problem delays and cost ovverruns can be reduce or totally

eliminated using a proper project monitoring and control system that will outline all the

important activities in each phase of the project .In addition ,"Another additional tactics used to

achieving a project with little or no delay and cost overrun is in the definition of project success

factors and criteria. The integration of these factors will lead to a better understanding of the

issues in which the project manager needs to address and design a control system that will

monitor these issue"(Ambituuni ,2011)

References

BORDAT, C et al., 2004. An analysis of cost overrun and time delay of INDOT projects. Joint Transport

Research Program. Purdue e-pubs.

FLYVBJERG, B et al., 2004. What causes cost overrun in transport infrastructure project. Transport

Review Article, 24(1), pp.3-18.

KIMBERLY, R. and JAMES, LYNEIS., 1999. Management focus: the dynamics of project management:

benchmarking the derive of cost and schedule overrun. European Management Journal, 17(2), pp. 135-

150.