Assessment of Cost and Time Overrun in Addis Djibouti Railway Project

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Addis Ababa University


Transportation is the back bone of a nation’s economic activities. Mass transit system like rail systems shall be constructed for efficient transportation. The railway connecting Ethiopia with Djibouti was a meter gauge line opened in 1917. A new line contract was awarded to China Civil Engineering Construction Corporation (CCECC ) and China Railway Engineering Corporation (CREC ) having double track for the first 115 Km from Addis Ababa to Adama, and single track for the remaining 600Km to Djibouti. The huge investment in the project and import export importance of the line were a case for evaluating the presence and cause of cost and time overrun. Since time overrun has a high attribute to cost overrun, in this thesis the time and cost overruns of the project had been assessed. This research assessed the effect of amendment on cost overrun and the increased out goings of the foreign currency. Questionnaire survey has been conducted on a total of 28 respondents from client, contractors and client representative to model the cause factors of project overrun using Partial Least Square (PLS ) approach via SmartplsV3 software package, to assess the cost and time management practice of the project and rank the major impacts of cost and time overrun using Relative Importance Index (RII ). In addition, a detailed archival document review was conducted to get the actual essence of cost and time overrun of the project. Findings of the research shows that, Project Management and Contract Administration related factors (PMCAR ) are the most significant construct or group of factors causing cost and time overrun. Following PMCAR, Financial and Time Management related factors affects cost overrun, while Contractor’s Site Management related factors (CSMR ) affect time overrun respectively. Delayed compensation payments, drainage of foreign currency and lost economical contribution of the project in terms of Time value of money were main impacts of Cost and Time overrun of the Addis-Djibouti railway project. Power supply issues and design changes were the most significant factors which exposed the project to time overrun. Unfinalyzed feasibility study brought many amendments and cost overrun to the three EPC contracts of the project.



Addis-Djibouti, cause factors, cost overrun, time Overrun, PLS-SEM, Railway