Assessment of Factors Affecting Cost Overrun of Road Construction Projects, The case of Ethiopian Construction Works Corporation, Transport Infrastructure Construction Sector
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Date
2018-05
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Abstract
In Ethiopian, under a government regulatory body, i.e. Ethiopian Roads Authority, number of
road construction projects is increasing from time to time. However, it becomes difficult to
complete projects in the allocated budget. Cost overrun is one of the major problems of road
construction projects undertook by Ethiopian Construction Works Corporation, Transport
Infrastructure Construction Sector. This research was carried out to assess and rank the severity
of major factors that cause cost overrun during construction projects in the Corporation.
Questionnaire surveys together with desk study were used to collect data on time and cost
overrun. A total of 82 responsescomprising 32 clients, 38 contractors and 12 consultants were
collected and a desk study of 7 completed road construction projects in Ethiopia were
investigated. The data was subjected to descriptive statistical analysis and subsequently mean
scores were determined to rank factors level of severity. From the study it was found that except
one which was completed under estimated budget, the majority of road construction projects
finished with severe cost overrun. The rate of cost overrun ranges from a minimum of 14.85 % to
the maximum of 37.32% of the work executed and certified amount. The study identified 31
causes of cost overrun for the case of Ethiopian Construction Works Corporation, Transport
Infrastructure Construction Sector. The most important causes of cost overrun were found to be
ineffective way of management of Material and Machinery resources at project (3.56), Skill of
Site Management Crew (3.53), wrong method of System/Approach employed to manage site
activities (3.44), contract management (Inadequate knowledge and skills of Project Management
and Contract Administration teams) (3.43) and Design errors (3.4) are the five most important
factors affecting cost of construction projects. It is likely that these findings will help focus on
very significant factors to improve the construction performance of the Corporation in the future.
Description
A Research Submitted In partial fulfillment of the requirement for the Degree of
Master of Business and Administration(MBA in Finance)
Keywords
Cost Overrun, Ethiopian Construction Works Corporation, Transport Infrastructure Construction Sector