Factors Causing Project Cost Overrun In Construction Project: In Case Of Rama Construction Plc

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Addis Ababa University


Construction projects routinely overrun their cost estimates. Many studies have thus been dedicated to investigate the root cause. The purpose of this study is to identify factors causing construction project cost overrun in RAMA Construction PLC. The study used a descriptive survey type for the assessment. It deploys both quantitative and qualitative research method to collect both primary and secondary sources of data. Both close ended and open ended questions were included on the questionnaire. The interview was unstructured. The secondary source of data was from different journals, study, books, and also from the internet and from these a total of 43 factors were identify which exists in the planning, design and construction phase of construction projects. The sampling technique was non-probability sampling technique, in particular purposive sampling. A total of 50 respondents were chosen and from the distributed questionnaire 43 were collected and 3 employees were interviewed. The data obtained from the questionnaire were later analyzed based on their frequency, severity and importance by using SPSS Version 20. The findings from the analysis were ranked based on their importance index it shows the Currency exchange, Underestimating time requirement, Frequent design change, Economic instability and Number of projects going at the same time are the top five factors causing the project cost overrun. In addition poor project risk management, poor financial control on site was found with highest frequency and severity index. As a result, the recommendation was provided so that the company could minimize the construction project cost form overrun.



Cost Overrun, Construction Projects, Project cost