Factors Causing Project Cost Overrun In Construction Project: In Case Of Rama Construction Plc
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Date
2018-06-28
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Addis Ababa University
Abstract
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.
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Keywords
Cost Overrun, Construction Projects, Project cost