Causes and Consequences of Project Cost Overrun in the Construction of Kadisco General Hospital Expansion Project
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Date
2023-06
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Addis Ababa University
Abstract
The construction industry is one of the biggest economic sectors in Ethiopia. It plays a significant role in the development of the country by providing employment opportunities and infrastructure development. However, the industry is overwhelmed with several challenges, which affect the completion of projects within a given budget and timeline. So this project work focuses on the cost overrun causing factors on one of the projects in the city that is Kadisco hospital expansion project. The study is done in descriptive research design by collecting both quantitative and qualitative data. Interviews, document review, and questionnaire technique were applied to collect data. Based on the data found, twenty-Five cost overrun factors has been identified and ranked on their level of impact and 8 factors (material cost increased by inflation, shortage of material, scope change, complexity of the project, and change order (rework). Inappropriate chain of command, labor cost increased, and lack of clear goal and objective on client side) stood out scoring average mean value of above 3.40 as a major impactful factors on the project to deal with cost overrun. The cost overrun mainly affects the owners of the project and the effects are quality compromisation by choosing less quality and less expensive finishing material due to lack of finance, the hospital is forced to be involved in additional debts to finance the project, the contractors and the consultant also losses their reputation by the management team of the hospital. Finally mitigation strategies and recommendation for the main stakeholders are forwarded to be implemented on the second phase of the project and other future projects to avoid or mitigate possible project cost overrun