Factors Affecting Effective Project Cost Management: The Case of Nashcon Construction PLC

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Date

2019-11

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Addis Ababa University

Abstract

project is successful only if it is completed within the approved time, quality and budget. Studies show that most projects in Ethiopia are not completed on time because of cost and schedule overrun due to lack of proper project cost management. Managers in the construction industry therefore need to focus on project cost management in order to attain project success. This research is done on a company called Nashcon Construction PLC. The main objective of the research is to improve the company’s Project Cost Management process by identifying factors which affect the effectiveness of the process most. The researcher employed a mixed research approach to investigate the problem under study. Both quantitative and qualitative data was collected through questionnaire and interview from personnel’s in Nashcon Construction PLC. The study concepts were developed through literature survey that enables to find out the variables. Furthermore, In order to obtain more insight on the cases, the study used review of document in the company and also an in-depth interview was conducted to assess the current status of the company’s project cost management implementation. The research result shows that though Nashcon Construction PLC is implementing the three cost management components (Cost Estimation, Cost Budgeting, and Cost Controlling) currently, its cost management system is poor and needs improvement. After data analysis it was discovered that the company’s cost management process is affected more by factors related to Cost Budgeting this shows that the company has of poor cost budgeting system. Furthermore poor scope definition, not updating budget after variation of changes, inaccurate cost budgeting, incomplete design, poor WBS design, material price fluctuation, allowance of numerous variation during project implementation, inaccurate/impractical schedule, poor allocation of costs, failure to site investigation, change in schedule and construction methods, not having a risk register are identified as factors which affect the cost management process of Nashcon Construction PLC.

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Finally, based, proposed to improve the current, project cost management of the company

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