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