Assessment Of Project Cost Overrun, Its Cause And The Mitigation Measures To Improve Project Cost Performance (A Case Of Ethiopian Shipping And Logistics Services Enterprise Construction Projects)

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Addis Ababa University


The study was conducted to find if any cost overrun exists, to identify factors causing cost overrun and the mitigation measures for the factors causing cost overrun in construction projects of ESLSE. Questionnaire was conducted among the construction experts of the client, the consultant and the contractor. Between the years 2012 – 2018, six mega projects are under construction by ESLSE and these projects are assessed. For the explorative data, Cost Performance Index (CPI) of the selected six projects was calculated. Interview sessions were also conducted with the selected expertise of the enterprise. Statistical Package for Social Scientists (SPSS) version 20 was employed to analyze the data for descriptive statistic. From the project status report of the projects, it is found that the costs of the selected six ongoing projects of ESLSE are under budgeted. The identified top ten causes of project cost overrun from the questionnaire survey are escalation of material cost, change in exchange rate, delayed approval of payment, procurement problems, excessive change orders, unclear and inadequate details in drawing, incomplete drawings, increase in cost of labor, too many scope change and constructive change orders by client and change and mistakes in design documents. As the result suggests, the mitigation measures which are extremely significant to improve cost performance of projects are efficient contract management, site management and supervision, effective project planning, scheduling and control, efficient management, effective project manager, skilled and experienced teams, on time payment, realistic cost estimation, possession of site on date, communication and coordination. It is hoped that the mitigation measures and the recommendation that is propose in this paper can help construction experts, particularly those who manage projects, by overcoming unnecessary causes which increase project cost.



Cost Overrun, Construction Project, Factors, Mitigation Measure