Analysis Cost Overruns in Manufacturing Projects: Causes, Consequences, and Mitigation Strategies In the case of Yirgalem Addis Textile Factory
No Thumbnail Available
Date
2024-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
The manufacturing industry is growing in recent years in Ethiopia. These industries undertake many kinds manufacturing projects and these projects are affected by cost overruns. Project cost overruns occur when the actual cost of a project exceed the estimated cost of a project. The objective of this study is to analyze cost overrun in manufacturing projects: causes, impacts and mitigation strategies in the case of yirgalem addis textile factory. To achieve the objective of this study, primary data such as questionnaire and interviews were used. Survey type of research design was used in this study. The data gathered were analyzed using descriptive statistics and inferential statistics. The findings of this study indicate that the main causes of cost overrun in textile manufacturing projects were scope change, labor issue, material price fluctuations, and government regulations. The consequence of cost overrun on manufacturing projects which were identified by the study were wastage of resources, financial problems, project delays, project abandonment. Enhanced project management capability, risk and contingency planning, implementation of cost monitoring and control measures were the mitigation strategies. The study’s recommendations are the scope of the project must be defined clearly and communicated to stakeholders, proper cost estimation of cost, monitoring and controlling cost, communicating the cause of cost overrun to all project stakeholders.
Key words: Cost overrun, causes, consequences, mitigation strategy, Textile factory, manufacturing projects