Assessment of Factors Affecting Cost Overrun in Public Building Construction Projects: Case Study at the Ethiopian Construction Works Corporation (ECWC)
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Date
2018-12-14
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Addis Ababa University
Abstract
The construction industry has a huge contribution to the overall economy of fast growing
countries like Ethiopia, but cost overrun is causing a negative impact on it. To overcome
this issue, the study aimed at identifying the causes of cost overrun in public building
construction projects. A descriptive survey was conducted on 42 professional
respondents who are actively involved in the construction industry. The samples were
drawn using purposive sampling since the objective was to select participants who have
knowledge & experience in the issues being investigated. Primary data was collected
using the questionnaires and secondary data is collected through reviewing of related
literatures. The study found that most important causes of cost overrun are poor
preplanning process accomplished by the contractor, inaccurate cost estimation by the
contractor, cash flow difficulties faced by the owner of the projects, economic instability
& market inflation pressure on the price of resources, delay in decision making on
critical issues by the consultant and poor financial management & control practices
undertaken by the contractor are the top major factor that causes cost overrun in public
building construction projects. Moreover, the study found out the most effective
mitigation measures for cost overrun verified by the experts are proper project planning
and scheduling by the contractor, appropriate scope definition of the project by the client
&the consultant and realistic cost estimation by the contractor before contract signing.
Therefore, it was concluded that even though the condition and the extent differ all key
stakeholders (client, consultant, contractor, and the external factors) have a significant
contribution for the construction cost overrun. Finally, the study recommended that the
top management of ECWC should capacitate and provide more supervision to the teams
who are responsible for the preparation of the cost estimation for the bid and proper
preplanning process before kicking off the project execution.
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Keywords
Cost overrun, Mitigation measures, public building