| Peer-Reviewed

Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District

Received: 11 October 2016     Accepted: 22 October 2016     Published: 5 January 2017
Views:       Downloads:
Abstract

One of the problems has been broadly published in different literature related to construction project management is project cost overrun. To fill this gap, the study on causes of cost overrun was conducted. It was conducted on 18 road construction projects with eight case studies which is found under the southern district of Ethiopian Road Authority. Based on a comprehensive literature review and archives, 40 factors linked to project cost performance were acknowledged for analysis. Based on the percentage of maximum score rank of 40 identified factors, six top rated factors were identified. These are material price fluctuation, cost underestimation, delay in supply of raw materials, inadequate review of contract documents, lack of coordination at the design phase and lack of cost planning during pre- and post- contract stage have the highest impacts on the performance of project costs from the client’s, consultants’ and contractors’ perspective. This study has been done through survey and case study to generate raw data. The questionnaires were distributed to 54 practitioners to evaluate the significance of the factors that causes the project cost overrun. In addition, case studies were used to find the magnitude of cost overrun on selected projects by an in-depth analysis of an archive of each project. The magnitude of cost overrun among selected project extended from 4.16% to 83.2%. While the average magnitude of cost overrun was nearly 21.52%, this is a significant amount when it compared with the number of projects.

Published in American Journal of Civil Engineering (Volume 5, Issue 1)
DOI 10.11648/j.ajce.20170501.15
Page(s) 27-40
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Construction Phase, Project cost Estimation, Project Cost Extent, Project Cost Management, Project Cost Overrun, Project Scope

References
[1] R. R. Venkataraman and J. K. Pinto, Cost and value management in projects, New Jersey: John Wiley & Sons, Inc., 2008.
[2] W. Turkey, "Risk Factors Leading to Cost Overrun in Ethiopian Federal Road Construction Projects and Its Consequences," Addis Ababa, 2011.
[3] B. F. E. J. E. M. a. B. v. W. Chantal C. Cantarelli, "Cost overruns in Large-Scale Transportation Infrastructure Projects: Explanations and Their Theoretical Embeddedness," European Journal of Transport and Infrastructure Research, pp. 5-18, 2010.
[4] J.-K. Lee, "Cost Overrun and Cause in Korean Social Overhead Capital Projects: Roads, Rails, Airports, and Ports," Journal of Urban Planning and Development @ ASCE, pp. 59-62, 2008.
[5] J. K. W. W. Garry D. Creedy Martin Skitmore, "Evaluation of Risk Factors Leading to Cost Overrun in Delivery of Highway Construction Projects," CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE, pp. 535-536, 2010.
[6] P. C. A. S. S. L. A. K. C. S. H. a. F. L. M. Abhishek Bhargava, "Three-Stage Least-Squares Analysis of Time and Cost Overruns in Construction Contracts," Journal of Construction Engineering and Managemen, pp. 1216-17, 2010.
[7] M. K. S. H. a. S. L. B. Bent Flyvbjerg, "What Causes Cost Overrun in Transport Infrastructure Projects?," Transport Reviews, pp. 3-18, 2004.
[8] H. Doloi, "Cost Overruns and Failure in Project Management: Understanding the Roles of Key Stakeholders in Construction Projects," Journal of Construction Engineering and Management © ASCE, pp. 267-279, 2013.
[9] Y. Rosenfeld, "Root-Cause Analysis of Construction-Cost Overruns," Journal of Construction Engineering and Management © ASCE, pp. 5-9, 2013.
[10] G. G. a. M. B. Thillai A. Rajan, "PPPs and Project Overruns: Evidence from Road Projects in India," Journal of Construction Engineering and Management © ASCE, pp. 3-9, 2013.
[11] A. K. R. M. M. S. A. M. a. C. S. D. Jennifer S. Shane, "Construction Project Cost Escalation Factors," Journal of Management in Engineering ©ASCE, pp. 221-229, 2009.
[12] M. P. M. H.-S. L. M. J. A. N. K. a. a. B. S. Sae-Hyun J, "Military Facility Cost Estimation System Using Case-Based Reasoning in Korea," COMPUTING IN CIVIL ENGINEERING © ASCE, pp. 218-231, 2011.
[13] R. R. A. I. F. a. I. F. A. Sang C. Lhee, "Prediction of Financial Contingency for Asphalt Resurfacing Projects using Artificial Neural Networks," Journal of Construction Engineering and Management, pp. 22-30, 2012.
[14] M. a. A. CharlesT. Jahren, "PREDICTORS OF COST-OVERRUN RATES," Journal of Construction Engineering and Management, pp. 548-551, 1990.
[15] a. T. R. A. Surya Sudheer Meduri, "Unit Costs of Public and PPP Road Projects: Evidence from India," Journal of Construction Engineering and Management © ASCE, pp. 35-43, 2013.
[16] R. U. F. a. S. M. A. Nida Azhar, "Cost Overrun Factors In Construction Industry of Pakistan," in Advancing and Integrating Construction Education, Research & Practice, Karachi, 2008.
[17] H. A. a. D. T. Ruth Apolot, "An Investigation into the Causes of Delay and Cost Overrun in Uganda’s Public SectorConstruction Projects," in Second International Conference on Advances in Engineering and Technology, Kampala, 2010.
[18] D. J. E. H. W. a. P. D. Peter E. D. Love, "Rework in Civil Infrastructure Projects: Determination of Cost Predictors," Journal of Construction Engineering and Management, pp. 275-282, 2010.
[19] S. M. V. a. F. Najafi, "COST AND TIME OVERRUNS IN HIGHWAY CONSTRUCTION," in 4th Transportation Specialty Conference of the Canadian Society for Civil Engineering, Montréal, Québec, 2002.
[20] S. K. A. S. Ali, "Cost Performance for Building Construction Projects in Klang Valley," Journal of Building Performance, pp. 111-116, 2010.
[21] A. Alhomidan, "Factors Affecting Cost Overrun in Road Construction Projects in Saudi Arabia," International Journal of Civil & Environmental Engineering, pp. 2-4, 2013.
[22] M. A. Kasimu, "Significant Factors that Causes cost Overruns in Building Construction Project in Nigeria.," INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS, pp. 777-779, 2012.
[23] J. M. Al-Najjar, "Factors Influencing Time and Cost Overruns on Construction Projects in the Gaza Strip," 2008.
[24] A. B. Ibrahim Mahamid, "Cost Deviation in Road Construction Projects: The Case of Palestine," Australasian Journal of Construction Economics and Building, pp. 58-71, 2012.
[25] P. m. I. PMI, "Study on Project Schedule and Cost Overruns," Project management Institute, 2012.
[26] P. M. I. PMBIK, A guide to project management body of knowledge: PMBOK guide.- 3rd ed, Pennsylvania: project management Institute, Inc., 2004.
[27] D. Cartlidge, Quantity Surveyor’s Pocket Book 1st ed, London: Elsevier Ltd., 2009.
[28] G. A. S. S. K. Richard H. Clough, Construction project management : a practical guideto field construction management 5th ed, New Jersey: John Wiley & Sons, Inc., 2009.
[29] A. C. T. a. J. G. Rees, Civil Engineering Project Management 4th ed., Burlington: Elsevier Butterworth-Heinemann, 2004.
[30] J. M. a. W. Hughes, Construction Contracts: Law and Management 3rd ed., London: Spon Press, 2000.
[31] E. A. Gamez, "RISK ASSESSMENT FOR INTERNATIONAL DEVELOPMENT PROJECTS: OWNER’S PERSPECTIVE," Northeastern University, Boston, 2009.
[32] R. Singh, "Cost and Time Overruns in Infrastructure Projects: Extent, Causes and Remedies," Centre for Development Economics, vol. 181, 2009.
[33] D. Tilk, "Project Success through Project Risk Management," 11 01 2011. [Online]. Available: http://www.pwc.com/ca/en/controls/program-project-services/project-risk-management.jhtml#.
[34] S. P. Shruti Wadalkar, "Role of Project Manager from the Client’s Side on the Performance of a Construction Project," International Journal of Engineering and Advanced Technology (IJEAT), p. 340, 2012.
[35] C. J. a. J. Burger, "Project Management Methodology in Human Resource Management," JOURNAL Fall/winter, pp. 25-30, 2005.
[36] D. E. Gray, Doing Research in the Real World, 1st ed., London: SAGE Publications, 2004.
[37] C. Kothari, Research Methodology: Methods and Techniques, New Delhi: New Age International (P) Ltd., 2004.
[38] S. G. Naoum, Dissertation Research and Writing for Construction Students, Amsterdam: Elsevier Ltd, 2007.
[39] W. World Bank, "Curbing Fraud, Corruption, and Collusion in the Roads Sector," The World Bank, Washington DC, 2011.
[40] G. D. Oberlender, Project Managment for Engineering and Construction, Singapore: McGraw-Hill, 2000.
[41] K. K. Chitkara, Construction Project management: Planning, Schedule and controling 2nd ed, New Delhi: Tata McGraw-Hill, 2004.
[42] A. H. Yimam, "PROJECT MANAGEMENT MATURITY IN THE CONSTRUCTION INDUSTRY OF DEVELOPING COUNTRIES (THE CASE OF ETHIOPIAN CONTRACTORS )," University of Maryland, College Park (Unpublished Master Thesis), Maryland, 2011.
[43] B. G. M. S. L. a. K. C. S. Claire Bordat, "An Analysis of Cost Overruns and Time Delays of INDOT Projects," Unpublished, West Lafayette, 2004.
[44] F. Nega, "Causes and Effects of Cost Overrun on Public Building Construction Projects in Ethiopia," Unpublished Master thesis @ AAU, Addis Ababa, 2008.
[45] AACE, SKILLS & KNOWLEDGE OF COST ENGINEERING, Morgantown: AACE International, 2004.
[46] I. A. Rahman, A. H. Memon and A. T. A. Karim, "Relationship between Factors of Construction Resources Affecting Project Cost," Canadian Centerof Science and Education, pp. 70-74, 2013.
[47] B. Flyvbjerg, M. k, SKAMRISHOLMl and S. BUHL, "How common and how large are cost overruns in transport infrastructure projects?," TRANSPORTREVIEWS, pp. 85-86, 2003.
[48] N. Kasim, C. Anumba and A. Dainty, "Improving materials management practices on fast-track construction projects," in 21st Annual ARCOM Conference, London, 2005.
[49] C. C. Cantarelli, B. v. Wee, E. J. E. Molin and B. Flyvbjerg, "Different Cost Performance: Different Determinants? The Case of Cost Overruns in Dutch Transportation Infrastructure Projects," Transport Policy, p. 88–95., 2012.
[50] J. Y. Lin and D. Doemeland, "Beyond Keynesianism Global Infrastructure Investments in Times of Crisis," Policy Research Working Paper, 2012.
[51] A. A. A. Azis, A. H. Memon, I. A. Rahman and A. T. A. Karim, "Controlling Cost Overrun Factors in Construction Projects in Malaysia," Applied Sciences, Engineering and Technology, pp. 2621-2629, 2013.
[52] C. Cantarelli, "Cost Overruns in Large-Scale Transport Infrastructure Projects," The Netherlands TRAIL Research School, Delft, 2011.
[53] A. Enshassi, S. Mohamed and S. Abushaban, "FACTORS AFFECTING THE PERFORMANCE OF CONSTRUCTION PROJECTS IN THE GAZA STRIP," JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT, vol. 15, no. 3, p. 269–280, 2009.
[54] D. Baccarini and A. Collins, "The Concept of Project Success - What 150 Australian project managers think," Unpublished, pp. 1-2, 2001.
[55] K. N. Jhn and K. C. Iyer, "Critical Factors Affecting Quality Performance in Construction Projects," Total Quality Management, pp. 1156-1169, 2006.
[56] I. A. R. a. A. A. A. A. Aftab Hameed Memon, "Preliminary Study on Causative Factors Leading to Construction Cost Overrun," International Journal of Sustainable Construction Engineering & Technology, pp. 58-68, 2011.
[57] M. W. Jekale, "Risk Management for Construction Projects," EACE Journal, pp. 1-2, 2008.
[58] I. A. R. A. A. A. A. Hameed Memon, "Time and Cost Perfomance in Costruction Projects inSouthern and Cenrtal Regions of Penisular Malaysia," International Journal of Advances in Applied Sciences (IJAAS), pp. 47-51, 2012.
[59] M. Ibrahim and B. Amund, "Cost Overrun Causes in Road Construction Projects: “Consultants’ Perspective’’," in 2011 2nd International Conference on Construction and Project Management, Singapore, 2011.
[60] W. M. Jekale, "Performances for Public Construction Projects in (Least) Developing Countries: Road & Educational Building Projects in Ethiopia," Doctoral Thesis, Norway, 2004.
Cite This Article
  • APA Style

    Ashebir Shiferaw Belachew, Wubishet Jekale Mengesha, Murad Mohammed. (2017). Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District. American Journal of Civil Engineering, 5(1), 27-40. https://doi.org/10.11648/j.ajce.20170501.15

    Copy | Download

    ACS Style

    Ashebir Shiferaw Belachew; Wubishet Jekale Mengesha; Murad Mohammed. Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District. Am. J. Civ. Eng. 2017, 5(1), 27-40. doi: 10.11648/j.ajce.20170501.15

    Copy | Download

    AMA Style

    Ashebir Shiferaw Belachew, Wubishet Jekale Mengesha, Murad Mohammed. Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District. Am J Civ Eng. 2017;5(1):27-40. doi: 10.11648/j.ajce.20170501.15

    Copy | Download

  • @article{10.11648/j.ajce.20170501.15,
      author = {Ashebir Shiferaw Belachew and Wubishet Jekale Mengesha and Murad Mohammed},
      title = {Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District},
      journal = {American Journal of Civil Engineering},
      volume = {5},
      number = {1},
      pages = {27-40},
      doi = {10.11648/j.ajce.20170501.15},
      url = {https://doi.org/10.11648/j.ajce.20170501.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajce.20170501.15},
      abstract = {One of the problems has been broadly published in different literature related to construction project management is project cost overrun. To fill this gap, the study on causes of cost overrun was conducted. It was conducted on 18 road construction projects with eight case studies which is found under the southern district of Ethiopian Road Authority. Based on a comprehensive literature review and archives, 40 factors linked to project cost performance were acknowledged for analysis. Based on the percentage of maximum score rank of 40 identified factors, six top rated factors were identified. These are material price fluctuation, cost underestimation, delay in supply of raw materials, inadequate review of contract documents, lack of coordination at the design phase and lack of cost planning during pre- and post- contract stage have the highest impacts on the performance of project costs from the client’s, consultants’ and contractors’ perspective. This study has been done through survey and case study to generate raw data. The questionnaires were distributed to 54 practitioners to evaluate the significance of the factors that causes the project cost overrun. In addition, case studies were used to find the magnitude of cost overrun on selected projects by an in-depth analysis of an archive of each project. The magnitude of cost overrun among selected project extended from 4.16% to 83.2%. While the average magnitude of cost overrun was nearly 21.52%, this is a significant amount when it compared with the number of projects.},
     year = {2017}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Causes of Cost Overrun in Federal Road Projects of Ethiopia in Case of Southern District
    AU  - Ashebir Shiferaw Belachew
    AU  - Wubishet Jekale Mengesha
    AU  - Murad Mohammed
    Y1  - 2017/01/05
    PY  - 2017
    N1  - https://doi.org/10.11648/j.ajce.20170501.15
    DO  - 10.11648/j.ajce.20170501.15
    T2  - American Journal of Civil Engineering
    JF  - American Journal of Civil Engineering
    JO  - American Journal of Civil Engineering
    SP  - 27
    EP  - 40
    PB  - Science Publishing Group
    SN  - 2330-8737
    UR  - https://doi.org/10.11648/j.ajce.20170501.15
    AB  - One of the problems has been broadly published in different literature related to construction project management is project cost overrun. To fill this gap, the study on causes of cost overrun was conducted. It was conducted on 18 road construction projects with eight case studies which is found under the southern district of Ethiopian Road Authority. Based on a comprehensive literature review and archives, 40 factors linked to project cost performance were acknowledged for analysis. Based on the percentage of maximum score rank of 40 identified factors, six top rated factors were identified. These are material price fluctuation, cost underestimation, delay in supply of raw materials, inadequate review of contract documents, lack of coordination at the design phase and lack of cost planning during pre- and post- contract stage have the highest impacts on the performance of project costs from the client’s, consultants’ and contractors’ perspective. This study has been done through survey and case study to generate raw data. The questionnaires were distributed to 54 practitioners to evaluate the significance of the factors that causes the project cost overrun. In addition, case studies were used to find the magnitude of cost overrun on selected projects by an in-depth analysis of an archive of each project. The magnitude of cost overrun among selected project extended from 4.16% to 83.2%. While the average magnitude of cost overrun was nearly 21.52%, this is a significant amount when it compared with the number of projects.
    VL  - 5
    IS  - 1
    ER  - 

    Copy | Download

Author Information
  • School of Civil and Environmental Engineering, Jimma University Institute of Technology, Jimma, Ethiopia

  • School of Civil and Environmental Engineering, Addis Ababa University Institute of Technology, Addis Ababa, Ethiopia

  • School of Civil and Environmental Engineering, Jimma University Institute of Technology, Jimma, Ethiopia

  • Sections