scholarly journals Rethinking construction cost overruns: cognition, learning and estimation

2014 ◽  
Vol 19 (1) ◽  
pp. 38-54 ◽  
Author(s):  
Dominic D. Ahiaga-Dagbui ◽  
Simon D Smith
Keyword(s):  
Conceptual Model ◽  
Cost Estimation ◽  
Cost Model ◽  
Percentage Error ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Holistic View ◽  
Content Type ◽  
Using Data ◽  
Qualitative Exploration

Purpose – Drawing on mainstream arguments in the literature, the paper presents a coherent and holistic view on the causes of cost overruns, and the dynamics between cognitive dispositions, learning and estimation. A cost prediction model has also been developed using data mining for estimating final cost of projects. The paper aims to discuss these issues. Design/methodology/approach – A mixed-method approach was adopted: a qualitative exploration of the causes of cost overrun followed by an empirical development of a final cost model using artificial neural networks. Findings – A conceptual model to distinguish between the often conflated causes of underestimation and cost overruns on large publicly funded projects. The empirical model developed in this paper achieved an average absolute percentage error of 3.67 percent with 87 percent of the model predictions within a range of ±5 percent of the actual final cost. Practical implications – The model developed can be converted to a desktop package for quick cost predictions and the generation of various alternative solutions for a construction project in a sort of what-if analysis for the purposes of comparison. The use of the model could also greatly reduce the time and resources spent on estimation. Originality/value – A thorough discussion on the dynamics between cognitive dispositions, learning and cost estimation has been presented. It also presents a conceptual model for understanding two often conflated issues of cost overrun and under-estimation.

Predicting likelihood of cost overrun in educational projects

2017 ◽  
Vol 24 (1) ◽  
pp. 21-39 ◽  
Author(s):  
Richard Ohene Asiedu ◽  
Nana Kena Frempong ◽  
Hans Wilhelm Alfen
Keyword(s):  
Linear Regression Analysis ◽  
Model Development ◽  
Multiple Linear Regression Analysis ◽  
Coefficient Of Determination ◽  
Percentage Error ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Content Type ◽  
Public Projects ◽  
Contract Signing

Purpose Being able to predict the likelihood of a project to overrun its cost before the contract signing phase is crucial in developing the required mitigating measures to avert it. Known parameters that permit the timely prediction of cost overrun provide the basis for such predictions. Therefore, the purpose of this paper is to develop a model for forecasting cost overruns. Design/methodology/approach Ten predictive variables known before the contract signing phase of a project are identified. Based on a survey approach, information on 321 educational projects completed are compiled. A multiple linear regression analysis is adopted for the model development. Findings Five variables – initial contract sum, gross floor area, number of storeys, source of funds and contractors’ financial classification are observed to influence cost overruns. The model, however, yields a fairly weak coefficient of determination with a mean absolute percentage error of 30.22 and 138 per cent, respectively. Research limitations/implications The model developed focussed on data only educational projects sampled from three out of the ten administration regions in Ghana based on a purposive sampling approach. Practical implications Policy makers and construction managers working on public projects stand to gain tremendous assistance in formulating and strengthening their own in-house cost forecasting at the precontract phase based on “what if” analysis to generate various alternative predictions of cost overruns. Originality/value Considering the innate nature of cost overruns within the Ghanaian construction industry often resulting to project abandonment, this research presents a unique dimension for tackling cost overruns based on a predictive approach.

A system dynamics approach to conceptualise causes of cost overrun of construction projects in developing countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richard Ohene Asiedu ◽  
Collins Ameyaw
Keyword(s):  
Developing Countries ◽  
System Dynamics ◽  
Construction Projects ◽  
Mitigation Measures ◽  
Conceptual System ◽  
Cost Overrun ◽  
Interactive Approach ◽  
Cost Overruns ◽  
Content Type ◽  
Using Data

PurposeThis study aimed at developing and empirically testing a system dynamics causal loop (SDCL) model for investigating factors related to the risk of cost overruns, associated with the performance of construction projects in developing countries.Design/methodology/approachUsing data derived from the Ghanaian construction industry (GCI), a conceptual system dynamics model was hypothesised and empirically tested.FindingsSupported by empirical evidence, the study established that the low technical capacity of consultants is the underlying cause of cost overruns in government projects. There is a strong proof of the relationship between the results of the SDCL model and poor contract planning and supervision, change orders, competence of the project team and the lack of effective coordination amongst the contractual parties.Practical implicationsThe final SDCL model has revealed key risk components that would require standard mitigation measures in order to achieve “acceptable success” in construction projects.Originality/valueThe study presents an interactive approach for construction practitioners in developing countries to prioritise the causes of cost overruns in order to initiate quick responses.

Effect of factors of organizational structure influencing nonphysical waste in road projects of developing countries

2020 ◽  
Vol 27 (10) ◽  
pp. 3135-3153
Author(s):  
Muhammad Irfan ◽  
Muhammad Sohail Anwar Malik ◽  
Syyed Sami Ul Haq Kaka Khel
Keyword(s):  
Developing Countries ◽  
Organizational Structure ◽  
The Body ◽  
Management Support ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Content Type ◽  
Factors Influencing ◽  
Road Projects ◽  
Significant Factors

PurposeThe purpose of this research is to rank the most significant factors of organizational structure that can reduce time and cost overruns (nonphysical waste) in road projects of the developing countries. Additionally, the effect of factors of organizational structure on nonphysical waste in road projects is also measured.Design/methodology/approachFactors of organizational structure causing time and cost overrun are extracted through a content analysis of the published literature. Moreover, a questionnaire survey is carried out involving 128 professionals to assess the effect of organizational structure factors on time and cost overrun. Finally, to obtain a more objective evaluation, relative importance index and regression analysis techniques are utilized, and the most severe factors influencing time and cost overrun are indicated.FindingsThis study found out that top management support and procurement procedures are the most significant factors influencing time and cost overruns in road projects of the developing countries.Originality/valueA small number of studies have been conducted to investigate the effect of factors of organizational structure on time and cost overrun in the construction industry. And even more, its relation with respect to road projects of the developing countries is limited. This research highlights the effect of most significant factors of organizational structure that influence the nonphysical waste in road projects of the developing countries. Therefore, this study adds to the body of knowledge by recommending that all the stakeholders of construction project should pay close attention toward these factors to control the enigma of time and cost overrun. It might also prove helpful, if implemented to its full extent, in all the road construction activities undertaken.

Latent geotechnical pathogens inducing cost overruns in highway projects

2017 ◽  
Vol 22 (3) ◽  
pp. 269-285 ◽  
Author(s):  
Alolote Ibim Amadi ◽  
Anthony Higham
Keyword(s):  
Niger Delta ◽  
Best Practice ◽  
Methodological Approach ◽  
Cost Overrun ◽  
Delta Region ◽  
Cost Overruns ◽  
Highway Projects ◽  
Content Type ◽  
Niger Delta Region ◽  
Geotechnical Risk

Purpose This paper aims to investigate the statistical validity of geotechnical risk factors in accounting for cost overruns in highway projects. The study hypothesises that “latent pathogens” because of mismanaged geotechnical risk, which lay dormant in organisational practices of highway agencies, trigger cost overruns. Design/methodology/approach To test this hypothesis, cost and geotechnical data gathered for 61 completed highway projects, executed in the Niger Delta, recording unusually high cost overruns, along with qualitative data from 16 interviews with the project commissioners, were comprehensively analysed via regression modelling, to statistically explain recorded cost variance. Findings The results provide empirical evidence supporting a cause–effect relationship between the extent of cost overrun and key geotechnical factors. It is suggested that positive changes made in the geotechnical practices of the highway agencies will produce an expected exponential decrease in the level of cost overruns recorded in highway projects. Research limitations/implications The study is limited to explaining the propagation of unusually high cost overruns in the geologic setting of the Niger Delta region of Nigeria. As such there is a need to test the generalisability of the theory presented. Practical implications The emergent view of geotechnical practice calls for further research, necessary to align geotechnical best practice into highway project delivery in the Niger Delta region. Originality/value The study used a robust methodological approach to understanding the propagation of cost overruns in highway projects, based on a characterisation of geotechnical intricacies, which is unprecedented in cost overrun research.

Integrated priority decision index for risk assessment in chaos: cost overruns in transport projects

2019 ◽  
Vol 27 (4) ◽  
pp. 825-849
Author(s):  
Farman Afzal ◽  
Shao Yunfei ◽  
Muhammad Sajid ◽  
Fahim Afzal
Keyword(s):  
Management Practices ◽  
Innovative Technology ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Content Type ◽  
Critical Elements ◽  
Edge Of Chaos ◽  
Management Domain ◽  
Judgment Process ◽  
Project Life

Purpose Cost overrun is inherent to project chaos, which is one of the key drivers of project failure. The purpose of this paper is to explore the critical elements of complexity-risk interdependency for cost-chaos in the construction management domain by utilizing a multi-criteria decision model. Design/methodology/approach A total of 12 complexity and 60 risk attributes are initially identified from the literature and using expert’s judgements. For the development of a structured hierarchy of key complexity and risk drivers, a real-time Delphi process is adopted for recording and evaluating the responses from experts. Afterwards, a pair-wise comparison using analytical network processing is performed to measure complexity-risk interdependencies against cost alternatives. Findings The findings of the integrated priority decision index (IPDI) suggest that uncertainties related to contingency and escalation costs are the main sources of cost overrun in project drift, along with the key elements such as “the use of innovative technology,” “multiple contracts,” “low advance payment,” “change in design,” “unclear specifications” and “the lack of experience” appear to be more significant to chaos in complexity-risk interdependency network. Research limitations/implications This study did not address the uncertainty and vulnerability exit in the judgment process, therefore, this framework can be extended using fuzzy logic to better evaluate the significance of cost-chaos drivers. Practical implications These results may assist the management of cost overrun to avoid chaos in a project. The proposed model can be applied within project risk management practices to make better-informed technical decisions in the early phases of the project life cycle where uncertainty is high. Originality/value This research addresses the importance of cost overruns as a source of project chaos in dynamic systems where projects reach the edge of chaos and progress stops. A new IPDI index contributes toward evaluating the severity of complexity and risk and their interdependencies which create cost-chaos in infrastructure transport projects.

A conceptual framework

2019 ◽  
Vol 31 (2) ◽  
pp. 331-347 ◽  
Author(s):  
George Kofi Amoako
Keyword(s):  
Competitive Advantage ◽  
Conceptual Model ◽  
Future Study ◽  
Implementation Strategies ◽  
Strategy Implementation ◽  
Sustainable Competitive Advantage ◽  
Holistic View ◽  
Content Type ◽  
Effective Implementation ◽  
Environmental Activities

Purpose The purpose of this paper is to explore the possible effects of corporate environmental activities on sustainable competitive advantage through the mediation of leadership factors and effective implementation strategies. Design/methodology/approach The work is essentially non-empirical review of the literature with the development of a conceptual model which can be tested in a later study. Findings The study proposes that corporate environmental activities can give firms competitive advantage. The studies also propose that stakeholders can act as pressure thereby moderating the relationship between corporate environmental activities and sustainable competitive advantage. Leadership factors and effective implementation affect competitive advantage. Research limitations/implications This study has a few limitations that must be considered and could provide guidance for future study; as this study does not address customers point of view, future study could help in the investigation in order to get a holistic view. Moreover, the study is based on the literature, and the conceptual model has not been tested. Practical implications The study proposes that good leadership and effectiveness in strategy implementation can make corporate environmental activities lead to sustainable competitive advantage. The findings of the study provide managers of firms with a possible tool in creating sustainable competitive advantage. Originality/value Despite the rapid growth in research on environmental issues in corporate world, limited studies have been conducted on how leadership factors and effectiveness of strategy implementation can influence how corporate environmental activities affect competitiveness of firms. This study makes an original contribution by proposing strategies for sustainable competitive advantage through the instrumentality of corporate environmental decisions.

Low estimates – high stakes: underestimation of costs at the front-end of projects

2016 ◽  
Vol 9 (1) ◽  
pp. 171-193 ◽  
Author(s):  
Bjorn Andersen ◽  
Knut Samset ◽  
Morten Welde
Keyword(s):  
Cost Estimation ◽  
Small Sample ◽  
Estimation Methods ◽  
High Stakes ◽  
Cost Estimates ◽  
Cost Overruns ◽  
Content Type ◽  
Strategic Performance ◽  
Front End ◽  
Initial Idea

Purpose – The purpose of this paper is to adopt an in-depth perspective on cost estimation, from the development of the initial idea until the budget is agreed, to obtain new insights into issues of underestimation at the front-end. Design/methodology/approach – The study uses a small sample of projects with exceptional increases in cost estimates during the front-end phase. The authors analyzed the magnitude of cost increases and possible reasons for them. Findings – The paper concludes that underestimation in the front-end phase was significant in the sample and poses a serious problem in that suboptimal projects are approved. The causes of underestimation include underestimating risk, overestimating opportunities, inadequate estimation methods and skills, reliance on weak information, and strategic/deliberate scope creep and division of projects. Research limitations/implications – The study builds on a small sample, and hence further studies should be undertaken to verify whether the findings are generalizable. Practical implications – The sample shows that the projects with the most unrealistic early estimates have disputable relevance. The paper suggests a number of recommendations that might help to counter the problem of unrealistic early cost estimates, which in turn, might allow suboptimal projects to be funded. Originality/value – The underestimation of costs at the front-end is grossly neglected in the literature compared with whether costs comply with the budget. While cost overruns are an indication of failure in terms of the project’s tactical performance, the contention is that the up-front underestimation of costs might result in an inferior project being selected and thus affect the strategic performance of the project.

Exploring critical road project delay factors in Ghana

2017 ◽  
Vol 15 (2) ◽  
pp. 110-127 ◽  
Author(s):  
Charles Teye Amoatey ◽  
Alfred Nii Okanta Ankrah
Keyword(s):  
Road Construction ◽  
Mitigation Measures ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Content Type ◽  
The Road ◽  
Integrated Risk ◽  
Road Project ◽  
Road Projects ◽  
Project Delays

Purpose The purpose of this paper is to investigate the causes of road construction delays in Ghana and identify appropriate mitigation measures. Design/methodology/approach The initial approach involved an empirical analysis of 48 road projects to quantify the extent of time. This was followed by a survey of the perception of road agency and donor partner officials of the critical causes of road project delays. Findings About 70 per cent of road projects experience delays and 52 per cent experience cost overruns. The average time overrun and cost overruns of road projects in Ghana was 17 months and US$1.15m (or 22.5 per cent), respectively. The five most critical causes of road construction delays were delay in finance and payment of completed work by owner (client-related); inadequate contractor experience (contractor-related); changes in scope by the owner during construction (client-related); delay to furnish and deliver the site to the contractor (client-related); and inflexible funding allocation for project items (donor-related). Research limitations/implications The most critical constraint of this study is the fact that findings are based on only the views of industry professional experts. It may be assumed that despite using broadly used terminology to refer to the causes of project delays, the interpretations by respondents may have differed from those intended. Further research could look at the correlation between time overrun and cost overrun using principle component analysis. Practical implications The identified delay factors are not unique to the road sector. From both academic and practical perspectives, the results emphasizes on the need for a holistic and integrated risk management model for the entire construction industry in Ghana. Originality/value The paper examined the causes of road project delays in the Ghanaian context and recommended remedial measures.

Webrooming behaviour: a conceptual framework

2017 ◽  
Vol 45 (7/8) ◽  
pp. 762-781 ◽  
Author(s):  
Sourabh Arora ◽  
Sangeeta Sahney
Keyword(s):  
Technology Acceptance ◽  
Conceptual Model ◽  
Risk Perceptions ◽  
The Body ◽  
Perceived Usefulness ◽  
Holistic View ◽  
Content Type ◽  
Online Risk ◽  
Tam Model ◽  
The Impact

Purpose Recent statistics on increasing webrooming customers make it topical in the multi-channel retailing domain. The purpose of this paper is to offer an enhanced understanding on “Webrooming behaviour”, an area of concern for e-retailers by proposing an integrated framework grounded on the Theory of planned behaviour and Technology acceptance model. Design/methodology/approach The conceptual model presented develops a number of propositions applicable to webrooming behaviour utilizing the rich literature on channel choice behaviour in the multi-channel retailing environment. The propositions are open for verification and can serve the basis for future line of research. Findings The model proposed provides basis for understanding the webrooming sequence via search attitude towards online channels, purchase attitude towards offline channels, perceived ease of online search and perceived usefulness of webrooming behaviour. The impact of online risk perceptions and mediating role of (lack of) “trust” have been proposed along with the direct impact of product type and category which offers an holistic view towards understanding the webrooming conduct. Research limitations/implications The model proposed lacks empirical verification. There is a need to test the model empirically to validate the model and to find out the suitability of integrated TPB-TAM model. Practical implications Webrooming substantially erodes online profits. Before retailers’ strategies to defend webroomers, it is imperative to understand the phenomenon from the consumer’s side. The model proposed is a step in this direction and provides the basis for formulating strategies for holding back the webroomers. Originality/value This paper adds to the body of knowledge in retailing by proposing a conceptual model on webrooming behaviour which is an emerging area of research in the present retail landscape.

scholarly journals A Review of Building Construction Cost Research: Current Status, Gaps and Green Buildings

2021 ◽  
pp. 1-17
Author(s):  
Ming Hu ◽  
Miroslaw Jan Skibniewski
Keyword(s):  
Cost Estimation ◽  
Construction Cost ◽  
Building Construction ◽  
Estimation Methods ◽  
Current Status ◽  
Cost Overrun ◽  
Labor Costs ◽  
Cost Overruns ◽  
Sustainable Building ◽  
Parametric Cost Estimation

An overall scoping review was conducted to examine research on building construction costs in the past decades. The aim is to provide a better understanding of conventional building construction cost estimation methods, gaps and potential improvement strategies that may mitigate the high risk of the cost overrun in conventional and sustainable building. This study first examined the components included in a building's construction cost and the commonly used calculation methods for cost estimation. Then, additional components included for sustainable buildings were identified and explained. The causal factors for construction cost overruns in sustainable building werediscussed as well. The findings concluded the following: (a) there is no consistent cost definition used in the industry; (b) a variety of cost estimation methods create ambiguity and confusion; and (c) newer cost estimating methods and tools, such as parametric cost estimation, which integrate risk and uncertainties have not been broadly adopted by the building industry. The current practice used to determine a sustainable building's cost estimation is the same traditional method that has been used over several decades, which is based on the material and labor costs. Such a conventional approach does not consider other factors, including the complexity of the sustainable building system, an organization's environment, and the capability of teams, among others. To respond to such a knowledge gap, a comprehensive and consistent cost estimation framework was proposed to integrate risk and uncertainty consideration, which is particularly prevalent in sustainable building.

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