CLAIMS MANAGEMENT: UNDERLYING CAUSES IN MEGA-CONSTRUCTION PROJECTS

2021 ◽  
Vol 8 (1) ◽  
Author(s):  
Dikeledi Matseke ◽  
Nthatisi Khatleli
Keyword(s):  
South Africa ◽  
Construction Projects ◽  
Significant Risk ◽  
Project Managers ◽  
Cost Overruns ◽  
Change Orders ◽  
Contractual Relationship ◽  
Force Majeure ◽  
Underlying Causes ◽  
Delay In Payments

Construction claims remain unavoidable in any megaproject contractual relationship and can quickly escalate to misunderstandings, disputes and litigations if not appropriately managed. Disputes pose a significant risk in hindering project progress; they are characterised by lengthy legal battles that consume substantial time and financial resources. This study identifies the causes of claims encountered by clients, contractors and consultants in transport and energy sector mega construction projects in South Africa. A semi-systematic literature review was used to identify, select and appraise existing literature on this issue. Content analysis using NVivo 12 was used to identify factors causing claims in the construction sector, particularly in MCPs. Findings of the study revealed that construction projects occurring outside of South Africa experienced a delay in payments, time and cost overruns, change orders, inadequate project and drawing specifications, natural risks or force majeure. In South Africa, delays and cost overruns (due to insufficient experience and expertise of project managers and engineers) frequent to be the causes attributable to claims.

scholarly journals An Artificial Neural Network Approach to Predicting Most Applicable Post-Contract Cost Controlling Techniques in Construction Projects

2020 ◽  
Vol 10 (15) ◽  
pp. 5171 ◽  
Author(s):  
Temitope Omotayo ◽  
Awuzie Bankole ◽  
Ayokunle Olubunmi Olanipekun
Keyword(s):  
Decision Support ◽  
Construction Projects ◽  
Cost Management ◽  
Management Practice ◽  
Project Managers ◽  
Construction Process ◽  
Neural Network Approach ◽  
Cost Overruns ◽  
Effective Cost ◽  
Artificial Neural

The post-contract phase of the construction process remains critical to cost management. Several techniques have been used to facilitate effective cost management in this phase. However, the deployment of these techniques has not caused a reduction in the incidence of cost overruns hence casting doubts on their utility. The seeming underwhelming performance posted by these post-contract cost control techniques (PCCTs), has been traced to improper deployment by construction project managers (CPM) and quantity surveyors (QS). Utilizing the perspectives of CPM and QS professionals, as elicited through a survey, produced 135 samples. The instrumentality of the artificial neural networks (ANN) in this study enabled the development of a structured decision-support methodology for analysing the most appropriate PCCTs to be deployed to different construction process phases. Besides showcasing the utility of the emergent ANN-based decision support methodology, the study’s theoretical findings indicate that CPM and QS professionals influence decisions pertaining to PCCTs choice in distinct phases of the construction process. Whereas QS professionals were particularly responsible for the choice of PCCTs during the initial and mid-level phases, CPM professionals assumed responsibility for PCCTs selection during the construction process close-out phase. In construction cost management practice, the crucial PCCTs identifies more with the application of historical data and all cost monitoring approaches.

scholarly journals Exploring the Components of Cost on Construction Projects

2018 ◽  
Vol 2 (2) ◽  
pp. 42-50
Author(s):  
Abimbola Windapo ◽  
Alireza Moghayedi ◽  
David Oliphant ◽  
AbdulRauf Adediran
Keyword(s):  
South Africa ◽  
Construction Projects ◽  
Resource Planning ◽  
Construction Cost ◽  
Research Approach ◽  
Construction Work ◽  
Construction Costs ◽  
Cost Overruns ◽  
Planning And Control ◽  
Electrical Installation

This study examines the components of construction projects and whether there are construction resources that are the key project constituents. The rationale for the study stems from the unexplained assumptions regarding the primary components responsible for increases in construction costs in South Africa, as South Africa lacks a national building cost database. The study adopts a qualitative research approach that employs a case studies of six new and six refurbished projects in obtaining the necessary data for use in answering the study objectives. The study found that the primary cost constituents of construction projects are materials and sub-contracted work, accounting for 63.69% and 74.6% of the value of renovation and new construction work respectively and on the average, the major materials by value are reinforcement, cement and filling, while Electrical Installation is the primary sub-contracting item by value. Based on these findings, the study concludes that the future levels of construction work can be predicted knowing levels of specialist sub-contractor costs and building material costs. The study recommends that the sub-contractor and material inputs into construction projects are carefully managed, both on the projects and the construction industry, to limit construction cost increases and cost overruns on projects. The study contributes to the literature on resource planning and control in construction. Keywords: Cement, Construction Cost, Electrical Installation, Reinforcement, Specialist Sub-contractor.

scholarly journals Building Information Modelling Technology in Mitigating Cost Overruns and change orders in Construction Projects

2021 ◽  
Vol 4 (1) ◽  
pp. 50-64
Author(s):  
Ja’far A. Aldiabat Al-Btoosh
Keyword(s):  
Construction Industry ◽  
Cost Estimation ◽  
Construction Projects ◽  
Information Modeling ◽  
Cost Overruns ◽  
Change Orders ◽  
Significant Difference ◽  
Project Costs ◽  
Building Information ◽  
And Control

Variation order (VO) is one of the main issues faced by the construction industry in Jordan. Many researchers had investigated on the causes of VO and proposed procedures to minimize and control this issue; however, the VO is affecting the construction industry badly even at moment. Building Information Modeling (BIM) is a powerful management system that can make a significant difference in the project costs. However, BIM has not been examined as a tool to minimize the VO in Jordan. The main target of this study is to utilize BIM applications in reducing the effect of VO on the governmental projects in Jordan. In order to achieve this target, the researcher has designed a questionnaire to gather data related to VO causes and the BIM capability to solve this problem. The data collected from the questionnaires were analyzed statistically. The result from the analysis found that the consultant initiated the highest VO of 50% followed by the clients and the contractors of 20% and 10% unforeseen variation respectively. Moreover, it is found that BIM Design Applications, Facility Operations Simulation, Exploration Design Scenarios, BIM Design Detection and BIM Quantity Take-off and Cost Estimation were significantly capable of minimizing VO. The results show positive relationship with the application of BIM in minimizing VO in the construction industry in Jordan. © 2018. JASET, International Scholars and Researchers Association

scholarly journals Managing Fast-Track Construction Project in Qatar: Challenges and Opportunities

Buildings ◽  
2021 ◽  
Vol 11 (12) ◽  
pp. 640
Author(s):  
Temitope Egbelakin ◽  
Olabode Emmanuel Ogunmakinde ◽  
Billie Teshich ◽  
Temitope Omotayo
Keyword(s):  
Construction Projects ◽  
Fast Track ◽  
United Arab Emirate ◽  
Real Life ◽  
Project Managers ◽  
Accurate Information ◽  
Change Orders ◽  
Life Project ◽  
Challenges And Opportunities ◽  
Operations And Maintenance

Fast-track construction projects are becoming increasingly prevalent in the construction industry, particularly where completion time is essential. A high adoption rate in some of the United Arab Emirate countries and the lack of a conceptual understanding of the challenges inherent in such may jeopardize the future sustainability of the construction sector. To make an informed decision about adopting a fast-track construction method, it is necessary to first identify the opportunities and challenges associated with it. Therefore, this study examines the critical challenges impeding the performance of Qatar’s fast-track construction projects. The research findings were analysed and triangulated using a real-life project as a case study and several data sources. The results of the research identified four critical categories of barriers: design and coordination-related, scope or change orders-related, material and equipment-related, and contractual-related barriers. In addition, strategies such as accurate information, constructability assessment, early involvement of operations and maintenance personnel, and the use of an effective change control system were identified for addressing the identified challenges. The findings are beneficial to professionals who are currently operating or planning to undertake construction projects in Qatar or other United Arab Emirate countries. This study recommends that project managers be more attentive to key barriers in order to improve the performance of fast-track projects and to meet clients’ objectives.

scholarly journals The Amoebic Growth of Project Costs

2005 ◽  
Vol 36 (2) ◽  
pp. 15-27 ◽  
Author(s):  
Colin Eden ◽  
Fran Ackermann ◽  
Terry Williams
Keyword(s):  
Construction Projects ◽  
Project Managers ◽  
Total Expenditure ◽  
Claims Analysis ◽  
Private Industry ◽  
Cost Overruns ◽  
The Public ◽  
Project Costs ◽  
Industrial Projects ◽  
Public Construction

In the public arena, we often hear about projects that have suffered massive cost overruns. Often they are related to large public construction projects such as airports, bridges, or public buildings. Large overruns also exist in private industry. However, often these do not appear in the newspapers, so the public is not as aware of them. Of course, not all projects go badly wrong, but quite a few do, and frequently we find ourselves uncertain of the causes for such overruns. In this paper, industrial projects that overrun and overrun in a surprising manner are considered. In other words, the paper considers those many projects where the extent of the overrun is well beyond what might ever have been anticipated, even though what was going wrong within the projects was, for the most part, understood. The basis for the content of the paper (that is, the structure and lessons), are drawn from a postmortem analysis of many large projects as part of claims analysis, particularly “delay and disruption” claims for projects whose total expenditure appeared, at first look, inexplicable or surprising. The aim of the paper is to contribute to an understanding of how projects go badly wrong, when they do, and in particular to draw some lessons from this exploration that are likely to help all managers. The reasons for cost escalation are not just the responsibility of project managers.

Developing management policies and analyzing impact of change orders on labor productivity in construction projects

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sharareh Kermanshachi ◽  
Behzad Rouhanizadeh ◽  
Paul Govan
Keyword(s):  
Labor Productivity ◽  
Construction Projects ◽  
Project Managers ◽  
Significant Drop ◽  
Change Orders ◽  
Content Type ◽  
Short Period ◽  
Significant Length ◽  
Indirect Impacts ◽  
The Impact

Purpose The inevitable change orders in construction projects have either direct or indirect impacts on a project’s duration. Reduced productivity is one of the indirect consequences that lead to major delays in the completion of the project. The purpose of this study is to develop a model that could quantify the impact of change orders on labor productivity and result in the establishment of policies to lessen their effects. Design/methodology/approach A model was developed to analyze the effects of change orders on labor productivity, then policies for managing their impacts on productivity and project duration were established. A water treatment case study was selected to serve as the scenario in which to implement and evaluate the model and policies. Findings The results of this study indicated that pressure to adhere to a schedule initially leads to an increase in labor productivity, but it is often followed by a significant drop that is a result of employee frustration. It was concluded that the pressure can be positive if it is applied for a short period of time; however, it continues for a significant length of time, the duration of the project will increase appreciably. Originality/value The proposed model can be implemented to identify the factors that affect labor productivity in a construction project. Its utilization will also help project managers assess when change orders occur and determine, which policies will be most effective in optimizing labor productivity.

scholarly journals Applying Interpretive Structural Modeling to Cost Overruns in Construction Projects in the Sultanate of Oman

2015 ◽  
Vol 12 (1) ◽  
pp. 53 ◽  
Author(s):  
K. Alzebdeh ◽  
H.A. Bashir ◽  
S.K. Al Siyabi
Keyword(s):  
Cost Estimation ◽  
Construction Projects ◽  
Project Managers ◽  
Decision Makers ◽  
Sultanate Of Oman ◽  
Interpretive Structural Modeling ◽  
Cost Overruns ◽  
Complex Interactions ◽  
Project Costs ◽  
The Us

Cost overruns in construction projects are a problem faced by project managers, engineers, and clients throughout the Middle East.  Globally, several studies in the literature have focused on identifying the causes of these overruns and used statistical methods to rank them according to their impacts. None of these studies have considered the interactions among these factors. This paper examines interpretive structural modelling (ISM) as a viable technique for modelling complex interactions among factors responsible for cost overruns in construction projects in the Sultanate of Oman. In particular, thirteen interrelated factors associated with cost overruns were identified, along with their contextual interrelationships. Application of ISM leads to organizing these factors in a hierarchical structure which effectively demonstrates their interactions in a simple way. Four factors were found to be at the root of cost overruns: instability of the US dollar, changes in governmental regulations, faulty cost estimation, and poor coordination among projects’ parties. Taking appropriate actions to minimize the influence of these factors can ultimately lead to better control of future project costs. Thisstudy is of value to managers and decision makers because it provides a powerful yet very easy to apply approach for investigating the problem of cost overruns and other similar issues.  

scholarly journals Exploring the Causes of Design Changes in Building Construction Projects: An Interpretive Structural Modeling Approach

2021 ◽  
Vol 13 (17) ◽  
pp. 9578
Author(s):  
Shahab Shoar ◽  
Nicholas Chileshe
Keyword(s):  
Construction Projects ◽  
Structural Modeling ◽  
Project Managers ◽  
Building Construction ◽  
Value Engineering ◽  
Interpretive Structural Modeling ◽  
Change Orders ◽  
Construction Methods ◽  
Design Changes ◽  
New Construction

The purpose of this study is to investigate the mutual interactions between the causes of design changes using Interpretive Structural Modeling (ISM) and to classify the causes using the “Matrice d’Impacts Croisés Multiplication Appliquée à un Classement” MICMAC technique. This study further identifies and proposes strategies to mitigate design change occurrence and map them onto the identified connections between the causes. To achieve these goals, critical causes of design changes were identified through a comprehensive literature review; 23 key causes were then refined according to the opinions of relevant experts involved in the Iranian building construction sector. Stakeholders associated with each cause and the management areas from which causes arise were also considered. The factors “Unfamiliarity with new construction methods”, “Design errors”, “Value engineering”, “Scope uncertainty”, “Change orders”, and “Constructability ignored in the design phase”, which are highly influenced by other factors, emerged at the highest level of the ISM diagram, and “Clients’ attitudes and experience” as the main root cause of design changes at the bottom of the diagram. The MICMAC technique results showed that consultant-related causes significantly influence other causes, and policy and client-related causes have a feedback effect on the whole system. The findings of this study provide a better insight into how various causes of design changes are connected to one another and can ultimately assist project managers of different parties, even in other countries, to choose influential strategies to mitigate design changes in building construction projects.

scholarly journals The Influence of Delays in the Implementation of Work on Budget Plan and Field Management on Building Project in Banjarmasin

2019 ◽  
Vol 280 ◽  
pp. 05010
Author(s):  
Candra Yuliana
Keyword(s):  
Construction Projects ◽  
Project Managers ◽  
Project Work ◽  
Primary Data ◽  
Dominant Factor ◽  
Cost Overruns ◽  
Structural Work ◽  
Project Construction ◽  
Building Project ◽  
The Impact

The construction service company needs to think about the best strategy for dealing with delay in the project work schedule so that the cost overruns can be reduced to a minimum. The purpose of this research is to make a strategy for overcoming the delay of building project construction work in Banjarmasin. Primary data were obtained by field survey and interviews. The survey was conducted to project directors, project managers and the field, supervisors, and experts who are experienced in handling construction projects. The survey aims to collect data on the dominant factors causing delays in structural work, the impact of such delays on the budget plan, and the strategy of handling delays. The data were analyzed descriptively and AHP. Variable Y, which is the impact of the delay on changes in the work plan cost budget structure, is at a large level that is changing between 3% - 4% of the budget plan cost. The dominant factor to the cause of the delay is the slow decision-making process by the owner, the owner’s financial problem, the financial difficulties by the contractor, the mistake of choosing the construction method, the shortage of the project.

scholarly journals Predicting buildings construction cost overruns on the basis of cost overruns structure

2020 ◽  
Vol 29 (3) ◽  
pp. 366-376
Author(s):  
Diana Car-Pušić ◽  
Ivan Marović ◽  
Marko Mlađen ◽  
Ksenija Tijanić
Keyword(s):  
Construction Projects ◽  
Cost Model ◽  
Computing Methods ◽  
Construction Costs ◽  
Cost Overruns ◽  
Change Orders ◽  
Additional Work ◽  
New Construction ◽  
Soft Computing Methods ◽  
The Republic

In construction practice, contractually agreed costs are often exceeded, which interferes with the sustainable realization of construction projects. The research described in this paper covers 24 new construction, renovation and reconstruction projects in the Republic of Croatia realized in the years 2006 to 2017, in order to analyse the occurrence of cost overruns more precisely with regard to the source of the overruns. It was found that additional work is the main source of cost overruns: firstly, additional work as a result of the client’s change orders and then unforeseen construction work as a result of unforeseen circumstances. As for the additional works, they are carried out at the client’s request and are not necessary for the safety and stability of the building. Using linear regression and “soft computing” methods, the possibility of modelling the relationship between contractually agreed and realized construction costs with satisfactory accuracy was tested. The model with the values of the natural logarithms of the variables, modelled according to the time–cost model of Bromilow, proved to be of the highest accuracy.

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