scholarly journals Contingency Management in Indian Construction Projects

2020 ◽  
Vol 4 (2) ◽  
pp. 11-24
Author(s):  
H. Maniar
Keyword(s):  
Data Analysis ◽  
Financial Performance ◽  
Construction Projects ◽  
Contingency Management ◽  
Archival Data ◽  
Cost Overrun ◽  
Project Risk ◽  
Project Cost ◽  
Construction Companies ◽  
Subjective Approach

The successful completion of Indian construction projects possesses an inherent uncertainty due to the nature of the construction industry along with prevailing tepid recovery of the Indian economy, which has made it difficult for construction companies to achieve required operational and financial performance. This necessitates having accurate project cost estimation and efficient contingency management to shield unknown project risk and address cost overrun problems. Therefore, this study aims to assess the current state, the issues faced in contingency management and evaluating the effectiveness of contingency in overcoming cost overrun problems in Indian construction companies. The study preferred a quantitative approach in capturing the required data by using structured questionnaires collected from 100 Indian construction companies (of contractors, vendors/suppliers, customers, and consultants) out of 335 companies with a response rate of 29.85%. This, along with archival data analysis of 50 Indian construction projects completed between Calendar Year (CY) 2014 to 2019. The captured data were analysed using simple statistical tools like Relative Importance Index (RII), mean score, standard deviation and ranking methods to ensure relevant results aligned with research objectives. The result findings of the study revealed that 60% of Indian construction companies preferred the traditional percentage method for contingency sum percentage addition to estimated project cost (a subjective approach based on the historical project performance) which may not be adequate in overcoming cost overrun problems. Archival data analysis found that contingency consideration was effective in accommodating cost overrun problems in 9 (18%) projects out of 50 projects. The study further found that contingency was utilised in an unplanned mode and having unclear contingency forecasting strategies. Based on result findings and observations, this study concludes that contingency should be estimated based on the scientific approach in place of a subjective approach to address project risks adequately, this along contingency consideration should be an integral part of the project risk assessment and should be effectively utilised during the execution stage. Keywords: Contingency, Cost Overruns, Indian Construction Projects, Operational and Financial Performance, Project Risk.

scholarly journals Measuring the performance of project risk management: a preliminary model

2019 ◽  
Vol 11 (1) ◽  
pp. 1984-1991
Author(s):  
Alfredo Federico Serpell ◽  
Ximena Ferrada ◽  
Larissa Rubio
Keyword(s):  
Risk Management ◽  
Construction Projects ◽  
Research Literature ◽  
Lessons Learned ◽  
Project Risk Management ◽  
Project Risk ◽  
Know How ◽  
Construction Companies ◽  
Important Concern ◽  
Preliminary Model

Abstract The function of project risk management (PRM) is to understand the uncertainty that surrounds a project and to identify the potential threats than can affect it as well as to know how to handle these risks in an appropriate way. Then, the measurement of the performance of PRM becomes an important concern, an issue that has not yet been addressed in the research literature. It is necessary to know how successful the application of the PRM process is and how capable is the process within the organization. Regarding construction projects, it is essential to know whether the selected responses to mitigate or eliminate identified risks were suitable and well implemented after the execution of the project. This paper presents a critical analysis of the relevance of measuring the performance of PRM and the benefits of doing so. Additionally, it presents a preliminary and pioneering methodology to measure the performance of PRM through the evaluation of the adequacy of responses applied to mitigate risks as well as to evaluate the resulting impacts as indicators of the effectiveness of these actions at the end of the project. This knowledge will allow construction companies to incorporate good practices, generate lessons learned, and thereby to promote a continuous improvement of the whole PRM process.

scholarly journals Estimation of cost overrun in construction projects using Fuzzy Logic

2021 ◽  
Vol 23 (05) ◽  
pp. 797-805
Author(s):  
Neelakash Haloi ◽  
◽  
Tapas Goyal ◽  
Faizan Zahoor ◽  
Harsh Jain ◽  
...  
Keyword(s):  
Fuzzy Logic ◽  
Construction Projects ◽  
Cost Overrun ◽  
Time Data ◽  
Construction Companies ◽  
Five Factors ◽  
Spss Software ◽  
The Cost ◽  
The Impact ◽  
Published Research

In recent years, the impact of the construction industry on the economy of India is increasing. However, there are a number of problems that are being faced by the construction companies or contractors or other relevant stakeholders, in the completion of a construction project. One of the major problems being faced is time and cost overrun. Thus, it is important to find ways of mitigating this critical problem. One of the solutions that is being used is the prediction of the amount and time that a project might overrun beforehand i.e. estimating the overrun during the design phase itself. This prediction can be done using a number of different techniques, the important one of which used in this paper is through the use of Fuzzy Logic. It also provides a brief description about the factors that are responsible for causing this cost overrun. The factors are identified by conducting a questionnaire survey and gathering responses from the relevant stakeholders which include contractors, project engineers, architects and consultants. The responses collected are further processed and analysed using SPSS software. The top 5 factors have been selected after the analysis and further used in preparation of the fuzzy logic model in the fuzzy toolbox of MATLAB. Further, the validation of this model has been done with real-time data of projects from various published research papers. Thus, the model developed provided prediction of the percentage of the cost overrun based on the percentage input of the top five factors.

scholarly journals Identification of risk factors leading to cost and time overrun in B-O-T projects

2021 ◽  
Vol 10 (1) ◽  
pp. 10
Author(s):  
Anue Marry Mathew ◽  
Neena S Lal
Keyword(s):  
Economic Growth ◽  
Construction Projects ◽  
Capital Expenditure ◽  
Growth Time ◽  
Cost Overrun ◽  
Managerial Skills ◽  
Term Operation ◽  
Construction Companies ◽  
Huge Impact ◽  
The Government

As infrastructural investments are vital in developing countries, it’ll not solely facilitate to foster the economic growth of a nation, however it’ll additionally act as a platform within which new kinds of partnership and collaboration may be developed. The developments of BOT have attracted participation of native and foreign non-public sector capitalist to secure funding and to deliver projects on time, within the budget and to the desired specifications. There are many complexities in projects because of the variety of factors in project’s trend and also the dependence of project primarily on national factors. Because of these complexities and their long-term operation, the projects meet with uncertainty and numerous risks. Effective risk management methods and good managerial skills are required in guaranteeing the success of the project. In recent years, due to substantial increase in the amount of construction companies along with the changes in the government administrations, the construction projects are exposed to cost and time overrun and has huge impact on the progress of works within the industry. Although, the sector is considered to be a key driver of economic growth, time and cost overruns threaten to limit the sector’s potential to help achieve the desired growth and ensure efficient capital expenditure. Keywords—BOT, cost overrun, delays, risk

scholarly journals CAUSES OF VARIATION ORDERS IN CONSTRUCTION PROJECTS IN THE GAZA STRIP

2010 ◽  
Vol 16 (4) ◽  
pp. 540-551 ◽  
Author(s):  
Adnan Enshassi ◽  
Faisal Arain ◽  
Sadi Al-Raee
Keyword(s):  
Construction Projects ◽  
Gaza Strip ◽  
Spare Parts ◽  
Cost Overrun ◽  
Construction Companies ◽  
Study Results ◽  
The Gaza Strip ◽  
Negative Impacts ◽  
Proactive Measures ◽  
International Consultant

The maximum project performance would be achieved if the work invariably flows smoothly within time limits and anticipated budget. Variation orders result in time delay, cost overrun, quality defects, and other negative impacts. This is common in construction projects in Gaza Strip. The main objective of this study was to analyze the causes of variation orders in construction projects in Gaza Strip. The causes of variation orders in construction process in Gaza Strip were investigated through questionnaire survey of 36 classified construction companies, 25 consultants and 15 owners. 64 causes of variation orders were identified from literature review. The study results identified the top ten most important factors that include lack of materials and equipment spare parts due to closure, change in design by consultant, lack of consultant's knowledge of available materials, errors and omission in design, conflicts between contract documents, owner's financial problems, lack of coordination among project parties, using inadequate specification for local markets by international consultant, internal politics, and change is specification by owners. In general, the study shows an agreement among owners, consultants and contractors regarding the ranking of the 64 factors causing variation orders. The results al‐so reveal that factors related to consultant are the most important causes of variation orders followed by the factors related to owner. An understanding of the causes of variation orders would be helpful for building professionals in assessing variation orders. Furthermore, the study would also assist professionals in taking proactive measures for reducing variation orders in construction projects. The findings from this study would also be valuable for all construction professionals in general. Santrauka Projektas bus efektyviausias, jei darbai vyks nuolatos ir sklandžiai, neviršijant terminu ir numatyto biudžeto. Del pake‐itimu nurodymu projektas užtrunka, viršijamos sanaudos, atsiranda kokybes trūkumu ir patiriamas kitoks neigiamas poveikis. Tai būdinga Gazos ruože vykstantiems statybu projektams. Pagrindinis šio tyrimo tikslas – išanalizuoti, kokios priežastys Gazos ruožo statybu projektuose lemia pakeitimu nurodymus. Priežastys, lemiančios pakeitimu nurodymus Gazos ruožo statybu procese, buvo tiriamos atlikus 36 tam tikros kategorijos statybos imoniu, 25 konsultantu ir 15 savininku apklausa. Apžvelgus literatūra nustatytos 64 pakeitimu nurodymus lemiančios priežastys. Atlikus tyrima, buvo nustatyti dešimt svarbiausiu veiksniu, iskaitant medžiagu ir atsarginiu irangos daliu trūkuma del uždarymo, projekto konsultanto pakeitimus, nepakankamas konsultanto žinias apie galimas medžiagas, projekto klaidas ir trūkumus, vienas kitam prieštaraujančius sutarties dokumentus, finansines savininko problemas, veiksmu koordinavimo trūkuma tarp projekto dalyviu, tarptautinio konsultanto naudojamas vietiniu rinku neatitinkančias specifikacijas, vidaus politika ir savininku pakeitimus specifikacijoje. Apskritai tyrimas rodo, kad savininkai, konsultantai ir rangovai sutaria del to, kaip pagal svarba išsidesto 64 veiksniai, lemiantys pakeitimu nurodymus. Be to, rezultatai rodo, kad su konsultantu susije veiksniai yra svarbiausios pakeitimu nurodymu priežastys, o antroje vietoje – su savininku susije veiksniai. Statybu specialistams suprantant, kokios priežastys lemia pakeitimu nurodymus, tokius nurodymus jiems vertinti būtu lengviau. Be to, tyrimas padetu specialistams imtis aktyviu priemoniu, kad statybu projektuose pakeitimu nurodymu būtu mažiau. Šio tyrimo išvados taip pat būtu naudingos visiems statybu specialistams apskritai.

scholarly journals Influence of Claim Management in Construction Industry

2019 ◽  
Vol 9 (2S2) ◽  
pp. 1052-1061
Keyword(s):  
Construction Industry ◽  
Construction Projects ◽  
Negative Impact ◽  
Critical Issue ◽  
Point Of View ◽  
Cost Overrun ◽  
Construction Companies ◽  
Spss Software ◽  
The Impact ◽  
Work Contract

Most construction projects are suffering from claims due to many reasons. Claim emergencies have risen for ten years due to the critical political situation. These claims have a bad impact on all groups who were work in the construction field. The impact of claim could be followed to cost overrun, loss of efforts and suspension of work, contract termination. This investigation means to recognize the real reason for causes of claim in construction and demonstrate their difference between respondent concerning individual, company and organization traits. It also aims found the important factors in developing for the management of construction project claim to predict claim occurrence and to mitigate the negative impact of a claim. The objective of the study achieved through a valid questionnaire obtained from several construction companies. The questionnaire survey was conducted involving the contractor, consultant, client point of view. The result of the questionnaire encountered in the SPSS software for finding the major factor that affects the construction. The finding demonstrates the absence of site attention to detect claims, detachment or inaccessible of related documents proactively, and conflicts which develop during owner/contractor negotiation are all critical issue related with the system of claim management. My work aims to distinguish the various claims through review paper and to recognize the most impacted causes of claim in our region.

scholarly journals Cost overruns of public sector construction projects: a developing country perspective

2019 ◽  
Vol 13 (1) ◽  
pp. 66-84 ◽  
Author(s):  
Richard Ohene Asiedu ◽  
Ebenezer Adaku
Keyword(s):  
Public Sector ◽  
Construction Projects ◽  
Public Procurement ◽  
Construction Project ◽  
Cost Overrun ◽  
Project Cost ◽  
Cost Overruns ◽  
Content Type ◽  
Interview Session ◽  
Construction Project Cost

Purpose Cost overrun of construction projects has been a key concern for all stakeholders of projects for many decades now. Many studies have been done in the past and continue to be done currently to understand the underlying causes of construction project cost overruns. However, the empirical evidence of the causes seem not be clear due to the silo approach in understanding the causes of construction project cost overruns. The purpose of this paper is to take the debate a step forward by providing an understanding of the causes of project cost overrun from a system’s perspective, especially from a less researched environment. Design/methodology/approach Data were collected and analysed from 131 respondents who were mainly involved in construction works in public procurement entities in Ghana. A two-staged approach was employed in collecting data from the respondents. The first stage involved an interview session with key informants in the construction industry in Ghana to ascertain the detailed causes of cost overrun of construction projects. The second stage focussed on the validation of these detailed factors by a wider stakeholder group through questionnaires. Factor analysis was employed to consolidate these detailed factors into major causes of construction project cost overruns. Findings The results show that there are primarily four major causes of most public sector construction projects cost overruns. These four major causes of cost overruns are poor contract planning and supervision; change orders; weak institutional and economic environment of projects and lack of effective coordination among the contracting parties. Originality/value The study provides more insights as to the critical and major factors that underpin public sector construction projects cost overruns and more importantly provides a basis for common treatment of the multiple risk factors engendering public sector construction projects cost overruns.

scholarly journals Factors Influencing Cost Overrun and Delay with Their Risks in Construction Management

2020 ◽  
Vol 9 (3) ◽  
pp. 439-443
Keyword(s):  
Construction Management ◽  
Construction Projects ◽  
Previous Literature ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Productivity Level ◽  
Construction Companies ◽  
Factors Influencing

Cost overrun and delay are the most important factors which affect the rate of progress in construction industries. There are numerous Risks are involved in cost and schedule overrun which leads to unprofitable situation or dropping the project. Previous literature studies are mainly focused only on cost overrun and delay but they do not deal with their risks which is important to study. This study is to assess the factors influencing time and cost overruns on construction projects and their risks also. The objectives of the study were achieved through valid questionnaire. The questionnaires are collected over 40 construction companies. From this survey, identify and ranking the various elements which are responsible for the inflation of cost and schedule overrun using analytical software like SPSS. And discuss about the significant values obtained from the collecting data and recommendation and mitigation ideas from the ranking of overrun factors. The significant value should be more than 0.05 and from our analysis most of the factors are above that value. The study clarified that incorrect estimates and low productivity level of labors highly contributes to overrun in construction management. It will leads to unprofitable situation, so proper scheduling and better management will rectify these problems.

scholarly journals Design Changes in Construction Projects – Causes and Impact on the Cost

2019 ◽  
Vol 5 (7) ◽  
pp. 1647-1655 ◽  
Author(s):  
Mughees Aslam ◽  
Edmund Baffoe-Twum ◽  
Farhan Saleem
Keyword(s):  
Construction Projects ◽  
Primary Objective ◽  
Extensive Literature ◽  
Cost Overrun ◽  
Project Cost ◽  
Design Changes ◽  
Communication And Coordination ◽  
The Cost ◽  
The Impact ◽  
The Relationship

Isolation of design phase from construction has made the design changes inevitable in construction projects. Extensive literature appraisal has acknowledged the detrimental effect of design changes on project performances. However, the impact and causes of design changes have been divided up, either separately or project specific. As a result, the relationship between impact and causes of design changes could not be established for general construction. The primary objective of this paper is to examine the impact of design changes on project cost and identifying actions responsible for these changes. The objectives of the study were achieved through a systematic review of past literature published in well-established journals, and contents analyzed. From the extensive literature review, it was established that the design change is one of the predominant factors to cost overrun, and in some cases, may upshot into cost overrun between 5 and 40% of the project cost. Also, many causes of design changes resulting in cost overrun within the perspective of the owner, consultant, and contractors are explored. Some projects experienced closure as a result of owner induced design changes, although these changes may not be significant in number.  Design changes as a result of consultants and contractors in some cases might have reduced impact but are frequent. For each consideration, most events leading to design changes can be eliminated by improving on communication and coordination between stakeholders. The main contribution of this research is to bring together the impact and causes of design changes on cost under one platform for effectively managing the design process.

scholarly journals Delay Factors and Time-Cost Performance of Construction Projects in Gaborone City Council, Botswana

2016 ◽  
Vol 8 (1) ◽  
Author(s):  
Aderemi Adeyemi ◽  
Keabetswe Masalila
Keyword(s):  
Construction Industry ◽  
Construction Projects ◽  
Cost Model ◽  
City Council ◽  
Archival Data ◽  
Cost Overrun ◽  
Time Cost ◽  
Significant Delay ◽  
Chi Square ◽  
Poor Site

The problem of delays in the construction industry is a global phenomenon and the construction industry in Botswana is not an exception. The objectives of this study were to confirm the presence of significant delay in GCC projects; to identify and rank the perceived delay causes; and construct a Bromilow-type time-cost model for the council’s projects. The study made use of archival data and questionnaire survey soliciting the perceived causes and effects of delay from the clients, consultants, and contractors that are associated with GCC projects. Chi-square statistical method was employed to prove the presence of statistically significant delay in the council’s project. About 150 respondents drawn from three client organizations, five consulting firms and 23 construction contracting companies participated in the survey to rank the perceived causes of delay. The study identified 10 most important causes of delay from a list of twenty eight different causes and six different effects of delay. The ten most important causes are: contractor’s improper planning, contractor's poor site management, inadequate contractor experience, inadequate client's finance and payments for completed work, problems with subcontractors, shortage in material, labor supply, equipment availability and failure, lack of communication between parties, and mistakes during the construction stage. The six main effects of delay were: time overrun cost overrun, disputes, arbitration, litigation and total abandonment. In addition, archival data were used to establish the time-cost relationship of the council’s projects using Bromilow’s model. The derived relationship was given by Time = 1.18Cost0.361861. The adjusted R2 of the model was 0.817812 showing that the model had high predictability. It was concluded that the results of this study can be of immense assistance to the stakeholders of GCC projects in terms of planning future projects and better understanding of the dynamics of project management as lessons for reducing the incidences of project delay and high cost.

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