scholarly journals The Influence of Optimism Bias on Time and Cost on Construction Projects

2021 ◽  
Vol 5 (4) ◽  
pp. 429-442
Author(s):  
Aaron Chadee ◽  
Salisha R. Hernandez ◽  
Hector Martin
Keyword(s):  
Construction Projects ◽  
Management Practices ◽  
Time Window ◽  
Literature Survey ◽  
Control Mechanisms ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Optimism Bias ◽  
Bias Score ◽  
The Impact

The unresolved scholarly debate to curtail cost and time performances in projects has led to alternate solutions, departing from the dominant technical school of thought to include concepts from behavioural sciences. In this paper, we consider the psychological effect, namely optimism bias, as one of the root causes for delays in cost overruns on projects. The research objectives were to determine the level of bias among project participants, rank time and cost overrun causes according to the participants’ bias score and establish a mitigation strategy to curb potential delays and cost overrun impacts based on the bias scores obtained. A literature survey was conducted to determine causal factors contributing to delays and cost overruns linked to optimism bias. Through a pilot survey of three semi-structured interviews, eighty factors obtained from the literature survey were reduced to 24 critical delay and cost overrun factors relevant to Trinidad and Tobago. A questionnaire was subsequently developed seeking construction professionals to rate their bias scores based on an 11-point Likert scale. The research confirms that project planners and decision-makers exhibit moderate levels of optimism bias; however, participants lacked awareness of the impact of optimism bias on projects outcomes. Project location, environmental impacts and historic preservation, and labour disputes are the top three critical factors where project professionals displayed increased optimistic tendencies. It is proposed that contingency “time window” and reference class forecasting be implemented as control mechanisms to mitigate the impacts of time and cost overruns on projects. This research introduces a novel method to account for and measure optimism bias on construction projects. This study adds knowledge into delays and cost overruns causation and provides a foundation for future studies on quantifying psychological effects on projects and enhancing overall project management practices. Doi: 10.28991/esj-2021-01287 Full Text: PDF

Investigation of Cost-Influencing Factors Potentially ‎Controllable by Main Contractors in Construction Projects in ‎Iraq

2020 ◽  
Vol 38 (7A) ◽  
pp. 1069-1076
Author(s):  
Layth T. Ali ◽  
Raid S. Abid Ali ◽  
Zeyad S. M. Khaled
Keyword(s):  
Construction Projects ◽  
Project Managers ◽  
Cost Overrun ◽  
Public And Private ◽  
Importance Index ◽  
Labor Recruitment ◽  
Supply Planning ◽  
Major Factors ◽  
And Control ◽  
The Impact

Cost overrun in construction projects is a common phenomenon in Iraq. This might occur due to diversity of factors. This study aims to identify the factors influencing construction projects cost that are potentially controllable by main contractors. A field study through a questionnaire survey was directed to a sample of related Iraqi professional engineers from general contracting companies at both public and private sectors. Their opinions on the impact and frequency of each factor were investigated. The questionnaire offered (59) factors classified in (8) categories namely; legislations, financial and economic, design, contractual, site management, material, labor and equipment. The factors were ranked according to the highest Relative Importance Index (RII). The study revealed (10) major factors that are potentially controllable by main contractors namely; labor productivity, sub-contractors and suppliers performance, equipment productivity, site organization and distribution of equipment, experience and training of project managers, scheduling and control techniques, planning for materials supply, planning for equipment supply, materials delivery and planning for skilled labor recruitment. Recommendations to aid contractors and owners in early identification of these factors are also included in this study.

Assessing the Impact of Cost Overrun Causes in Transmission Lines Construction Projects

2020 ◽  
Vol 24 (4) ◽  
pp. 1029-1036 ◽  
Author(s):  
Hai Pham ◽  
Truong-Van Luu ◽  
Soo-Yong Kim ◽  
Duc-Thinh Vien
Keyword(s):  
Transmission Lines ◽  
Construction Projects ◽  
Cost Overrun ◽  
The Impact

scholarly journals Cost Overruns in Tunnelling Projects: Investigating the Impact of Geological and Geotechnical Uncertainty Using Case Studies

2020 ◽  
Vol 5 (9) ◽  
pp. 73
Author(s):  
Chrysothemis Paraskevopoulou ◽  
Georgios Boutsis
Keyword(s):  
Case Studies ◽  
Research Work ◽  
Construction Cost ◽  
Cost Overrun ◽  
Cost Overruns ◽  
Total Cost ◽  
Ground Investigation ◽  
Major Factors ◽  
The Uk ◽  
The Impact

Tunnelling projects seldom meet the initial budget requirements. Commonly, these types of projects suffer from cost overruns, which subsequently lead to project delivery delays mainly due to unsuccessful ground investigation as specified in the literature. The presented work scrutinises the effect of ground investigation in cost overruns. More specifically, various cost figures (total cost, construction cost, tunnel cost) are analysed for two case studies i) the Channel tunnel in the UK and ii) the Olmos Tunnel in Peru. Clayton’s relation between ground investigation and the construction cost is utilised and further investigated. In the Channel tunnel, the main problems faced led to a cost overrun of 78% for the total cost, 66% for the construction cost and 77% for the tunnelling cost. In the Olmos tunnel, two main geological scenarios are analysed and the construction cost overrun is calculated at 9.6% and 6.7%. Drawing on the conclusions, this research work proves that ground investigation can be one of the major factors influencing the tunnel cost.

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 Assessment of delay and cost-overrun in federal road construction project in Abuja

2020 ◽  
Vol 11 (4) ◽  
pp. 1184
Author(s):  
Ashem Emmanuel Egila ◽  
Oluwaseun Abdulakeem Balogun ◽  
Saheed Olanrewaji Yusuf
Keyword(s):  
Construction Projects ◽  
Construction Project ◽  
Road Construction ◽  
Mean Value ◽  
Cost Overrun ◽  
Related Factors ◽  
Cost Overruns ◽  
Factors Influencing ◽  
Importance Index ◽  
The Government

Poor road infrastructure in Nigeria is a significant challenge, just like poverty, insecurity, and unemployment. The construction of road in the country is characterized by numerous challenges throughout the project life cycle. Some of these challenges are project delay and cost overrun, corruption and fraud, faulty contractual process among others. Objectives of this study are to identify factors influencing delays and cost overruns in road construction project, to rank these factors base on their impacts and importance, and to suggest conservative ways to address the future challenges that can result from delays and cost overruns of future road construction projects. The research instruments include in-depth literature review, fieldwork, questionnaire administration, and interview. Inferential statistics such as Relative importance index (RII) and Mean Value techniques were used to analyze collected data. The result of the study identified factors influencing delays and cost overruns in road construction projects as; man related, money-related, machine-related, material related, environmental-related, and method related factors. Analysis using RII and MV ranked man and money related as the highest factors for delay and cost overrun respectively. Hence, the research recommends that the Government should create an enabling environment, making suitable policy for the construction company to operate.

scholarly journals A model for measuring distruption risk in the prefabrication supply chain

2021 ◽  
Vol 11 (2) ◽  
pp. 69-88
Author(s):  
Somik Ghosh ◽  
◽  
Mustafa Hamad ◽  
Keyword(s):  
Supply Chain ◽  
Construction Projects ◽  
Risk Model ◽  
Exposure Model ◽  
Risk Exposure ◽  
Cost Overruns ◽  
Batch Sizes ◽  
Risk Managers ◽  
The Impact ◽  
Disruption Risks

Use of prefabrication in construction projects is increasing due to the benefits in cost, time, quality, and safety. However, utilizing prefabrication introduces uncertainties inherent with the supply chain of the process. These uncertainties, if not managed, can disrupt the prefabrication process and result in schedule delays and cost overruns. This study proposes a model to measure disruption risks in the prefabrication process. The model was used in measuring the disruption risks of prefabrication of headwalls in patients’ rooms for a healthcare project as a pilot study. The risk model could successfully identify the disruption risks originating anywhere in the supply chain based on input information such as required material quantity, batch sizes of material deliveries, production rates, and batch sizes of transporting the headwall units. Using the model, the project team identified two uncertainties that could lead to possible disruptions: the start of the prefabrication processes and the required production rate to meet the on-site schedule. This is a first step to developing a risk exposure model that can prove valuable to the risk managers to analyse and manage the impact of disruptions. This will help the risk managers in making informed decisions about where to focus their limited resources.

scholarly journals Effects of Project Cost Overruns and Schedule Delays in Sub-Saharan Africa

2017 ◽  
Vol 3 (2) ◽  
pp. 46 ◽  
Author(s):  
Paul Terna Gbahabo ◽  
Oluseye Samuel Ajuwon
Keyword(s):  
Economic Effect ◽  
Sub Saharan Africa ◽  
Control Mechanisms ◽  
Cost Overrun ◽  
Project Cost ◽  
Cost Overruns ◽  
Schedule Delay ◽  
Wide Range ◽  
Sub Saharan ◽  
Secondary Information

This paper provides conceptual insights on the economic impact of project cost overrun and schedule delays on infrastructure procurement in developing countries with huge infrastructure deficit in Sub-Saharan Africa. Projects cost overruns and schedule delay are a major and widespread problem in infrastructure procurement the world over. It has received a lot of attention in the recent past. However, the literature reveals that extant studies on project overruns are heavily skewed towards causative factors, with little or no attention to the effects it has on the economy as a whole. The paucity of studies on the effects of project cost overrun and schedule delay will further reinforce the imperative to reacquaint policymakers and infrastructure developers, as well as project financiers with the gravity and import of the problem for infrastructural development in particular and the wider economy in general. The study undertakes an exploratory approach drawing from a wide range of secondary information and materials obtained from policy documents, study reports and peer-reviewed articles. The findings show that cost overrun and schedule delay in infrastructure procurement can have a damaging economic effect ranging from allocative inefficiency of scarce resources, further delays, contractual disputes, claims and litigation to project failure and total abandonment. The study recommends project management capacity-building for infrastructure developers, project managers as well as a number of innovative control mechanisms such as reference class forecasting, public-private partnership and computer-aided cost estimating tools including artificial neural networks, data mining, building information modelling as well as fuzzy neural inference model, genetic algorithms, and stochastic simulation to curb the menace of the problem.

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.

Inflation rate and labours’ wages in construction projects: economic relation investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Ali Musarat ◽  
Wesam Salah Alaloul ◽  
M.S. Liew
Keyword(s):  
Construction Industry ◽  
Construction Projects ◽  
Inflation Rate ◽  
Vital Role ◽  
Strongly Correlated ◽  
Cost Overrun ◽  
Content Type ◽  
Spearman Correlation Test ◽  
Key Resources ◽  
The Impact

PurposeLabours are one of the key resources of construction projects having a significant impact on economic development. With time, the construction industry is getting a boom due to numerous construction projects in which labours’ contribution is significant. Project betterment is associated with the project productivity which relates to the labours. Wages play a vital role in retaining labours in the construction industry.Design/methodology/approachThis study focuses on investigating the increasing and decreasing behaviour of labour wages in the construction industry and observing the impact of the inflation rate in deviating labour wages. Initially, the percentage deviation was calculated to observe the changing behaviour of the data and then the Spearman correlation test was used to find the relationship between the inflation rate and the labour wages.FindingsIt is evident that even with a good economy and a stable construction sector, still, the labour wages faced a decline over time, which is a matter of concern. Also, based on the correlation coefficient, it was revealed that several labour wages categories are moderately and strongly correlated with the inflation rate and can impact project cost if the inflation rate is not considered while finalizing the budget. Besides that, the changing behaviour of labour wages due to the inflation rate impacts significantly on gross domestic product (GDP); therefore, it requires vital attention.Originality/valueChanges in labour wages are not considered in budget estimation which drag the project towards cost overrun. This study brings the attention of the stakeholders on the issue with experimental justification. Also, how the inflation rate is affecting the labour wages has also been addressed.

scholarly journals Analysis Cost Overruns, Delays and Risk Involved in Construction Management Using Primavera

2018 ◽  
Vol 7 (3.10) ◽  
pp. 160 ◽  
Author(s):  
T Subramani ◽  
P Sivakumar
Keyword(s):  
Construction Industry ◽  
Great Risk ◽  
Construction Management ◽  
Construction Projects ◽  
The Other ◽  
Cost Overrun ◽  
Management Compensation ◽  
Social Effect ◽  
Cost Overruns ◽  
Resource Creation

Construction industry is taken into consideration as one of the maximum crucial industries in India. These phenomena may additionally have an effect on the development of construction industry in India. In addition to may additionally expose many establishments of construction to be destroyed. Delays in addition to disruptions are sources of capacity risks that studies are looking into techniques to manipulate along with technical, social, monetary, felony, economic, useful resource, creation and commercial. To evaluate the reasons of delays and conflicts are due to: layout modifications, delays in price to contractors, facts delays, investment troubles, bad challenge management, compensation problems and disagreement at the valuation of labor accomplished. On the other hand, time overrun, cost overrun, bad social effect, idling assets and disputes are the principle outcomes of delays and disruptions. The observe concludes the reasons of delays and disruptions and their outcomes placed construction projects at extremely great risk that have an impact on their performance the use of primavera. 

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