Causes Of Cost Overrun In Construction Projects

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A THEORETICAL REVIEW ON THE FACTORS CAUSING COST OVERRUN IN CONSTRUCTION PROJECTS IN MALAYSIA Abstract This study examines previous literature on construction projects cost with the specific aim of determining the frequently observed causes of cost overruns in construction projects. Cost overrun is one of the major problems in construction projects. Cost overrun is frequently observed in almost every construction projects. This cost overrun in construction projects occurs due to various reasons and many researchers have carried out various studies to identify the cause factors of this issue. The causes of construction cost overrun could vary from country to country because of the difference in political, economic, social and environmental…show more content…
Cost is among the major considerations throughout the project management life cycle and can be consider as one of the most important parameters of a project and the driving force of project success. Despite the proven importance of cost it is not hard to see a construction project achieving its objectives within the anticipated cost. Cost overrun is a very frequently observed phenomenon and is almost associated with nearly all construction projects. The issue of cost overrun is more severe in developing countries where these overruns sometimes exceed 100% of the estimated cost of the project (Azhar, N., Farooqui, R. U. and Ahmed, S. M.,…show more content…
Many studies in past fives have been carried out with scope of identifying cause factors of cost overrun in Malaysia by different researchers. In very comprehensive study by (Endut, LR, A. Akintoye and J. Kelly, 2009) of 359 different construction projects, it was found that 46.8% and 37.2% of public sector and private sector projects respectively were completed within the budget. However, 84.3%of the private sector projects were completed within the 10% cost deviation compared with 76.0% of the public sector projects. Another study carried out by (Memon A.H et al .2011) carried out in southern and central region of Malaysia, stated that approximately 40% variation in cost overrun is resulted from construction resources in southern part while in central region of Malaysia 59% of variation is caused because of construction resources. In a study of cost and time performance in central and southern region, (Memon A.H et al .2012) concluded that Cost overrun was a major issue in construction projects as agreed by 89% of respondent. Cost overrun problem is sever in large construction project as in a survey by (Memon A.H et al .2012a), the 96% of the respondent were agreed that there projects experienced cost overrun. (Shehu, Z et al 2014) studied 359 recently completed construction projects in different parts of Malaysia, to determine cost performance based on contract values; project sector; type of

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