Cost Overrun In Construction Industry

1396 Words6 Pages
Cost overrun is an infamous issue in the construction industry. According to Chapter 2 Literature Review (Section 2.1.1), cost overrun is a problem that occurs in Malaysia and other countries. Numerous causes of cost overrun have been investigated by previous researchers such as contractor-related factors, consultant-related factors, client-related factors, material-related factors, labour-related factors and other factors. Based on Chapter 2 Literature Review (Section 2.1.2), different countries may experience similar or different causes. There are various effects due to cost overrun of construction projects. Many researchers have studied the aftermath of this well-known problem. Mahamid and Dmaidi (2013) have investigated the cost growth…show more content…
In previous studies by Flyvbjerg et al. (2002) and Sweis et al. (2013), as cited in Shehu et al. (2014), private projects normally do well compared to public projects, in terms of completing the projects within the cost agreed. However, according to a study conducted by Shehu et al. (2014), private sector experience higher rate of cost overrun compared to the public sector. Public sector achieves 45.8% of completing the projects within budget while the private sector only attained 37.3%. Moreover, it will also emphasize on post-contract stage. Cost control is essential in both design stage and construction stage, particularly the latter. The phase where a lot of cost reduction can be accomplished is the design stage as it is still in the early period of construction and no crucial cost expenditure has been made. On the other hand, changes occurred during the construction stage is the most critical as it can cause project delay which will instigate unavoidable price inflation (Bahaudin et al., 2012). Furthermore, the researcher will highlight the measures implemented by medium-sized contractors in Malaysia. Large organizations in Malaysia have comprehensive cost control guidelines and strategies and uses more advanced software where they even employ experts (Bahaudin et al., 2012). Medium-sized contractors do not take cost control implementation as seriously. Aside from that, this study will concentrate on building construction projects as cost overruns during the construction stage of building projects is common (Cunningham,
Open Document