Cost Overrun in Construction Projects in Saudi Arabia: Contractors Perspective
Cost Overrun in Construction Projects in Saudi Arabia: Contractors Perspective
Research Method
34 cost overrun causes in construction projects were defined
through a detailed literature review. The causes were tabulated
into a questionnaire form. Then the draft questionnaire was
discussed with three experts in construction industry to
VH
Frequency M
VL
VL L M H VH
Severity
Fig. 1. The risk matrix
The risk matrix includes three zones: red, yellow, and green; RESULTS AND DISCUSSION
such that: Participants
The target populations in this study are the total number of
construction contractors in the Northern Province of Saudi
1) Green zone: risks in this zone are low level, and can Arabia. Simple random sampling was used to select the
be ignored. participants from the available list.
2) Yellow zone: risks in this zone are of moderate The questionnaire was sent out to a total of 60 contractors
importance, and should be controlled. asking their perception in ranking the identified 34 causes in
terms of severity and frequency using an ordinal scale. A total
3) Red zone: risks in this zone are of critical of 43 contractors filled the questionnaire. The response rate by
importance. These are the top priorities, and close contractors is 72%. On average, the respondents have
attention should be paid to them. experience of more than 7 years.
Table II
Risk matrix for cost overrun causes from contractors perspective
Cause
Cause S.I Level F.I Level
zone
long period between design and time of implementation 63.87 H 60.18 H red
Top cost overrun causes planning will get resources together to achieve the
project objectives within the limited time, cost and
Table 3 shows the top contributors to cost overruns in quality.
construction projects in Saudi Arabia from contractors‘
perspective, they are: 4. Long period between design and time of
implementation: The owner should try to shorten the
1. Frequent changes in design: this could happen due to period between the design and time of
the less involvement of the owners in the early implementation, since during this period many
phases of the projects or due to the design mistakes influencing changes could be arise that might lead to
and scope changes. This situation interrupts the cost overrun.
planned schedule, especially if the changes lead to
additional works or rework. Consequently, the 5. Payments delay: Construction works involve high
project cost will increase. daily expenses and most of the contractors cannot
fulfill these expenses when the payments are delayed.
2. Bid award for lowest price: in general, the clients Due to the dely of payments by the owner, work
award bids to the lowest bidder to execute their progress can be delayed because of inadequate cash
projects. However, the lowest bidders might be low flow to support the construction expenses by
qualified contractors. Consequently, poor cost contractor, and thus project cost will increase.
performance might occur.
Table III
Top cost overrun causes from contractors' perspective
Risk
Cause S.I Scale F.I Scale
zone
bid award for lowest price 63 H 52.35 M red
frequent changes in design 64.74 H 59.31 M red
improper planning 71.36 H 64.53 H red
long period between design and time of
red
implementation 63.87 H 60.18 H
payments delay 74.22 H 61.92 H red
bid award for lowest price 3.15 1.02 39.58 2.62 0.87 27.7
high interest rates by bankers 1.97 0.85 43.55 2.05 0.79 41.73
inadequate production of raw materials by the country 2.77 0.98 40.23 2.49 0.8 29.44
lack of coordination between design and contractors 2.72 0.94 33.35 2.84 0.95 35.49
long period between design and time of implementation 3.19 0.92 30.43 3.01 0.88 27.65
number of projects going at the same time 2.47 0.8 31.49 2.57 0.85 35.32
poor financial control on site 2.72 0.98 37.13 2.66 1.25 46.07
poor relationship between managers and labors 2.68 1.05 36.72 2.88 1.12 42.29
1.6
1.4
Standard deviation (Sn)
1.2
1
0.8
0.6
0.4
0.2
0
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Mean (X')
1.6
1.4
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