Cost Overruns and Failure in Project Management: Understanding the Roles of Key Stakeholders in Construction Projects

• Published in: Journal of construction engineering and management Vol. 139; no. 3; pp. 267 - 279
• Main Author: Doloi, Hemanta
• Format: Journal Article
• Language: English
• Published: Reston, VA American Society of Civil Engineers 01.03.2013
• Subjects: Applied sciences; Building economics. Cost; Buildings. Public works; Clients; Construction industry; Consultancy services; Contractors; Cost analysis; Exact sciences and technology; Failure; Management; Project management; Project management. Process of design; Technical Papers; Australia; Oceania; Construction cost; Performance evaluation; Data analysis; Factor analysis; Methodology; Cost overrun; Project management; Estimation; Regression analysis; Descriptive statistics; Construction industry; Construction costs; Stakeholder; Cost performance; Critical study; Cost estimation
• ISSN: 0733-9364; 1943-7862
• DOI: 10.1061/(ASCE)CO.1943-7862.0000621

AbstractThe subject of poor cost performance has been widely published in the mainstream project and construction management literature. Nevertheless, the underlying responsibilities of the key stakeholders (clients, consultants, and contractors) in managing this chronic problem in the Australian construction industry remain unclear. By performing an in-depth analysis of the roles and responsibilities of these key stakeholders, this research is intended to unfold the industrywide perception of cost performance being heavily reliant on the contractor’s performance alone. Based on a thorough literature review and relevant industry inputs, 73 attributes associated with cost performance were identified for investigation. Based on the relative importance weighing technique on 48 selected attributes, planning and scheduling deficiencies have the highest impact on cost performance from clients, consultants, and contractors’ perspectives. Confirmatory factor analysis on the combined responses across all three groups suggests that robust control procedures and adequate programming, along with efficient design and effective site management, are the most critical factors. These factors are primarily associated with the responsibilities of contractors and consultants for managing cost overruns in projects. However, the client’s responsibility in facilitating effective management of these factors within the project environment is crucial. Multivariate regression analysis performed on eight factors’ scores highlighted the influence of five significant factors (p<5%) on managing cost overruns. The findings are expected to abridge a significant knowledge gap by shifting the priorities in cost estimation and management practices across all industry sectors.