Factors Influencing Cost Overruns in Construction Projects of International Contractors in Vietnam

• Published in: The Journal of Asian finance, economics, and business Vol. 7; no. 9; pp. 389 - 400
• Main Authors: VU, Thong Quoc, PHAM, Cuong Phu, NGUYEN, Thu Anh, NGUYEN, Phong Thanh, PHAN, Phuong Thanh, NGUYEN, Quyen Le Hoang Thuy To
• Format: Journal Article
• Language: English
• Published: 한국유통과학회 30.09.2020
• Subjects: 경제학; Foreign Contractor; Project Management; International Management; Cost Overrun; Financial Management
• ISSN: 2288-4637; 2288-4645
• DOI: 10.13106/jafeb.2020.vol7.no9.389

A construction project is a designed product made up of labors, materials, and installations in the project positioned on the ground and may include the underground and ground section, and the section in water or on the water surface. It is a civil, industrial, transport, agricultural and rural development, infrastructure, or some other. A key phase in the life cycle of these construction projects is the implementation when building products are made directly with workers, equipment, materials, and managers. If there is a lack of management experience, information, and problem-solving solutions to tackle the risks faced by contractors, especially foreign ones, will fail in controlling the project’s cost. This study was conducted with investigations, discussions, and evaluation of the factors that lead to cost overruns in the construction projects of international contractors in Vietnam. The principal component analysis (PCA) showed that those factors that influence cost overruns these construction projects fall into five general groups, including factors related to (i) the owners, (ii) the foreign contractors, (iii) the subcontractors and suppliers, (iv) state management, and (v) the project itself. Besides, the study proposes solutions to limit cost overruns in construction projects and improve the profitability of international contractors in Vietnam.