Causes of Contractor Cost Overrun in Construction Projects: The Case of Ethiopian Construction Sector
International Journal of Business and Economics Research
Volume 4, Issue 4, August 2015, Pages: 180-191
Received: Jun. 19, 2015; Accepted: Jun. 25, 2015; Published: Jul. 14, 2015
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Authors
Zinabu Tebeje Zewdu, Faculty of Business and Economics, Unity University and OVID Construction plc, Addis Ababa, Ethiopia
Getachew Teka Aregaw, Faculty of Business and Economics, Unity University and Financial Training and Consultancy Plc, Addis Ababa, Ethiopia
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Abstract
Completion of a construction project with budget is frequently seen as a major criterion of project success by clients, contractors, consultants and related stakeholders. It is here that project management becomes essential tool for the delivery of effective projects than the traditional functional management. However, the construction industry is faced with challenges to meet budget. This study is conducted to identify the top five cost over-run factors and survey is conducted on 140 respondents. The samples were drawn using convenient sampling approach. Primary data is collected using the self-administered questionnaires. While secondary data is collected through reviewing of related materials and the analysis is conducted using SPSS version 20. As per the contractor’ response, the top five factors that causes cost overrun of construction projects were from medium to high. On the other hand, the top five factors as per the response of consultants and clients ranged between high to very high. The contractors outlined the top five factors that causes cost overrun in construction projects are poor planning, fluctuation of price of materials, poor productivity, inflationary pressure and project financing in descending order.
Keywords
Cost Overrun, Project Management, Project Control and Project Success
To cite this article
Zinabu Tebeje Zewdu, Getachew Teka Aregaw, Causes of Contractor Cost Overrun in Construction Projects: The Case of Ethiopian Construction Sector, International Journal of Business and Economics Research. Vol. 4, No. 4, 2015, pp. 180-191. doi: 10.11648/j.ijber.20150404.11
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