Assesment of factors affecting the contractor's cost overrun of building construction project

Abstract

The successful completion of the project is within the required cost, time and quality. However, not all projects will be completed within the fixed time, budget and quality. Cost overrun of the project by the client or the contractor frequently happens. Cost overrun is more critical in the contractors’ organization and should be monitored closely. Inefficient method of cost control by the contractor will lead to lower profit or even losses. The aim of the study is to assess the factors affecting contractor’s cost overrun in building construction project and the method of cost control employed by contractors on site. The objectives of the study are to identify the factors that contribute to the contractor’s project cost overrun, to assess the methods of cost control employed by the contractor on building construction site, to identify the problems faced by contractors in controlling cost on site and to determine the strategies on how to minimize contractor’s cost overrun in Nigeria. The study is limited to identifying the factors causing cost overrun in building construction project in Nigeria and the method of cost control employ on site by contractors’ category „D’. The study is carried out through interviews and questionnaires. The questionnaires were distributed online using google drive and the respondents consist of contractors, subcontractors, site engineers and project manager. A total of 52 questionnaires were returned answered. The data is analyzed using Average Index. From the study, the factors that contribute to the contractor’s project cost overrun are contractor’s lack of experience, improper planning, fraudulent practice, poor on site management and lack of coordination between designers and contractors. The methods of cost control employed by the contractor on building construction site are work programme, monitoring and inspection and evaluation of work. The problems faced by contractors in controlling cost on site are increased cost of material, wastage of material, theft and vandalisation and delay by client to release money. The study indicates that contractors can minimize cost overrun by using actual value and earned value analysis, cost engineer to monitor cost, software to control cost, and line manager to manage cost