Cost and time overrun in road construction : Magnitude, Causes and Cost Estimating Models
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This study investigates the cost and time overrun in road construction projects in the West Bank in Palestine. The magnitude and causes of cost and time overrun are studied and recommendations to enhance the performance of construction projects were developed. The study is based on a sample of road construction projects awarded in the West Bank over the years of 2004 – 2008. Field data collection and questionnaire survey are the two main methods used to achieve the study goals. Based on the collected cost data, it is found that 100% of the projects suffer from cost diverge. The finding reveals that 76% of projects have cost under estimation, while 24% have cost over estimation. The discrepancy between estimated and actual cost has an average of 14.6%, ranging from -39.3% to 98%. The relationship between cost diverge and some physical project characteristics (i.e. road length, road width, terrain condition, ground condition, and soil quality) is discussed. Contractors and consultants who were involved in road construction were surveyed using a questionnaire. Seventy five percent of the surveyed contractors and 70% of the surveyed consultants indicated that the average time overrun for the projects they had experienced was between 10% and 30% of the original project duration. The analyses of the questionnaire survey reveal that the top five cost overrun causes are experience in contracts, insufficient time for estimate, incomplete drawings, materials price fluctuation and political situation. While the top five causes affecting time overrun are political situation, segmentation of the West Bank and limited movement between areas, award project to lowest bid price, progress payments delay by owner and shortage in equipments. Based on the collected data, some early stage cost (i.e. at early stages) estimating models for road construction projects were developed using multiple regression techniques. The study is divided into 9 chapters as follows: Chapter 1 is the introduction; it gives overview on construction industry, cost and time overrun in construction industry, risk in construction in general, challenges concerning construction in Palestine, statement of the problem, objectives of the study, study limitation, study approach and thesis organization. Second Chapter provides the state of art in the field of the study; it reviews some previous studies on time and cost overrun, cost estimating and construction cost. It includes the definition, size, causes, and effects of delay and cost overrun in construction projects. The third chapter investigates the cost diverge in road construction projects using data for 169 road construction projects awarded in the West Bank in Palestine over the years 2004–2008. In this chapter, the statistical relationship between actual and estimated cost of road construction projects is discussed. Based on the collected data, regression models that describe cost diverge as a function of estimated cost and project size (i.e. road length and width) are developed. Using data for 100 road construction projects implemented in the West Bank in Palestine over the years 2004–200, Chapter 4 examines the cost diverge (in terms of percentage and in terms of absolute value) in road construction activities. The considered activities are: earthworks, base works, asphalt works, and furniture works. The relationship between actual and estimated cost for each activity is discussed. Based on the collected data, regression models that describe cost diverge of each activity as a function of project size (road length and width) and other projects characteristics such as terrain condition, ground condition, and soil suitability are developed. A discussion of cost overrun causes in road construction projects is presented in Chapter 5. Thirty two contractors and 40 consultants from the West Bank in Palestine were surveyed. The survey included 51 factors affecting the estimation of road construction cost and their degree of importance. This chapter investigates the impact level of those factors measured by the level of importance and ranked according to the importance index for the three groups of contractors, consultants, and combination of them. The degree to which contractors and consultants groups agree on the severity rank of the cost overrun causes in road construction projects is investigated. Chapter 6 discusses the time performance of road construction projects in the West Bank in Palestine. A study is conducted in order to determine the causes of delay and their importance according to contractors and consultants. The field survey conducted covered 34 contractors, 30 consultants. Fifty two causes of delay were identified during the research. The average time overrun for the projects that has been experienced by the participating contractors and consultants is investigated. Chapter 7 discusses cost estimating models that could be used in early stages of road construction projects. Regression techniques are used to develop regression models that predict the total project cost as a function of project’s bid quantities and project size. The models were developed based on 131 set of data collected from the West Bank in Palestine. The used procedure resulted in the formulation of multiple and simple linear regression models could be handled easily using calculator or simple computer program. Finally, chapter 8 is devoted to a summary and chapter 9 is devoted to recommendations.