Reckoning construction cost overruns in building projects through methodological consequences

Abstract

The construction cost is considered as the most important parameter to analyze the project success. It is essential to measure the variance from the budgeted cost to understand the cost impact on project performance and profitability. Though sufficient knowledge on cost overrun has been largely shared in the extant literature, it is not adequately explained why the cost overrun keeps occurring. Hence it is necessary to investigate the relationships among cost overrun factors to improve current construction cost and controlling practices. A conceptual framework is proposed based on causal mapping, systemic and scenario understandings. The traditional forecasting methods such as trend analysis, regression models are dependent on the history while predicting the future, whereas the scenario planning and cause mapping approach suggest the alternative for the future up comings and make ready for anticipating changes. With overwhelming statistical and cognitive significance, it is evident that the cost overrun risk indicators caution the project managers in the execution of building projects. From the findings of this study, decision-makers can act on early warnings of cost variances and commendably mitigate cost overruns. The findings are expected to bridge the gap in the current construction cost management practices.

Keywords:

• Construction cost overrun
• project performance
• cost overrun causes
• cognitive map

Disclosure statement

No potential conflict of interest was reported by the authors.