COST OVERRUN FACTORS IN CONSTRUCTION INDUSTRY OF PAKISTAN

Abstract

Purpose: The major aim of this study was to identify most important and different factors responsible for the cost overrun in the construction industry. It basically correspond to include various factors to be studied in great details that based different management and regulatory contexts. Methodology: The study involved the use of questionnaires filled by 100 respondents from 10 construction companies of Karachi. The respondents belonged to different age groups, different income level, job experiences, and job level and residing in different areas. The integration of data was conducted by using SPSS which further was analyzed by Principal Component and Factor Analysis (PCFA). Findings: The complete analysis ofthe data reveals different contributing factors responsible for the cost overrun that may further cause delay in competing respective projects within time. These three most significant factors that are responsible for cost overrun include improper managerial applications with the factor value of 0.905 followed by raw material-fluctuation in price and inadequate financial management with the factor value of 0.865 and 0.816 respectively. In that respect, the secondary source of data is also evaluated based on identifying the context of different kinds of projects completed or under process. Practical Implications: It is observed that one of the major factors contributing cost overrun in the construction companies include improper managerial applications which is then followed by raw material-fluctuation in price and inadequate financial management. Based on this analysis, it is suggested to make suitable measures for avoiding these issues that subsequently form the basis of overall cost overrun in the projects. It correspond to involve systematic design and regulation of management which preferentially include the context of effective strategic design and implementation, proper management and planning which correspondingly involve frequent coordination and use of professional approach from the respective professional representatives working in the construction companies.