THE
IMPACT OF COST CONTROL TECHNIQUES ON CONSTRUCTION PROJECT DELIVERY
CHAPTER
ONE
1.0 INTRODUCTION
1.1
BACKGROUND OF THE STUDY
It is
a known fact that the Nigerian construction industry continues to occupy an
important position in the nation’s economy even though it contributes less than
the manufacturing or other service industries, (Aibinu and Jagboro, 2002). The
contribution of the construction industry to national economic growth
necessitates improved efficiency in the industry by means of cost effectiveness
and timeliness, and would certainly contribute to cost savings for the country
as a whole. It is also common knowledge that the implementation of the
construction project in the industry is usually accompanied with time delay and
cost increase as well as owner dissatisfaction (Hafez, 2001).
In general most (if not
all), construction projects experience time delays and cost overruns during
their implementation phase (Koushki and Kartam,2004). Numerous researchers,
both in the developed and developing nations have also examined and identified
the causes of time and cost overrun in the construction industry. Mansfield,
Ugwu and Doran (1994), for example performed a comprehensive analysis of most
important factors responsible for project delays and cost overrun in Nigerian
construction projects. This analysis indicated poor contract management,
financing and payment of completed works, change in site conditions, shortages
of materials, design changes, subcontractors and nominated suppliers, other
factors were price fluctuation inaccurate estimates, delays and additional
works as factors responsible for project delays and cost overrun.
A comprehensive classification of
causes of construction delays has also been determined by Henesy (1993). The
classification system included materials, labour, equipment and financial
constraints, as the main contributory variable to causes of construction time
overrun. The list of major factors causing construction delay in Thailand by
Ogunlana and Proumkunting (1996) included the inadequacy of resources supplies,
client and consultant shortcomings and incompetence. Koushki and Kartan (2004)
studied the impact of construction materials on project time and cost in Kuwait
and identified the project related variable affecting the on time delivery of
materials as material selection, time, type of materials and their availability
in the local market.
Time impacts are inevitable on
construction projects, primarily because of the uniqueness of each project and
the limited resources of time and money that can be spent on planning,
executing and delivering the project.
Time factors are inherent in all of
project construction’s undertakings. Construction projects have long been
recognized as particularly cost, time and risk-laden. Some of the time and cost
factors associated with the construction process are fairly predictable or
identifiable; others may be totally unforeseen. The constructed project may not
perform as anticipated because the owner may have unrealistic expectations regarding
the delivery time of construction forcing contractors into unrealistic gambles,
corner-cutting or commitments that may not be realistic (Frimpong 2003).
Project success can be defined as
meeting goals and objectives as prescribed in the project plan. A successful
project means that the project has accomplished its technical performance,
maintained its schedule, and remained within budgetary costs. Project
management tools and techniques play an important role in the effective
management of a project. Therefore, a good project management lies in the
management tools and techniques used to manage the project. Project management
involves managing the resources—workers, machines, money, materials and methods
used. Some projects are effectively and efficiently managed while others are
mismanaged, incurring much delay and cost overruns and negatively affecting the
economy (Frimpong 2003).
Assessing construction projects’
delivery time is critical in today’s market-driven economy.
1.2 STATEMENT OF THE PROBLEM
Construction
can be considered as a dynamic industry which is constantly
facinguncertainties. These uncertainties and the many stakeholders in these
kinds of projects, makethe management of costs difficult which consequently
causes cost overruns. Therefore, costoverruns are considered one of the most
critical issues during the execution of constructionprojects (Chan, et al.,
2004; Doloi, 2011).
As
mentioned by Van Der WesthuizenandFitzgerald (2005), the presence of cost
overruns can be a reason for project delays or possible project failures.
Howeverthis idea has been refuted by many authors who considered that project
success depends onmany other factors that should be assessed to conclude the
success or failure of a project(Chan, et al., 2004). Moreover, there
have been many studies that suggest that the success of aproject depends on the
presence of certain critical factors which can also change depending onthe
objective to be met (Iyer and Jha, 2005). In other words, some authors
ascertained thatthere are some critical success factors that help to improve
cost performance and prevent costoverruns.
1.3 RESEARCH QUESTIONS
In-order to guide the study and achieve
the above stated research objectives; the following research questions were
formulated:
1. What
cost control techniques are frequently used by contractors in construction
projects?
2. What
are the problems faced by contractors in controlling cost in the construction
project process?
3. What impact does cost controlling techniques have on the
duration of construction projects?
1.4
AIM AND OBJECTIVES OF THE STUDY
The main aim of the study is to
examine various cost control techniques used in construction projects and the
impact they have on project delivery. Specific objectives of the study are:
1.
To identify cost control technique frequently used by contractors in
construction projects.
2.
To examine problems encountered by contractors in managing construction project
cost.
3.
To determine the impact of cost
control techniques on the duration of construction
projects.
1.5 SIGNIFICANCE OF THE STUDY
This
study is important to building professionals and the general public because it
would not only clarify but also create awareness
of the extent to which inadequacies in cost control techniques can adversely affect
project performance. The study
help contractors, clients, consultants and all parties involved in
construction projects about ways of improving their current method of cost
management and control.
The study will also be of great benefit for other student
researchers’ who may want to venture into the same subject matter. Having
gotten results-both empirically and theoretically, the study will serve as a
foundation for future research studies.
1.7 SCOPE AND
LIMITATION OF THE STUDY
The
study will cover some selected quantity surveyors from Ibadan, Oyo State. All
findings and recommendations from the study may not reflect the true view of
the traditional roles and changing roles of quantity surveyors as the
researcher could not cover a wider area due to financial and time constraints.
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