Critical Factors Affecting Cost Overrun in Foreign Funded Road Construction Projects in Sri Lanka: A Case Study of Road Development Authority and Provincial Road Development Authorities

Abstract

Foreign funded road projects are rampant with cost overrun, and through the identification of critical factors affecting cost overrun, this problem can be mitigated. In this research, a literature review has been carried out to identify 33 factors causing cost overrun in construction, and through interviews with experts, eight significant factors causing cost overrun in road construction projects have been identified. Altogether 37 factors were considered and classified into five groups: Natural conditions, Client and/or consultant, Client, Contractor and 'Beyond the control of all parties'. These were adopted to analyse the cost overrun in the selected 17 foreign funded road projects. The impact of these factors on the increase in BOQ items and Variations were examined using the documentary evidence and interviews with the personnel involved in these projects. The analysis revealed that only 11 factors had an impact on at least one project. Of these factors, the five most significant factors causing cost overrun, in the descending order of significance, are as follows (the number of projects affected by the factor is given in the parenthesis); Price escalation (13), New instructions issued by the client (9), Unforeseen site requirements (8), Items not identified in the BOQ (8) and Estimation errors in the BOQ (6). The study also analyses these factors in detail and makes recommendations.