Causes of Contractor Cost Overrun in Construction Projects: The Case of Ethiopian Construction Sector

Abstract

Completion of a construction project with budget is frequently seen as a major criterion of project success by clients, contractors, consultants and related stakeholders. It is here that project management becomes essential tool for the delivery of effective projects than the traditional functional management. However, the construction industry is faced with challenges to meet budget. This study is conducted to identify the top five cost over-run factors and survey is conducted on 140 respondents. The samples were drawn using convenient sampling approach. Primary data is collected using the self-administered questionnaires. While secondary data is collected through reviewing of related materials and the analysis is conducted using SPSS version 20. As per the contractor’ response, the top five factors that causes cost overrun of construction projects were from medium to high. On the other hand, the top five factors as per the response of consultants and clients ranged between high to very high. The contractors outlined the top five factors that causes cost overrun in construction projects are poor planning, fluctuation of price of materials, poor productivity, inflationary pressure and project financing in descending order.