Components of Cost Overrun in China Construction Projects

Abstract

This paper concerns an investigation into the causes of cost overrun in the construction industry of China. Cost overrun is common in all the countries of the world. For example, China has been experiencing severe cost overrun problem in the construction industry. The aim of the paper is to evaluate the major factors giving impact on cost components including labour, material, equipment and subcontractor. General factors that caused cost overrun in construction projects were obtained from literature review. The first questionnaire was designed to identify severity of factors for each cost component. The second questionnaire was designed to obtain the average proportions of cost components and cost of each top-ten factors for each cost component. The survey findings indicated that low productivity of labour, escalation of material prices, high cost of machineries and cash flow, and poor financial management are possible causes related to cost overrun in construction project of China as compared to other factors.