Assessment of the mitigating measures for cost overruns in the South African construction industry

Abstract

This study investigated the causes of cost overruns and cost management methods to minimize cost overruns in the South African construction industry. The methodology used is a quantitative approach. Closed-ended and open-ended survey questions were used to gather data from 130 construction professionals, of which, 74 completed questionnaires were returned. The data received were analyzed by making use of both a computer programme called Statistical Package for Social Sciences (SPSS) and a content analysis method. The findings from the study revealed that the most common and significant causes of cost overruns were changes in the scope of work, decision making, planning, the inadequate experience of contractors, an increment of material prices, provision of weather conditions, unskilled labour, late design and lack of coordination. The findings also indicate the effects of cost overruns as disputes claims, extension of time, reduced profit to the contractor, and bad public relations. The study has identified cost management methods that can reduce cost overruns in the South African construction industry as effective planning, accurate estimate, tracking status of the project, use of scheduling tools, an inspection of works, communication, site meetings, proper methods of construction and evaluation of work completed. This study, therefore, suggests that all construction professionals must be equipped with factors of cost overruns in order to implement the correct measures to minimise cost overruns.