Factors Contributing to Cost Overruns and the Mediating Effects of Inadequate Planning in Construction Projects

Abstract

Construction cost overruns (CCO) remain a persistent challenge in the global construction industry, leading to significant financial losses and project delays. This study examines the factors contributing to cost overruns and investigates the mediating role of inadequate construction planning (ICP) in construction projects. Based on project management theory and lifecycle theory, a conceptual framework was developed incorporating resource constraints (RC), design change (CD), inadequate construction planning, and construction cost overruns. Data were collected from 540 construction professionals across 16 cities in Anhui Province, China, yielding 512 valid responses (94.8% response rate). Structural Equation Modeling (SEM) was employed to test seven hypotheses regarding the relationships among these variables. The results demonstrate that resource constraints significantly impact both inadequate construction planning (β = 0.322, p < 0.001) and cost overruns (β = 0.18, p = 0.013). Design change also significantly affects cost overruns (β = 0.148, p = 0.029), while inadequate construction planning shows the strongest positive influence on cost overruns (β = 0.418, p < 0.001). Mediation analysis reveals that inadequate construction planning partially mediates the relationship between resource constraints and cost overruns (indirect effect = 0.234, p < 0.001), as well as between design change and cost overruns (indirect effect = 0.04, p = 0.03). These findings contribute to the understanding of cost overrun mechanisms and provide practical implications for construction project management, emphasizing the critical role of comprehensive planning in mitigating cost escalation risks.