Factors affecting time and cost overruns in road construction projects in a Metropolitan Municipality of the Free State Province
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Date
2020
Authors
Ndlovu, Mlondolozi
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Free State
Abstract
Time and cost overruns in construction projects remain a significant challenge facing
the construction industry worldwide. The purpose of this study was, therefore, to
assess the most significant factors affecting time and cost overruns in road
construction projects in a metropolitan municipality of the Free State Province to
facilitate the formulation of comprehensive mechanisms to enhance project
performance. The study employed a quantitative research approach and cross-sectional research
design. A structured questionnaire was developed from 61 factors identified in existing
literature as the leading causes of time and cost overruns in construction projects. The
questionnaire was reviewed by the study supervisor and industry experts to guarantee
the face validity of the study and thereafter piloted with five industry practitioners before
distribution. The final questionnaire was disseminated to 66 purposively nominated
participants classified into three groups, namely, client (12), consultant (21), and
contractor (33). The respondents were nominated based on their direct participation in
47 selected road projects completed between July 2014 and March 2020. The
response rate for the valid questionnaires was 56% (37 out of 66). The empirical data
were analysed using the Relative Importance Index (RII), Importance Index (IMPI), and
weighted RII and IMPI methods to identify the hierarchical order of importance of the
61 variables on the performance of the road construction projects in the municipality.
The Spearman's rank correlation coefficient was employed to assess the degree of
correlations of perceptions between the respondent groups on the subject. Cronbach's
alpha was used to evaluate the reliability of the survey instrument.
The study found that 83% (39 out of 47) of the selected projects experienced time
overruns, with an average overrun percentage of 107.33%. Out of the sample projects,
44.68% (21 out of 47) experienced cost overruns with an average overrun percentage
of 24.48%. Using the weighted RII and IMPI methods, the study identified the top ten
variables contributing to the poor performance of projects from the collective responses
of all the participants to be: appointment of contractors with political clout; contractor's
cash flow; community disruptions; labour unrest; corruption; delays in progress
payments; subcontracting challenges (dispute and performance); under-pricing of the work due to strategic misrepresentation; under-pricing of the work due to overconfidence in own ability; and appointment of consultants with political clout. The
Spearman's rank correlation results indicated an overall high agreement between the
client and consultant groups (0.79), consultant and contractor groups (0.75), and client
and contractor groups (0.68) for the weighted RII and IMPI indexes. The questionnaire
was found to be reliable with a Cronbach's alpha value of 0.97.
The study recommends the following key measures to improve the performance of
projects at the municipality: vetting bidders and supply chain management
practitioners; appointing qualified and competent staff with integrity; developing a
comprehensive financial plan by contractors; introducing payment guarantee clauses
in contracts for advance payments and delayed progress payments; conducting a
comprehensive risk assessment during the bidding process; blacklisting service
providers caught practising bribery; conducting adequate public participation;
introducing capacity development programmes; paying wages in line with BCCEI and
standardising wages among all the contractors working in a site; ring-fencing the
project budget; limiting subcontracting to projects equal to or above R30 million;
appointing experienced subcontractors that are registered with the CIDB;
implementing cession payments for subcontractors; and appointing competent cost
estimators by the contractors.
Description
Dissertation (MBA (Business Administration))--University of the Free State, 2020
Keywords
Time overruns, cost overruns, Relative Importance Index (RII), Importance
Index (IMPI), mitigation measures, road construction projects, project management, municipality, Free State Province, South Africa