Study on the cost overruns in road construction projects in Sri Lanka

Abstract

Cost is among the major considerations throughout the project life cycle. The gap between the cost at completion and that originally estimated known as cost overrun can be regarded as one of the most important parameters reflecting the success of projects. Despite its proven importance, it is common to see construction projects failing to complete within the originally estimated cost. Cost overrun is a frequent phenomenon and is associated with most of the projects in the construction industry in Sri Lanka. This trend is seen in the other developing countries where these overruns sometimes exceed 100% of the original cost of the project. The objective of this study are: to identify various factors influencing cost overrun at pre-construction and construction phases of road projects; to rank the factors identified based on their significance and identify the critical factors contributing to cost overruns and to make recommendations to overcome critical identified factors in future road projects Factors influencing cost overruns in road projects were identified during the literature survey and the information gathering sessions and a questionnaire was prepared considering those factors. A survey was carried out to identify significant factors influencing cost overruns in Road Projects. Delays in making payment, delays due to utility relocation, design changes during construction phase, cost escalation and land acquisition related issues have been identified as critical factors influencing cost overruns in road projects. Conclusions and recommendations are made to overcome the critical factors influencing cost overruns in the future road construction projects.