Journal of Advanced College of Engineering and Management Project 2022

jacem, Vol. 2, 2016 An Exploration of Causes for Delay and Cost Overruns in Construction Projects: Case Study of Australia, Malaysia & Ghana
Journal of Advanced College of Engineering and Management, Vol. 2, 2016
AN EXPLORATION OF CAUSES FOR DELAY AND COST OVERRUNS IN
CONSTRUCTION PROJECTS: CASE STUDY OF AUSTRALIA, MALAYSIA &
GHANA
Raj Kapur Shah
Senior Lecturer, Department of the Built Environment, Faculty of Technology and Environment,
Liverpool John Moores University, Liverpool, L3 3AF, United Kingdom
Email Address: [e-mail]
__________________________________________________________________________________
Abstract
Cost and time overruns are the key problems of any construction projects. These issues are causing the negative impact on
the development of country economic growth and prosperity. To overcome these issues, the paper is aimed to discover the
most influence factors causing the project delay and cost overruns and recommend the possible measures by investigating
case studies in three different countries in the world. Each country’s quantitative data from the past studies was selected to
analyse and recommend the effective measures. A questionnaire survey was conducted in all three case studies adopting
different data collection strategy. The reason of selecting three case studies is to outline the compare analysis of delay factors
and to classify why different delay factors have different priority level of influence in project delay from one country to
another country. The findings from the case studies exposed that the most influential factors in Australia are (1) planning and
scheduling deficiencies, (2) methods of construction, (3) effective monitoring and feedback process, whereas in Ghana, (1)
delay in payment certificates (2) underestimating of project cost, (3) complexity of projects are the most influential factors.
However, in Malaysia (1) Contractor’s improper planning, (2) poor site management, (3) inadequate contractor experience
are the most influential factors. This paper has also analysed the average and least impact of the delay factors causing project
delay and cost overruns in those countries. The paper concludes that there are diverse groups of delay factors from one
country to another country that causing project delay and cost overruns. It also concludes that there are diverse measures
according to the nature of delay factors to reduce the impact on project delay and cost overruns in construction industry.
Keywords: Cost and time overruns, delay factors, construction industry, projects delay, and developing countries
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1. Introduction
Construction delays are more likely to happen in almost all projects due to the miscommunication
between contractors, subcontractors, property owners or any other reasons. In many cases,
construction projects are delayed because of inaccurate estimate of time and project cost that was
initially presented to the clients or project owners. Delays and cost overruns are the most common
problems causing delay in the construction industry in both developed and developing countries
(Enshassi, 2009). A study by Flyvbjerg (2003) exposed that nine out of ten projects had the cost
overruns from a sample of 258 companies across 20 countries and 5 continents around the world. In
practice, delays occur in every construction project and the magnitude of these delays varies
significantly from project to project and country to country (Wael et al, 2007).
Construction industry plays an important role in contributing on national economy around the world
(Takim, 2005). The construction industry also impact the rate of GDP and employment of many
countries, and for this reason, the construction industry is considered to be vital for the economic
growth of a country (Olawale, 2010), and he suggested that the construction activities have become a
significant market indicator since this industry produces more products and consume more materials
than other industries. The cost overrun is one of the critical problems and requires a lot of research
studies and exploration to minimise or reduce the delay and less variation in budget for the future

jacem, Vol. 2, 2016 An Exploration of Causes for Delay and Cost Overruns in Construction Projects: Case Study of Australia, Malaysia & Ghana
projects. In some of the developed countries, the cost overruns consequence could be more serious
and the results could sometimes exceeds 100% of the initial project estimated (Angelo, 2002). The
construction industry is one of the main sectors to stimulate and provide ingredients for the
improvement of a country economy. Therefore, it is considered that the construction has a great
connection and play significant roles in the economic growth or reactivation in all countries.
Delays are constantly occurring in road construction projects and they could causes great impact on
economic growth. It is one of the common problems that upset the construction companies in terms of
competitiveness and long term sustainable in the global market. Due to the population growth,
industrialisation and urbanisation, more roads and highways are required for the easy access to market,
economy and other vital purposes such as transportation and delivering goods and services (Mahamid,
2012). He highlights that cost is one of the major issues which has to be considered throughout the
project life cycle and it can be considered as one of the most important factors cause the project to
delay and failure if appropriate consideration is not taken into account. The issue of cost overrun in
project is attracting more researchers over the past decades and still more research are running to
address the issue.
Moreover, there are many risk factors causing cost overruns in the construction industry, therefore,
researchers tend to take this issue into further scrutinise with aim of identifying the factors and their
ranking of importance. In recent study, researchers have tried to discover the reasons behind the initial
estimated and final amount, and other causes of time overrun. Morris (1987) found four key factors
that were the most likely influenced on cost overruns. These factors include design changes, poor
planning, unpredictable weather condition and the fluctuation in prices of building materials. It is
important to have in depth understanding of the outstanding issues in the construction industry. Hence,
the paper aims to provide in depth light about the existing causes of project delay and cost overrun in
both developed and developing countries, and outline the possible recommendations for controlling
project delay and cost overruns in future projects by analysing the case studies from different
countries.
2. Literature Review
Kaming et al (1997) conducted a study on thirty one high rise projects in Indonesia, and the study
revealed that the cost overruns are more likely to occur than time overruns, which means that the issue
of cost is more important and common than the project delay. He found that majority of the problem
causing cost overruns are due to increase in material prices and currency inflation, whereas the delay
in time was due to inaccurate estimation, design changes, poor labour productivity, inadequate
planning, and shortages of necessary resources. Similarly, a survey was conducted by Assaf (2006)
and identified a total of fifty six main risk factors, which were more likely to cause the project delay.
Delay factors are grouped into nine major factors in terms of their level of importance to different
parties. Howick et al (2009) stated that construction projects can suffer massively in time and cost
overruns because of mainly two reasons: to gain learning for future projects, and to claim
compensation from one to another party during the project.
Moreover, a survey was conducted by Greenwood et al (2005) aimed to find the subcontractors
liability in project delay. They found that despite the level of importance of agreement between the
two parties, there is advantageous way of dealing with such delays and that could be subjected to
Liquidated Damage. The survey also found the most common method for dealing with such delay
liability in subcontract is to base damage upon proportion of main contract liquated damages (LD).
The delay in subcontractors delay has to be dealt with before the start of the project, by agreeing to

jacem, Vol. 2, 2016 An Exploration of Causes for Delay and Cost Overruns in Construction Projects: Case Study of Australia, Malaysia & Ghana
the terms in both sides. Having an appropriate planning scheduling can decrease a significant number
of potential reasons for project to be delayed as the scheduling gives clear indication how a project
and people are performing, since appropriate scheduling tells when an activity should be finished
whereas on the other hand, effective monitoring will ensure that particular activity finishes in its
estimated time, this will show the project is working according to the plan and the next activity will
start without any delay. All of these three important factors have to be considered and advanced
procedures to be used to avoid controlled delay.
Furthermore, a study conducted by Assaf (2006) found that any changes made by client during the
construction period would affect in progress payment by client. Other causes are improper planning
and scheduling of projects by contractor, poor site management and supervision by contractor,
shortage of labour, difficulties in financing project by contractor. This shows that changes made by
client while construction is already in progress will not only slow the progress but also affect
everything that contractors has planned for the project in terms of materials delivery schedule or any
activities that were due to finish on time. Such changes made by client could stop the work and
increase project cost and delay the delivery schedule. The cost and time overruns are the two common
factors frequently occurring within the construction projects. The past project history shows that the
construction industry has vast number of projects were completed with time and cost overrun (Amehl,
2010). In addition, Al-Momani (1996) suggested that the actual estimated cost of project rises by up
30% by the time the project is ready to be completed even in the most developing countries.
Noulmanee et al (1999) has investigated the causes of delay in highway construction in Thailand and
the survey result showed that the delay are caused by all parties were involved in the project, even the
main reason was due to inadequacy of sub con tractors, organisation not providing required resources,
unclear drawing and lack of communication between consultants and contractors. Noulmaneeet al
(1999) suggested that delay can be minimised by better understanding and involving all parties in the
project with good communication between them. Similarly, a survey was conducted in Lebanon by
(Mezher, 1998) and he found that the owners were more wary of their financial issues, contractors
were not very keen about their relationship with other parties, and there was a lack of trust in
guaranteeing and complying with the agreement. But it was found that the poor management by
consultants was key reason of the delay. There were three main causes of cost overruns identified
by(Koushki, 2005) in a study in Kuwait, which include contractor related problems, material related
problems and owners’ lack of experience.
Ellis (2002) conducted a study to investigate main causes of delay in highway construction projects.
The study was split into two categories: excusable and non-excusable delay and found that on average
31% to 55% of all highways experienced a delay of 44% extra from the original agreed period. The
study also highlights that the delay mainly occurs more frequently in the urban areas. Similarly,
Jahren (1990) discovered that the quality of the contractor document, nature of the interpersonal
relation on the project and the policies of the contractor were key factors causing a significant impact
on cost overruns. The same investigation also exposed that a cost overrun rate from 1% to 11% are
more likely to occur on larger construction projects than smaller ones.
Moreover, a significant number of researchers have been involved in identifying causes behind the
delay in the construction projects and a lot of work has been carried to minimise such problematic
issues occurring in almost every project in every country worldwide. Six outcomes of delay were
identified by (Sambasivan, 2007) which comprise of time overruns, cost overruns, disputes,
arbitration, litigation and total abandonment. In many occasion, the delay happens due to human
errors and careless attentions to facts from either client or other team members of staff. Sibanyama

jacem, Vol. 2, 2016 An Exploration of Causes for Delay and Cost Overruns in Construction Projects: Case Study of Australia, Malaysia & Ghana
(2012) suggested that difficulty of establishing fair and expeditious settlement of claims depended on
untimely notification, poor record keeping, inadequate legal and factual justifications and poor
presentation. It is vital for contractors to fully understand the client’s requirements and fully commit
in providing services accordingly.
Furthermore, some authors believe some of the factors causing delay or cost overruns can be
classified as understandable and other parties should understand the situation of others where they
believes cost overruns due to their inaccurate estimation. Similarly, Chan (2002) identified other
reasons causing cost overruns and classified them into 3 aspects such as owner’s control, consultant’s
control, and beyond the control. Whereas, Bramble (1987) classified major delay factors into four
categories: excusable or non-excusable delay, compensable or non-compensable delay, critical or non-
critical delay, and concurrent or non-concurrent delay. Excusable are those delay arising from the
outside the control of the parties to the project such as acts of God where an unexpected weather
occurs or a strike action by labour, there are nothing can be done about such delays. Non-excusable
are those delays that one cannot have any excuse or can provide an excuse because the delay occurred
within due to careless of the contractor or consultant for slow progress. Compensable delays are those
delays where contractors and subcontractors have legal right to get a time extension from the agreed
finishing date of completion as this occurred due to the owner’s requirement change of plan, and
they’re entitled to additional financial compensation for the cost of delay. Nonetheless, Yates
(2006)suggested that non-compensable delay occurs due to acts of God where the fault are not from
any parties and therefore, the contractor is entitled only to extension of time but not additional cost.
2.1 Factors affecting project cost and time overruns
Construction is considered as an active industry and therefore delay in the construction project has
been one of the main subjects for many researchers. Delay is one of the major risk factors for both
contractors and owners and causes difficulties within the project and then leads to cost and time
overruns. Chan (2004) highlighted that the cost overruns to be one of the most critical issue at the
execution stage of the construction project. Also stated by (Van Der Westhuzien, 2005), the presence
of cost overruns can be a reason behind the failure of a project. But not all authors agree that the
failure is viewed from one single factor but many believe there are a significant amount of factors
causing the delay. However, Morris (1987) suggetsed that there are three different measures to
identify whether, the projects is successful or not. Project should perform functionality, management
of the project and performance of the contractors during the process. In the other hand, Chan (2004)
suggested that the key to a successful project completion and deliver is correct estimation, monitoring
time performance, cost performance and the overall quality of the construction project.
2.2 Delay in the developed countries
The delay and cost overrun are also key issues in the developed countries. For example, Bourn (2003)
published a report entitled “Modernising construction” and highlighted that 70% of the UK
construction projects, which are carried out by public departments and agencies, are delayed. A
research conducted by Building Cost Information Service (UK) found that nearly 40% of the
construction projects overrun the originally agreed contract period. Similarly, a survey was carried out
by Mansfield (1994) amongst contractors, consultants and clients in Nigeria and he found a total of 16
factors causing the project delays and cost overruns, whereas some of critical risk factors were finance
arrangements for payment, poor contract management, shortage in materials, inaccurate estimation
and price fluctuation. Moreover, Arditi (1985) conducted a survey amongst 146 organisations in
Turkey and he found that the main reasons causing the cost overruns are the increase in materials’