Oxford Brookes Dissertation: Construction Project Delays and Overruns

This dissertation investigates the significant impact of schedule delays and cost overruns on construction projects. It examines the relationship between these two critical factors and their effects on project outcomes. The research explores various causes of delays, including labor strikes, errors in planning, and interventions by outside agencies, as well as changes initiated by project owners. The study employs both quantitative and qualitative data analysis, using SPSS to determine the correlation between schedule delays and cost overruns. Findings reveal multiple factors affecting schedule delays, such as poor management, limited resources, and external interference. The dissertation recommends methods to minimize the impact of delays and overruns, providing insights for contractors, scholars, and researchers to improve project efficiency and cost-effectiveness. The study also includes a reliability test to ensure the research's validity and usefulness for future applications.

Dissertation Title: Effect of schedule delays and cost overrun on
construction project
Statement of Originality
With the exception of those parts in which it is stated to the contrary, this dissertation is
solely my own work, it has not been submitted (in whole or in part) for any degree at this or
any other, academic or professional institution.
Signature: Abhinav Singh Patel
Date:
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discretion of the Head of School in accordance with regulation 3 and 4 above.
Signature: Abhinav Singh Patel Date:
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EFFECT OF SCHEDULE
DELAYS AND COST
OVERRUN ON
CONSTRUCTION PROJECT
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ABSTRACT
Cost overrun and schedule delay highly affect the construction project. The aim of the
dissertation is to identify the relation between the cost overrun and schedule delay and
measure their impact on construction project. To understand the impact, researcher explain
the views of different author in respect to the research topic, impact of cost overrun and
schedule delay, and the various measures to resolve the issues. The quantitative and
qualitative data are selected to gather the information regarding the project and identify the
methods to resolve the issues. SPSS tool is used to explain the correlation between the cost
overrun and schedule delay. The selection of 20 contractors as sample help to understand the
interrelation of schedule delay and cost overrun in deeper sense. The study recommends
different methods to minimize the impact of cost overrun and schedule delay. It also suggests
various techniques to manage the activities and prepare proper plan to improve the
performance of the labour. It used the reliability test to explain that whether the research is
reliable or not for the further use by the researcher, scholar and constructor. The finding from
the study exposed the various factor which affect the schedule delay such as interference of
outside agencies, labour strike, limited resources, poor management, error in planning, poor
site management etc. The research explains that there are various factors which make impact
of construction project, and they are differed from country to country and one project to
another project. Conclusion and recommendation of the study explains the different factors of
schedule delay and suggest the appropriate methods to overcome their impact on construction
project.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to the professor Dr. George Blumberg who help
me to select the research topic and encourage me to invest my whole time in the project to
complete it with the efficiency and effectiveness. I also thank to my friends, scholar who help
me to conduct the project effectively and collect the data by getting the consent of different
contractors. Last but not least I would like to thank my family who support me in this project
by providing the proper resources.
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TABLE OF CONTENTS
ABSTRACT...............................................................................................................................2
ACKNOWLEDGEMENT.........................................................................................................3
CHAPTER 1: INTRODUCTION..............................................................................................5
Background of the study....................................................................................................................5
Aims and Objectives..........................................................................................................................6
Questions...........................................................................................................................................6
Hypothesis.........................................................................................................................................7
Rationale of study..............................................................................................................................7
Scope of study...................................................................................................................................7
Significance of study..........................................................................................................................7
Structure of study..............................................................................................................................8
CHAPTER 2: LITERATURE REVIEW...................................................................................9
Labour strike....................................................................................................................................11
Error in plan.....................................................................................................................................13
Intervention by outside agencies.....................................................................................................14
CHAPTER 3: RESEARCH METHODOLOGY.....................................................................17
Research Type.................................................................................................................................17
Research Approach..........................................................................................................................18
Research Philosophy........................................................................................................................19
Sampling..........................................................................................................................................19
Data collection.................................................................................................................................20
Data Analysis...................................................................................................................................21
Research Limitation.........................................................................................................................21
Ethical Consideration.......................................................................................................................22
Reliability and Validity.....................................................................................................................23
CHAPTER 4: DATA ANALYSIS...........................................................................................24
Discussion........................................................................................................................................34
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS.............................................39
Conclusion.......................................................................................................................................39
Recommendations...........................................................................................................................41
REFERENCES.........................................................................................................................42
APPENDIX..............................................................................................................................46
Questionnaire..................................................................................................................................46
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Dissertation Topic: Effect of schedule delays and cost overrun on
construction project
CHAPTER 1: INTRODUCTION
Background of the study
Project denotes series of related task which reflects sequence and series of activities on the
basis of time. Construction project is referred to organised process of constructing,
refurbishing, renovating infrastructure and structure of building. A standard construction
project has five life cycle phases which comprise initiation, planning, execution, monitoring
and performance and closure. Schedule delay in construction project is the main area of
concern as it is related to time, cost, labour management (Dinakar, 2014). Delays in
construction delay impact synch of project specifically with reference to cost but also
reputation of company involved in certain project.
The major causes of delay in schedule of project are due to changes in design, poor labour
productivity, shortages of resources, inadequate planning. Apart from this major cause
schedule delay in construction are because of changes in user, uncertain whether condition,
condition of site, increase in quality, economic conditions, plan of designer and late
deliveries. There are different types of schedule delay like Non- Excusable days which
includes strike for work, uncertain events like, surges, quakes and flames (Amusan, Dosunmu
and Joshua, 2017). These are controlled event in construction project and therefore knowns as
forgivable deferrals. This type of delay is also caused due to changes initiated by proprietor
and blunders in design plans, structure of details and documents. Further, it can be said that
compliance with legislative requirement also play essential role in minimizing delay in
schedule of project because it is the aspect which restrict execution of project activities.
Apart from this, there are non-excusable type of delays which are known as non\reasonable
deferrals. For example, delay in assessment and accommodation of sub-materials of
construction (Owolabi and et.al., 2014). Moreover, non-reasonable deferrals in project are
because of poor coordination, late execution of providers and subcontractors and because of
reluctance.
Apparently, delay in project are because of time which is part of basic delay arise due
to inappropriate time management or due to undertaking of conveyance date. Compensable
and simultaneous delay are other concerns of incurring risk in construction projects like,
additional expenses or due to cost, calendar delay and excessive time consumption in
specialized investigation (Larsen and et.al., 2015). The major incurring factor because of
project delay in construction project is cost. Incurring cost of project due to delay impacts
interrelationship and management between clients and companies.
Cost overrun is increase in cos because of unexpected changes in project. Cost
overrun in construction project mainly arise due to improper planning of contractors, poor
site management, inadequate experience and financial resources. Changes in budget o project
is the critical factor which impacts reputation and project planning and resources of both
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contractor and client. Cost overrun effects stakeholders of project that is client, contractor,
employees, etc. Further, it leads to less return on investment and also impact confidence of
client. Also, incurring cost of project reflects loss of profit to contractor because it directly
increases cost and time of every scheduled activity. On the other hand, it is identified cost
over of construction project effects supplementary agreement, budget shortfall, reputation of
consultant increase labour cost, poor coordination, delay in time inadequacy of funds and
delay in construction. Thus, the present research will help in outlining effects of delay in
schedule and cost overrun of construction project. Also, the study will be focused on deriving
interrelationship of delay in schedule and increase in cost.
Aims and Objectives
Aim
“To analyse the effect of schedule delays and cost overrun on a construction project and their
interrelationship”.
Objectives
• To identify impact of labour strike on project cost.
• To identify impact of intervention of outside agency on project schedule delay and
cost.
• To identify impact of changes initiated by project owner on project cost.
Questions
• What is the impact of labour strike on project cost?
• What is the impact of intervention of outside agency on project schedule delay
and cost?
• What is the impact of changes initiated by project owner on project cost?
Hypothesis
H0: Schedule delay and cost overrun are directly proportional
H1: The more the delay takes place, the cost associated with the project will become more
Rationale of study
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The motive behind conducting this study is to outline cost estimation and execution of
planning of people involved in particular construction project. The study will help in deriving
reasons and frequency of delay in schedule of construction project which is necessary to gain
insight over impact of delay. The study is for academic and personal interest and therefore the
information will be based on academic articles and statistical analysis. Further, the rationale
behind choosing this topic of research is to outline significant impact of cost overrun on
profitability of project. In accordance with different researches, it is been identified that over
construction proved to be delay and show upward increase in cost contribution (Henjewele,
Sun and Fewings, 2014). However, the delay in project activities a is not planned and
therefore the research will helpful in finding out schedule delay with regard to work and
increase in cost with regard to planned budget.
Scope of study
Scope of research is based on two aspects that is delay in schedule and cost overrun for
construction project. The keywords of research will be budget, contractor, client, cost plan,
labour cost, calendar delay, time consumption, additional expenses, etc. Scope of study is
limited to construction project and in current of cost which can be also because of delay. In
accordance with research it stated that most of the construction projects of country undergo
cost and time overruns (Liu and et.al., 2017). Further, the study will also help in developing
statistical analysis over responsible factors and interventions for schedule delay.
Significance of study
The research topic is important with respect to knowledge management over the factors
which leads to delay in schedule and incur cost in construction projects. Further, it will help
in finding out relationship between cost overrun and schedule delays. The study will help in
gaining appropriate understanding over topic because it is specific to only two variables and
their possible impact in projects. The research is important as it will promote knowledge over
different elements which causes delay in schedule of project and causes budget overrun and
impacts consistency and planning of construction project (Safapour, Kermanshachi and
Ramaji, 2018).
Structure of study
Chapter 1 Introduction: The chapter provides brief over aspects of research that is aim,
objectives, question and hypothesis. The aim of present research to outline effect and
interrelationship of schedule deal and cost over run on construction project. In accordance
with outline of this chapter it can be said that null hypothesis of study states that schedule
delay and cost overrun of project are directly proportional. However, alternative hypothesis
of study states that more the delay takes place, the cost associated with the project will
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become more. This section of research helped in gaining understanding over different
perspective which needs to be researched for drawing appropriate findings.
Chapter 2 Literature review: The chapter is completely based on secondary facts and
findings outline din different articles, journals, online blogs, governmental publications,
books, newspaper, etc. The accumulation of information helps in gaining knowledge over
wide range of terms related to topic. The chapter encourages critical thinking over different
elements related to research objectives and questions like, errors in labour, increase in labour
cost, time management, budget overrun, poor management of consumer sites, poor
productivity of labour, etc. Thus, the secondary information in this chapter will be focused on
deriving impact of delays in schedule and cost overrun on a construction project and
relationship between schedule delays and cost overrun.
Chapter 3 Research methodology: This provide sequential plan and procedure for
conducting systematic research. The chapter derives use of methodological tools and
techniques in general and specific to research. The present research is about proving
hypothesis and therefore is of quantitative type. The collected information will be analysed
by statistically with the helps of SPSS that is Statistical package for social science. In
accordance with this tool the research philosophy will be positivism and approach ill be
deductive. However, the analysis will be done on the basis of correlation and regression.
Chapter 4 Data Analysis and Results: The chapter outlines interpretation of perform
statistical analysis. This helps in developing understanding over findings of study which is
interpreted on the basis of accumulated data. The analysis will be done the basis of themes of
questionnaire in qualitative form that is on the basis of figures. This is in form of critical
analysis which promotes discussion on findings. This, will aid in outlining similarities and
gap in findings on the basis of research objectives and questions.
Chapter 5: Conclusion and recommendation: This is the last chapter which provides
summary of accumulated and analysed information in study. This enables understanding over
tools and analysis done in study. Thus, it can be said that this final chapter derives link
between research question and objectives and analyses gap. Hence, on the basis of gap
recommendation for entire research are outlined.
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CHAPTER 2: LITERATURE REVIEW
It is been referred as the comprehensive summary that is been prepared from the previous
research topic. The survey of literature review is been made from the scholarly articles, other
sources and books that are considered as relevant to the area in within the research has to be
conducted. Literature review is the most important aspect that is to be taken into account
while going through the research process. It conveys the entire issues and the detailed
analysis in relation to the topic to the readers and provides from the knowledge and the ideas
that has been developed on the specific research topic. In accordance with this research study,
literature review highlights all the issues that are commonly faced by the construction
manager in the process of construction such as schedule delay, labour strike, project cost,
intervention by the other agencies etc.
According to the Larsen and et.al., (2015) schedule delay is quite common in construction
process. It can be done because of the various reason such as financial issues, resource
allocation, natural calamities, lack of experience, government, suppliers delay etc. There are
different types of schedule delay in construction such as excusable and non – excusable
delay, critical delay, concurrent delay, compensable delay etc. Construction schedule delay
refers to time lag in completing the project or activities from the given or specified time as
per the contract. It increases the risk for the project to increase the cost unnecessarily but by
identifying, measuring and analysing the schedule delay in systematic manner they can
manage the risk. Author found that delay of project is interrelated to the weather, design,
material, human resource and demographic location.
Author Durdyev, Omarov and Ismail, (2017) argued that some internal factor also increases
the schedule delay such as labour strike, changes by the owner in construction plan etc.
Sometime labour feels that they receive the unfair wages from the contractor or the contractor
does not use appropriate safety measures construction sites which generate the situation of
strike. Sometimes owner change the plan like add the additional features or change the outlet
or design etc. It also increases the schedule delay in construction. Author found that this kind
of delay are out of the control of contractor and comes under the excusable schedule delay.
As per the author Bagaya and Song (2016) schedule delay make a huge impact on the overall
construction process. It increases the cost of the project as well as create mistrust and dispute
among the suppliers and contractors because of the delay in payments. Construction delay
also affect the image of contractor and its business. As per the author the reason behind the
construction delay are cost overrun and time overrun. Cost overrun refers to exceed the cost
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from the available budget while time overrun refers to exceed the time with from the given
time limit for completed the building or project.
But as per the views of Aziz and Abdel-Hakam (2016) it has been criticized that schedule
delay increases the cost of the project and create negative impact in the mind of clients,
customer, contractor, consultants etc. It also affects the relationship with the different
suppliers and create mistrust, arbitration and cash flow problems. Schedule delay affect the
overall construction and also the related business. For example, a contractor wants to rent his
building to the foreign student but due to the schedule delay the construction work is not
completed. So, it also affects its profit generated by the rent.
Al-Hazim, Salem and Ahmad (2017) also found that cause and effect of delay is also differed
from project to the project. For example: For the construction of building the cause of delay
are different from the delay in construction of road. As well as it also varies from one country
to the other country due the climate and economic changes. It differs because different
country chooses different equipment for the construction like developed countries choose the
advanced techniques and equipment in construction site while the under developed countries
still use the traditional method and techniques on the construction sites.
As per the author Sambasivan and et.al., (2017) views cost overrun in construction project is
because of the improper plan, inaccurate estimation of project, design error, administration
error, poor site or location management, poor change management and inefficient labour and
engineers. This factor increases the cost of the construction project above to the given budget.
The proper planning of the project helps the contractor to minimize the cost overrun and
complete the project within the given time and cost. Author explains that cost overrun can be
result of improper planning and communication error on the sites. Sometime communication
barriers between the constructor and its labours generate the over utilization of resources
which increases the cost of the project. Constructor need to control the activities and monitor
the performance of labour to improve their relationship with the labour. It also helps them to
reduce the cost of the project.
But according to the Wang and Yuan (2016) there are also the other factor which create cost
overrun such as financial factor, environment factor, management factor and construction
item factor. Author collect data from the different contractors, sites, clients, architecture,
engineers etc. and concluded that shortage of finance, price fluctuation, environment change,
and inadequate project planning are the more reason behind the cost overrun. As per the
author contractors has to collect finance from the different sources to accomplish the
construction project but it is not an easy task. They have to face many problems while
collecting the fund for accomplish project, pay wages to labour, rental or purchase the
equipment and machinery etc. While the other author Faghihi and et.al., (2015) consider that
poor budget planning, high rental fee and material inflation are the common reason of cost
overrun. According to them the high rent of machinery and equipment increases the cost of
the project and due to the wide competition, the rental house charge high rent on the usage of
machinery. This also increases the cost of the project because the machinery and equipment
are useful part of the construction project.
As per the views of author Brookes and Locatelli (2015) cost overrun and schedule delay are
interrelated. That is schedule delay increases the cost overrun in construction project. They
explain in their study that there is positive relation between the cost overrun and schedule
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delay. Increase in schedule delay also results to increase in overrun cost of the project. For
example, Poor management, improper planning and resources etc. are the result of schedule
delay. It directly affects the cost of the project i.e. to complete the project within the time
contractor require more physical and human resources which increases the cost of the project.
Furthermore, a study conducted by the author Lessing, Thurnell and Durdyev (2017) suggest
that increase in the cost of the project also results to schedule delay. They explain that cost
overrun requires more fund to accomplish the task or project on time. Contractor need to
collect the fund from the different sources such as private institutions, banks, savings,
government etc. which takes huge time and process. So ultimately it delays the construction
project. Collect fund from the different sources consumes huge time because it requires
proper planning to propose the proposal to the investors and attract them to invest in the
project. The interrelation of cost overrun and schedule delay is positive. The increase in one
factor result to increase in another factor and also the vice versa. Author suggest in their
study that to minimize the impact of cost overrun and schedule delay they have to manage
their activities and regulate the project by setting standard and compare their activities to the
given standard. It helps them to analyse the error and rectify them within the given time.
As per the author Hwang, Zhao and Tan (2015) there are different ways to minimize the
impact of cost overrun and schedule delay on construction project. They explain in their
study that by efficient management of resource and proper planning contractor can resolve
the financial issues. As per their study contractor has to set the meetings and prepare a proper
construction plan with the availability of technical and physical resources. A proper
management of resources help the contractor to assign the cost and time according to the
available resource which indirectly reduces the risk of schedule delay and cost overrun. They
also suggest that allocation of resources and job role according the skills and experience of
worker also help the contractor to minimize the impact of cost overrun and schedule delay on
construction project. The experience of the worker helps to handle the critical situation on
construction site such as limited resources and time, usage of machinery and proposing
alternative plan and their implementation etc. It ultimately helps to complete the project
within the given time and cost. Experience of work force lead to manage the activity and
suggest different alternatives to control the cost of the project.
Labour strike
In the views of Turner, Clack and Roberts, (2017), strike refers to as a system wherein all the
workers or the employees of the company stops their work. This is done in order to solve the
problems and grievances of the employees. In today's modern era, many trade unions and
labour committees have been established in order to help and safeguard the rights of the
employees and mostly the worker class of employees. In accordance with the opinion of
Schmalz, Sommer and Xu, (2017), the worker class involves those type of labour and worker
which works at either factories or at construction sites. This factor is responsible for the
delaying in the work and also in overrunning of the cost. This is a major reason for the delay
in the work within the construction business. It is so because of the reason the if the workers
will not work at the construction site then there will be no work completed. Therefore, this
will stop the work at the construction site and the project will not be accomplished on time.
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