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    This document summarizes a study on the causes and effects of cost overruns in building construction projects in Bhopal, India. The study identified the main causes of cost overruns as contractor inexperience, poor project management, inadequate planning, contractor inefficiency, and inadequate financial provision. The main effects were identified as increased project costs due to time extensions, project abandonment, contractor insolvency, tying up client capital, and underutilization of resources. The study analyzed data from 15 construction professionals on 20 public building projects and found that educational buildings had the lowest rates of cost overrun while health buildings had the highest. Recommendations were provided to minimize cost overruns.

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    This document summarizes a study on the causes and effects of cost overruns in building construction projects in Bhopal, India. The study identified the main causes of cost overruns as contractor inexperience, poor project management, inadequate planning, contractor inefficiency, and inadequate financial provision. The main effects were identified as increased project costs due to time extensions, project abandonment, contractor insolvency, tying up client capital, and underutilization of resources. The study analyzed data from 15 construction professionals on 20 public building projects and found that educational buildings had the lowest rates of cost overrun while health buildings had the highest. Recommendations were provided to minimize cost overruns.

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    This document summarizes a study on the causes and effects of cost overruns in building construction projects in Bhopal, India. The study identified the main causes of cost overruns as contractor inexperience, poor project management, inadequate planning, contractor inefficiency, and inadequate financial provision. The main effects were identified as increased project costs due to time extensions, project abandonment, contractor insolvency, tying up client capital, and underutilization of resources. The study analyzed data from 15 construction professionals on 20 public building projects and found that educational buildings had the lowest rates of cost overrun while health buildings had the highest. Recommendations were provided to minimize cost overruns.

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    Amit Patel
    This document summarizes a study on the causes and effects of cost overruns in building construction projects in Bhopal, India. The study identified the main causes of cost overruns as contractor inexperience, poor project management, inadequate planning, contractor inefficiency, and inadequate financial provision. The main effects were identified as increased project costs due to time extensions, project abandonment, contractor insolvency, tying up client capital, and underutilization of resources. The study analyzed data from 15 construction professionals on 20 public building projects and found that educational buildings had the lowest rates of cost overrun while health buildings had the highest. Recommendations were provided to minimize cost overruns.

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    IJSRD - International Journal for Scientific Research & Development| Vol.

    4, Issue 04, 2016 | ISSN (online): 2321-0613

    Causes and Effects of Cost Overrun on Building Construction Projects


    Amit Patel1 Abhishek Jain2 Asst.Prof.Sanjay Saraswat3
    1,2
    Research Scholar 3Assistant Professor
    1,2,3
    Department of Civil Engineering
    1,2,3
    Samrat Ashok Technological Institute, Vidisha (M.P.), India
    Abstract— Many projects experience cost overrun and considered essential for the survey in order to have a true
    thereby exceed initial contract amount. In India the number image of the causes and effects of construction project cost
    of public building construction projects is increasing. overruns. Out of the 20 questionnaires sent out, 15 were
    However, it becomes difficult to complete projects in the receive representing a 65% comeback (response) rate. This
    allocated cost and time. Taking into account the scarce was viewed as sufficient for the investigation taking into
    financial resources of the country, cost overrun is one of the account the statement by Moser and Kalton (1971) that the
    major problems in this research was carried out to dig out consequence (result) of a survey could be considered as
    information on the factors that cause cost,¬ overrun during influence and of little value if the return rate was lower than
    construction and their effects on public building construction 30–40%. The information furnishing and examination made
    projects. And how to eliminate these problems. use of prevalence distributions and percentages of all the
    Key words: Causes, Effects, Methodology, Costoverrun respondents.
    Solution  A 5 pointer Likert scale was used to determine the
    causes of construction project cost overruns in Bhopal,
    I. INTRODUCTION with regards to the identified factors from the survey
    In this article, main causes of cost overrun should be literature.
    identified and then their effects on construction projects, and Formula:
    after that conclusion. This study will be undertaken with the
    following five objectives.
    After numerical calculations, the elements were
    1) Identifying the main causes of cost overrun and their
    then positioned in diving request of their mean thing score
    all effects for public building works..
    (from the highest to the lowest).
    2) Identifying the related responsible party to the causes
    of cost overrun.
    III. DATA ANALYSIS / RESULT
    3) Identifying the rate of cost overrun for various types of
    public building construction projects A. Causes of cost overruns in Bhopal
    4) Identifying the relationship between rate of cost Based on the ranking (R) of the weighted average of the
    overrun and contract amount. mean item score (MIS) for the listed causes of cost overruns,
    5) Forwarding recommendations to minimize or to avoid it was observed that the most dominant cause of cost
    cost overrun and frequency of its occurrence; and overruns on construction projects were contractors project
    hence to reduce its consequential effects on public inexperience (MIS=4.30; R=1),poor project management
    building construction projects. (MIS=4.10; R=2), inadequate planning (MIS=4.00; R=3),
    contractors inefficiency (MIS=3.99; R=4) and inadequate
    financial provision (MIS=3.98; R=5). Different variables
    recognized in the study incorporate; site conflicts
    (MIS=3.78; R=10), delays from employer (MIS=3.7; R=11),
    material price fluctuations (MIS=3.68; R=12), lack of
    executive capacity by the employer (MIS=3.67; R13) and
    over design (MIS=3.64; R=14). The study further revealed
    that unpredictable weather conditions (MIS=3.41; R=20),
    breach of local regulations (MIS=3.32; R21), unstable
    economy (MIS=3.22; R=22), project site location
    (MIS=3.16; R=23) and inflation (MIS=3.12; R24) were
    Fig. 1: Causes of cost overrun
    among the cause of cost overruns in Bhopal.
    II. METHODOLOGY B. Effects of construction project cost overruns in Bhopal
    The statistics used in this report were obtained from both When the respondents were further asked to rate the effects
    primary and secondary sources. The primary data was of construction project cost overruns in Bhopal, the
    collected through the survey procedure, while the secondary following result were obtained; increased project cost due to
    data was acquired from the audit of writing and authentic extension of time (MIS=4.21; R=1), projects abandonment
    records. The primary data was collected through the use of a (MIS=4.1; R=2), company/firms liability to insolvency
    arrange questionnaire survey. This was distributed to a total (MIS=3.79; R=3), tying down clients capital (MIS=3.72;
    of 20 construction professionals that included; Architects, R=4), under-utilization of manpower resources
    amount surveyors, structural specialists, development (MIS=3.70;R=5), liability of companies or firms to bad debt
    troughs and undertaking supervisors who are contemporary (MIS=3.60; R=6) and under-utilization of plants and
    required in construction work in Bhopal. This yardstick was

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    Causes and Effects of Cost Overrun on Building Construction Projects
    (IJSRD/Vol. 4/Issue 04/2016/228)

    equipment purchased for the projects (MIS=3.33;R=7) were Employing such contractors may cause delay and
    the causes of cost overruns. cost overrun low quality of work and accidents in the
    site of project
    IV. CONCLUSION 2) Use contractors with good management and
    1) Justification of the presence and degree of cost overrun supervision experience in the field of the work.
    on building construction tasks is essential before C. Expected From Contractors
    distinguishing the causes of cost overrun. 10 public 1) It is highly advocate to use senior managers with
    building projects investigated in the research suffered good level of related work experience and also
    cost overrun in their accomplishment. For these public knowledge on management in critical conditions.
    building construction projects, the actual cost overrun 2) Estimate the total cost before undertaking a
    ranges from 0% to 126% of the contract amount. construction project contract. A contract price should
    2) Rate of cost overrun is found to be affecting by the not be over the financial ability of the company.
    contract amount. The regression analysis of the data Any financial problem in the project expenditure and
    gathered from desk study for public building payments will cause delay and cost overrun
    construction projects shows that the rate of cost accordingly.
    overrun is found to decrease with expansion in the
    agreement sum.
    REFERENCES
    3) There are remarkable varieties in the aggregate sum of
    cost invade for the different types of public building [1] Al-Najjar, J.M., 2002. -Factors Influencing Time and
    construction projects scrutinize (investigated) in this Cost Overruns on Construction
    research. From the study educational buildings have [2] Projects in the Gaza Strip: Master’s Thesis: The Islamic
    the small rate of cost overrun, where as health University of Gaza.
    buildings have the most noteworthy rate of cost [3] Nega, F., 2008, -Causes and impacts of cost overrun on
    overrun. public building construction projects
    4) From the results of this report 29 causes of cost [4] in Ethiopia: Master of Science thesis: Addis Ababa
    overrun were identified by the respondents. The University.
    reasons for cost invade were recognized in light of the [5] Widerman- Glossary of Project Management Terms.
    reactions of the respondents. The most regular reasons
    for cost overwhelm are additionally distinguished by
    the examination based on the ranking of the rate of
    happening of the variables of cost overrun. The most
    widely recognized causes of cost overrun are increase
    in the cost of construction materials, change in foreign
    exchange rate, change orders and/or lack of control on
    immoderate change orders, failure to identify problems
    and institute the obligatory and timely actions.
    5) There is strong correlation on the responses of
    respondents, i.e. between client and contractor;
    between contractor and consultant; and amongst
    customer and expert in positioning reasons for cost
    invades and the rate of happening of the variables of
    cost overrun.

    V. RECOMMENDATIONS
    A. Expected from Consultants
    1) Continuous coordination and direct communication,
    which will abolish design inconsistency and errors as
    well as omissions in design and also give a chance to
    experts to audit the contract documents completely.
    This would help in taking out change requests or
    varieties because of inconsistency in contract reports.
    2) As much as possible avoid complex designs, while
    attempting to accomplish stylish claim, consider
    seriously the issue of build capacity in the design.
    3) Guarantee that the degree incorporates all the work
    required, and only the work required to complete the
    project successfully.
    B. Expected From Clients/Project Owners
    1) Avoid employing fresher contractors with an
    inadequate experience in the field Of the project.

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