FACTORS AFFECTING TIME AND COST OVERRUNS IN HOUSING CONSTRUCTION: THE CASE OF ADDIS KETEMA SUB CITY HOUSING DEVELOPMENT PROJECT

Abstract

A construction project is commonly acknowledged as successful when the aim of the project is achieved in terms of predetermined scheduled time, within budget, standard quality and specifications to meet stakeholders’ satisfaction. In Ethiopia, the number of housing construction projects is increasing from time to time. However, it becomes difficult to complete projects in the allocated cost and time. Many projects experience time and cost overruns and thereby exceed initial contract time and budget. It is therefore, this research was conducted to identify factors that cause time and cost overruns for condominium house construction project at Addis Ketema sub city housing development project office. A comprehensive literature review was reviewed to generate a set of factors believed to affect project time and cost overruns. A total of 55 questionnaires were distributed to three key groups of project participants; namely owner, consultant and contractors. The survey focused on identifying and ranking in order of importance the main factors causing project delay and cost overruns and their effects on housing projects in the sub city. The data from the questionnaire was analyzed statistically. Relative important index method was used to foundout the most significant factors affecting time and cost overruns. Spearman’s correlation coefficient analysis was also used to evaluate the degree of agreement /disagreement of the respondents on the causes of time and cost overruns. The result of the study revealed that the main causes of delay and cost overruns in construction of condominium house projects were financial problem during construction, inadequate funding of project, delay in payment for completed works, incomplete drawings and documents, slowness of decision making, costs underestimation, delay in delivery of construction materials, slowness in giving instructions, unrealistic contract durations and project scope definition for time overrun and shortage of materials, cost underestimation, inaccurate material specifications, lack of financial management and planning, high transportation cost, lack of experienced project managers, lack of experienced consultants and unavailability of competent staffs, dependency on imported construction materials, suspension of works and different consultants for design, supervision and contract administration works for cost overruns. The most common identified effects of project time and cost overruns were time claim, cost claim, frustration on stakeholders, the incompetency of project participants, dispute among stakeholders, arbitration, total abandonment of the project, litigation, weakens the growth of the construction industry and affects, in a negative way, the rate of national socio- economic development of the country.