CAUSES OF COST OVER-RUN IN CONSTRUCTION PROJECT: THE CASE OF ACCOMMODATION AND TRAINING CENTER CONSTRUCTION PROJECT OF THE KAIZEN INSTITUTE

Abstract

The purpose of this research was to identify the major causes of cost overrun and their effects on construction project performance in KAIZEN Institute. Cost overrun is pointed out as one of the major reasons that lead to poor construction project performance. The research was explanatory, and the research design was survey design. A quantitative research approach was adopted, and the hypothesis was also tested. A Likert scale questionnaire was designed and distributed to the Institute. Since the target population was small, a census survey was used. Out of 30 questionnaires, 30 were able to be retrieved with a response rate of 100%. The data gathered using the questionnaire was analyzed with the help of Statistical Package for Social Sciences (SPSS version 20) using descriptive statistics and regression analysis. The descriptive analysis was done to identify major causes of cost overrun which is distinguished into internal and external. The findings showed that from the internal causes Poor contract Management, Procurement process is ambiguous & without planning are the majors one which cause the institute to face cost overrun and from the external factors Escalation of Material price, Escalation of exchange rate are the major causes. Regression analysis was also conducted, and the result revealed that cost overrun has a significant effect on project with a p-value of <0.05 and regarding the hypothesis, the alternative hypothesis was accepted. The study concludes that cost overrun is a statistically significant predictor of project construction and represents the value change in project performance is associated with a unit change in cost overrun. The research finally recommends that all process which cause the construction to face cost overrun should be planned properly and take the necessary response.