Kazar, G; Mutlu, U and Tokdemir, O B (2023) Development of zero-based budgeting approach for multinational construction contractors. Engineering, Construction and Architectural Management, 30(10), pp. 5217-5232. ISSN 0969-9988
Abstract
Purpose: Cost overruns remain a persistent problem in the construction industry. Although various cost management strategies have been implemented, innovative approaches are still required. Therefore, the authors attempted to introduce and test a new cost management strategy for the construction industry. Design/methodology/approach: Zero-based budgeting (ZBB) is one such method whose effectiveness has been proven in different industries over many years. Therefore, the authors initially developed two different frameworks related to the integration of ZBB into a multinational construction contractor and the application process of ZBB for a construction project in this study. Then, the effectiveness and feasibility of the proposed frameworks are tested via an actual field study in a mega construction project. Findings: The results show savings of 0.81% of the total project budget and 4.74% of the focused cost items by following the ZBB framework compared to the traditionally estimated project budget. The feedback received from the employees in the construction company shows that ZBB could be efficiently implemented during ongoing construction projects. Research limitations/implications: The authors believe that implementing new cost management strategies such as ZBB will open doors to deal with the complex cost overrun issues and improve construction cost performances. Originality/value: This manuscript is the first actual application of the ZBB cost management approach in the construction industry.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cost control; cost performance; zero-based budgeting |
| Index terms: | effectiveness, construction industry, cost overrun, construction cost, cost management, savings, integration, methodology, construction project, cost control, construction contractor, cost performance, field study, strategy, construction company, budgeting |
| Subjects: | organization, practitioner, economic analysis, financial and cost management, economics, performance management, accounting and finance, research methods, management, financial management, production management, organizational analysis, industry analysis |
| Topics: | Organizational Design, Quality Management, Roles and Professions, Project Management, Research Practice, Business Strategy, Cost Management |
| Descriptive scope: | 3 PCT |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here