Rosenfeld, Y (2014) Root-cause analysis of construction-cost overruns. Journal of Construction Engineering and Management, 140(1): 04013039, ISSN 0733-9364
Abstract
Despite their negative impact on the construction industry, cost overruns have become an almost natural part of building and infrastructure projects. This paper examines the phenomenon as a worldwide problem, identifies its root causes, ranks them (on a local basis), and analyses them. Root-cause analysis is not merely an arbitrary expression; rather, it is a systematic, formal, well-structured methodology, used as part of the total quality-management approach. The expand-focus principles and techniques were applied in this research for assembling an initial, as wide as possible, inclusive list (pool) of 146 potential causes gathered from the international professional literature as well as from prominent local experts. Through two cycles of expand-focus, they were filtered and merged into merely 15 independent universal root causes. These were further investigated through a cross-sectional survey among 200 local construction practitioners who ranked the 15 universal root causes according to their conceived local importance and influence on cost overruns. The survey revealed that, locally, Cause number 1 is premature tender documents; Cause number 2 is too many changes in owners' requirements or definitions; and Cause number 3 is tender-winning prices are unrealistically low (suicide tendering). The unique value of this paper to the global community of construction engineering and management is twofold: (1) It identified 15 universal root causes of cost overruns, which provide a good starting point for any local investigation, and (2) offers a well-structured methodology for ranking these 15 universal root causes in accordance with the local circumstances, thereby pinpointing the vital few that may prevent locally a substantial part of the problem.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction claims; construction delays; cost and schedule; cost overruns; root cause analysis; tendering |
| Index terms: | cost overrun, owner, infrastructure project, construction industry, investigation, suicide, construction engineering, construction practitioner, survey, root cause analysis, construction claim, tender document, methodology, construction delay |
| Subjects: | sociology, payment, project controls, environmental health, industry analysis, infrastructure and transport systems, engineering methods, research methods, tendering, professional development, financial and cost management, data collection methods, risk assessment |
| Topics: | Procurement, Sustainability, Stakeholder Management, Risk Management, Research Practice, Engineering Principles, Information Management, Cost Management, Time Control, Contract Administration |
| Descriptive scope: | 5 PCTEA |
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