ASSESSMENT
OF DELAY AND COST-OVERRUN IN FEDERAL ROAD CONSTRUCTION PROJECT IN ABUJA
Ashem
Emmanuel Egila
School
of Entrepreneurship and Management Technology, Federal University of
Technology, Nigeria
E-mail: egilashem@futminna.edu.ng
Oluwaseun
Abdulakeem Balogun
School
of Entrepreneurship and Management Technology, Federal University of
Technology, Nigeria
E-mail: balogun.m1301754@st.futminna.edu.ng
Saheed
Olanrewaji Yusuf
School
of Entrepreneurship and Management Technology, Federal University of
Technology, Nigeria
E-mail: so.yusuf@futminna.edu.ng
Submission: 7/15/2019
Revision: 9/18/2019
Accept: 10/2/2019
ABSTRACT
Poor road infrastructure in Nigeria is a significant challenge, just like poverty, insecurity, and unemployment. The construction of road in the country is characterized by numerous challenges throughout the project life cycle. Some of these challenges are project delay and cost overrun, corruption and fraud, faulty contractual process among others. Objectives of this study are to identify factors influencing delays and cost overruns in road construction project, to rank these factors base on their impacts and importance, and to suggest conservative ways to address the future challenges that can result from delays and cost overruns of future road construction projects. The research instruments include in-depth literature review, fieldwork, questionnaire administration, and interview. Inferential statistics such as Relative importance index (RII) and Mean Value techniques were used to analyze collected data. The result of the study identified factors influencing delays and cost overruns in road construction projects as; man related, money-related, machine-related, material related, environmental-related, and method related factors. Analysis using RII and MV ranked man and money related as the highest factors for delay and cost overrun respectively. Hence, the research recommends that the Government should create an enabling environment, making suitable policy for the construction company to operate.
Keywords: Costoverun, Construction industry, Delay, Road construction
1.
INTRODUCTION
Construction industry
is generally known to contribute enormously to national development around the
world, and it also impacts significantly on the GDP and employment rate in
developing countries (OLAWALE, 2010). Thus, the construction industry is
considered to have a significant connection and plays a critical role in the
economic development or reactivation of any country (RAJ, 2016). According to Adindu et al.
(2019), the construction industry all over the world is continually growing due
to its dynamic nature and high socio-economic impact on the economy of nations.
The construction of
good road network eases movement and connects various places across the
country. Despite the high importance and expectation of road construction, it
suffers challenges such as corruption, fraud, under-design, over-design,
delays, and cost overrun (SOHAIL; CAVILL 2008). This paper, therefore, seeks to
assess the factors influencing the delay and cost overrun of road construction.
This delay is also known as time overrun either beyond the contract date or
beyond the agreed date between the contractor and the owner upon delivery of
the project (MARZOUK; EL-RASA, 2012).
Delays in road
construction projects are continually occurring and could cause a significant
impact on economic development. In construction, it is one of the common
difficulties that disturbs the construction companies regarding competitiveness
and long-term sustainability in the global market. Cost overruns, which are
said to be the deviations between the actual cost incurred during the
construction phase and estimated initial cost is more common in infrastructure
projects especially, road construction activities.
The impacts of cost overruns
are very high in developing countries compared to developed countries
(RAJAKUMAR, 2016). 55% of 137 analyzed projects in Nigeria had been found to
have suffered Overruns (PONZ-TIENDA; GÓMEZ-CABRERA, 2017). Therefore, where cost and time are not
adequately planned and utilized, a project cannot be accomplished and will
cause failure to the entire project.
It is essential to find
out various critical factors which are mostly influencing the delay and cost
overruns in road construction. Besides, the origin, causes, and difficulties
related must be addressed. Therefore, finding out the causes and rectification
will be very useful to accomplish the goals, scope of the project, and help to
maximize the return on investment, in order to complete the project within
actual budgeted cost and to deliver on time. Based on those as mentioned
earlier, this study provides an in-
Depth light about the
actual causes of delay and cost overrun of road construction in Abuja, FCT
Nigeria.
1.1.
Research objectives
Objectives of this study are to;
1)
Identify factors influencing delays and cost
overruns in road construction project;
2)
Rank these factors base on their impacts and
importance;
3)
Suggest conservative ways to address the future
challenges that can result from delays and cost overruns of future road
construction projects.
1.2.
Statement of the problem
In Nigeria, road
constructions are faced with numerous challenges throughout the project life
cycle. These challenges includes but not limited to the following; delay and
cost overrun, over-design, under-design, corruption, fraud, technical
know-how. The construction of road
widely involves high risk due to the varying nature of its construction
activities, and the success of any road construction projects is dependent on
the accomplishment of fundamental project constraint such as cost, time, and
quality.
The Federal Government
of Nigeria has appropriated about N1.4 trillion for road construction between
1999 and 2012 (OLATUNJI; DIUGWU, 2013) and allocated about N620 billion between
2017 and 2018 (HASSAN; BAYAGBON, 2017). Despite the vast financial sum
involved, the issue of road construction in Nigeria has not been appropriately
addressed which has led to poor project delivery.
This study, therefore,
considered the delay and cost overrun issues in Abuja, by stating out the
critical factors leading to delays and cost overruns and thereby facilitating
the establishment of an effective plan that would help to minimize the problems
arising from road construction.
1.3.
Delays and cost overrun in
construction projects
Delays in construction projects can
be referred to as lateness in the actual completion of works compared to the
baseline construction schedule or contract schedule. Most project delays occurs
during the construction phase, where numerous unforeseen factors are always
involved (SAFRI, 2009). According to Braimah (2008), the term ‘delay’ in
construction contract has no precise technical meaning. It can be used in a
different sense to mean different conditions in project execution. However, the
term is seldom used in its primary sense to mean any occurrences or events that
extend the duration or delay is the start or finish activity of any given
project.
Bartholomew (2008) also explained
the delay in a construction project as slowing down the rate of work without
altogether stopping it. It is different from suspension, which means stoppage
of works entirely through the directives of the contractor or the client. Delay
can also be described as a situation when the contractor and the project owner
jointly or severally contribute to the non-completion of the project within the
stipulated initially or agreed contract period (AIBINU; JAGBORO, 2002). As
interpreted by Abbas (2006), the delay is a loss of time. ‘Time’ refers to the
duration for completing a construction project. When the project is delayed, it
means the project cannot be completed within the originally scheduled time.
According to Avots
(1983), cost overrun means a situation where the project objectives are not
achieved within the estimated budget. Rajakumar
(2016) also explained cost overrun as the difference or deviation between the
actual estimated cost during the design stage and the actual cost incurred
during the construction phase. Cost
overrun is the excess of actual cost over budget. Cost overrun is the ratio of
contract amount to the original contract award amount. This calculation is
converted to a percentage for the case of comparison (JACKSON, 1990)
1.4.
Factors affecting project delay and
cost overrun in construction project
To identify the reasons for
overruns, an extensive survey was carried out by Diakwa
and Culpin (1990), in a typical developing country,
Nigeria. An interim report was presented on the survey, suggesting that the
major problems were lack of prompt payment by agencies to contractors and
fluctuation in material, labor and plant costs. Based on the study carried out
by Mansfield, Ugwu, and Doran, (1994), attributes
overruns to many reasons such as finance and payment arrangements, poor
contract management, materials shortages, inaccurate estimating and overall
price fluctuation.
Furthermore, a study by Kamming, Olomolaiye, Harris, and
Holt, (1997), conducted on thirty-one high rise projects in Indonesia, which
revealed that cost overrun is more likely to occur than time overrun, which
means that the issue of cost is more important and prevalent than a project
delay. It was also found that most of the problem causing cost overrun is due
to the increase in material prices and inflation, whereas delay in time is due
to inaccurate estimate, design changes: poor labor productivity, inadequate
planning, and a shortage of necessary resources.
Similarly, a survey was also
conducted by Assaf and Al-Hejji,
(2006), which revealed a total of fifty-six main risk factors, which were more
likely to cause project delays. These delay factors were grouped into nine
significant factors concerning their level of importance to different parties.
They also went further to find out that any changes made by the client during
the construction period would positively affect the in-progress payment by
clients.
Other causes are improper planning
and scheduling of projects by contractors, poor site management and supervision
by the contractor, shortage of labor, difficulties in financing project by
contractors. This shows that changes made by clients while construction is
already in progress will not only slow the progress but also affect everything
that the contractor has already put in place regarding materials delivery
schedule or any activities that were due to finish on time. Such changes made
by the client could stop work and increase project cost and delay the delivery
schedule. Besides, it was suggested that the actual estimated cost of project
rises by 30% by the time the project is ready to be completed even in most
developing countries (AL-MOMANI, 1996).
Equally studies by Noulmance, et al.,
(1999), in Thailand showed that the causes of delay in highway construction
were caused by the entire parties involved in the project; some of the main
reason was due to inefficiency of sub-contractors, organization not providing
required resources, unclear drawing and lack of communication between
consultants and contractors. The study suggests that delay could be minimized
by better understanding and involvement of the entire parties in the project
with excellent communication between them.
Similarly, a survey was conducted in
Lebanon by Mehzer and Tawil
(1998), and it was found out that the owners were warier of their financial
issues, contractors were not very keen about their relationship with other
parties, and there was a lack of trust in guaranteeing and complying with the
agreement. However, poor management of the consultant was the critical reason
for the delay. There were three leading causes of cost overrun identified by Koushiki, Al-Rashid, and Kartam
(2005) in a study in Kuwait, which include contractor related problem, material
related problem, and owners’ lack of experience.
Ellis and Thomas (2002) investigated
the actual causes of delay in highway construction projects. The study was
divided into two parts: excusable and non-excusable delay, which was found to
occur on an average of 31% to 55%, and all highways experienced a delay of 44%
extra from the original period. Moreover, it also highlighted that delay mainly
occurs more frequently in urban areas.
Moreover, a significant number of
researchers have been involved in identifying causes behind the delay in the
construction projects, and much work has been carried out to reduce such
problematic issues occurring in almost every project in every country
worldwide. Six outcomes of delay were identified by Sambasivan
and Soon (2007), which comprises time overruns, cost overruns, disputes,
arbitration, litigation, and total abandonment. In many occasions, the delay
happens due to human errors and careless attention to facts from either client
or other team members of staff.
Sibayama
(2012) suggested that the difficulty of establishing the fair and expeditious
settlement of claims depended on early notification, poor record-keeping,
inadequate legal and factual justifications, and poor presentation. It is
imperative for contractors to thoroughly understand the client's requirement
and be fully committed to providing services accordingly.
Chan (2004) identified other reasons
causing cost overrun and classified them into three aspects, such as owner’s
control, consultant’s control, and beyond the control. Whereas, Bramble and
Callahan (2010) classified major delay factors into four categories: excusable
or non- excusable delay, compensable or non-compensable delay, critical or
non-critical delay, and concurrent or non-concurrent delay.
Nonetheless, Yates and Epstein
(2006) suggested that non-compensable delay occurs due to acts of God where the
fault is not from any parties, and therefore, the contractor was entitled only
to the extension of time but no additional cost.
2.
RESEARCH METHODOLOGY
A simple random sampling procedure
was used to select the participants involved in road construction work in the
study area. Descriptive statistics such as percentage frequencies, relative
importance index (RII), mean-value method (MV), was used to analyze the data
collected for this research. The essence of sample size is to survey the ideal
number of households, which gives the most statistically representative result
(YUSUF, 2003).
Neuman
(1991), as cited in Yusuf (2003), opines that “larger populations permit
smaller sampling ratio for an equally good sample because as the population
size grows, the returns inaccuracy for sample size shrink.” Researchers
justified that 60% sample size can be considered adequate, also based on the
similarity in demography and socio-economic characteristics of the respondents
which include: income class and occupation. It is against this background that
60 % of the six hundred and eighty (680) populations of staff were sampled for
this research work. Therefore, the sample size for this research is four
hundred and eight (408) staff of the federal ministry of works and transport
Abuja.
2.1.
Method of Data Collection
After the pilot testing and all
necessary modification, the questionnaire was administered directly to the
chosen sample of the study. A total of four hundred and eight (408) copies of
the questionnaire were given out successfully, but three hundred and forty
(340) were filled and returned.
The number of a
questionnaire distributed and retrieved from the staff shows that 102
questionnaires were distributed to contractors, consultants, project manager,
and other staff, respectively. While a total number of 100 questionnaires were
retrieved out of the 100 distributed to the contractors, this was closely
followed by 90 questionnaires retrieved from other categories of staff.
Moreover, only 76 and 74 questionnaires were retrieved from the consultants and
project manager out the 115 distributed to each category, respectively.
3.
RESULT AND DISCUSSION
This section gives detailed analysis of data collected with the use of questionnaire administration. The various factors affecting delay and cost overrun of road construction projects were collected from the literature study. Furthermore, opinions were obtained from various (government authorities, private companies, contractors, consultants, project managers, and others). Finally, thirty-six factors were selected in total (eighteen each for delay factors and cost overrun factors), which were considered for the questionnaire survey. Recall that a total 408 questionnaires were administered during the fieldwork why only 340 questionnaires were well filled, retrieved, and analysed.
Table 1.0 below presents the demographic features of respondents.
3.1.
Different Factors Mostly Affecting
Delays and Cost Overruns
The
mean value index (MV) and relative importance index (RII) was used to rank and
find out the importance of the various factors affecting delay and cost-overrun
in the study area.
Table 2: Various factors of Cost overrun and Delay (Abuja)
|
No |
Critical Factors |
Cost Overrun |
Delay |
|
|
|
RII |
MV |
RII |
MV |
||
|
1 |
Money-Related Factors |
0.731 |
3.657 |
0.810 |
4.049 |
|
2 |
Material-Related Factors |
0.670 |
3.349 |
0.675 |
3.461 |
|
3 |
Man-Related Factors |
0.753 |
3.767 |
0.566 |
2.829 |
|
4 |
Method-Related Factors |
0.630 |
3.153 |
0.628 |
3.141 |
|
5 |
Machine-Related Factors |
0.698 |
3.488 |
0.693 |
3.463 |
|
6 |
Environmental-Related Factors |
0.639 |
3.194 |
0.637 |
3.186 |
Source: Author’s fieldwork
(2019).
This Table 2 above
depicts the RII and MV for various factors affecting delay
and cost-overrun. The variables for man
related factors for cost overrun as RII and MV of 0.753 and 3.767, followed by money-related factors with RII AND MV of 0.731
and 3.657 and machine-related factors with RII AND MV of 0.698 and 3.488 as the
most critical factors affecting cost overrun. However, material related
factors, related environmental factors, and method related factors with RII and
MV OF 0.670 and 3.349, 0.639 and 3.194 and 0.630 and 3.153 respectively as they
are of least essential factors affecting
cost overrun in the study area.
This implies that the
most critical factor affecting cost overrun of a road construction project in
Abuja is man related factors. While the for the delay, the variables for money
related factors for the delay as RII and
MV of 0.810 and 4.049, followed by machine-related
factors with RII AND MV of 0.693 and 3.463 and material related factors with
RII AND MV of 0.675 and 3.461 as the most critical factors affecting delay.
However, related
environmental factors, method-related
factors, and man related factors with RII and MV OF 0.637 and 3.186, 0.6298and
3.141and 0.566 and 2.829 respectively as they are of least essential factors affecting delay in the study
area. This implies that the most critical factor affecting the delay of a road
construction project in Abuja is money related factors.
3.2.
Ranking of delay factors in the
study area
Figure 1: graph showing ranking of Delay factors based on MV
Source: Author’s fieldwork
(2019).
The ranking of factors
responsible delay of road construction projects as shown Figure 1 reveals that
variables for money related factors for the delay
as MV of 4.049 as the highest-ranking,
followed by machine-related factors with
MV of 3.463 and material related factors with MV of 3.461 as the 3rd
most essential factors affecting delay. However, 4th, 5th, and
6th go to related
environmental factors, method-related
factors, and man related factors with MV of 3.186, 3.141, and 2.829
respectively as they of lest importance
factors affecting delay in the study area.
3.3.
Ranking of Cost overrun factors
based on this study area
The ranking of factors
responsible for cost-overrun of road construction projects as shown Figure 2
reveals the variables for man related factors for cost overrun as MV of 3.767
as the highest-ranking, followed by money-related
factors with MV of 3.657 and machine-related factors with MV of 3.488 as the 3rd
most important factors affecting cost overrun. However, 4th, 5th,
and 6th ranking go-to material
related factors, related environmental factors, and method related factors with
MV OF 3.349, 3.194, and 3.153 respectively as they are of lest importance
factors affecting cost overrun in the study area.
Figure 2: graph showing ranking of Cost overrun factors based on MV
Source: Author’s fieldwork (2019).
3.4.
Hypothesis one
· Ho: There is no significant relationship between delays in the progress of payment and overprice fluctuation in road construction projects
· Hi: There is a significant relationship between delays in the progress of payment and overprice fluctuation in road construction projects
|
Table 3: Correlations |
|||
|
|
|
Delays in Progress |
Over Price Fluctuations |
|
Delays in Progress |
Pearson Correlation |
1 |
.248** |
|
Sig. (2-tailed) |
|
.000 |
|
|
N |
340 |
340 |
|
|
Over Price Fluctuations |
Pearson Correlation |
.248** |
1 |
|
Sig. (2-tailed) |
.000 |
|
|
|
N |
340 |
340 |
|
|
**. Correlation is significant at the
0.01 level (2-tailed). |
|||
Pearson product-moment
correlation (PPMC) was used to test this hypothesis. Variables for this
hypothesis are delays in the progress of payment and
overprice fluctuation in road construction projects. The correlation coefficient shows that the P = 0.000 (two-tailed) < 0.01. This shows that the H1 which there
is a relationship between delays in the progress
of payment and overprice fluctuation in road construction projects was accepted. There is a little correlation
between the two variables.
3.5.
Hypothesis Two
· Ho: There is no significant relationship between the unavailability of material and low-quality materials in road construction projects
· Hi: There is a significant relationship between the unavailability of material and low-quality materials in road construction projects
|
Table 4: Correlations |
|||
|
|
|
Unavailability of Material |
Low Quality of Materials |
|
Unavailability of Material |
Pearson Correlation |
1 |
.087 |
|
Sig. (2-tailed) |
|
.111 |
|
|
N |
340 |
340 |
|
|
low quality of materials |
Pearson Correlation |
.087 |
1 |
|
Sig. (2-tailed) |
.111 |
|
|
|
N |
340 |
340 |
|
**. Correlation is significant at the 0.01
level (2-tailed).
Pearson product-moment
correlation (PPMC) was used to test this hypothesis. Variables for this
hypothesis are the unavailability of material and low-quality materials in road
construction projects. The correlation
coefficient shows that the P = 0.111 (two-tailed)
> 0.01. This shows that the Ho
There is no significant relationship between the unavailability of material
and low-quality materials in road
construction projects was accepted.
There is a high correlation between the two variables.
3.6.
Hypothesis Three
· Ho: There is no significant relationship between the frequent breakdown of construction equipment and equipment availability failure in road construction projects
· Hi: There is a significant
relationship between the frequent breakdown
of construction equipment and equipment availability
failure in road construction projects
Table 5: Correlations
|
|
|
Frequent Breakdown of Construction Equipments |
Equipment Availability and Failure |
|
Frequent Breakdown of Construction Equipments |
Pearson Correlation |
1 |
.574** |
|
|
Sig. (2-tailed) Sig. (2-tailed) |
|
.000 |
|
|
N |
340 |
340 |
|
Equipment Availability and Failure |
Pearson Correlation |
.574** |
|
|
|
Sig. (2-tailed) |
.000 |
|
|
|
N |
340 |
340 |
**. Correlation is significant at the 0.01
level (2-tailed).
Pearson product-moment
correlation (PPMC) was used to test this hypothesis. Variables for this
hypothesis are a frequent breakdown of construction equipment
and equipment availability failure. The correlation coefficient shows that the P = 0.00 (two-tailed) > 0.01. This shows that the H1,
which state there is a significant
relationship between the frequent breakdown of construction equipment and equipment
availability failure in road construction projects. There is a moderate correlation between the two variables.
3.7.
Hypothesis Four
· Ho: There is no significant relationship between weather-related issues and the act of God in road construction projects
· Hi: There is a significant relationship between weather-related issues and the act of God in road construction project
|
Table 6: Correlations |
|||
|
|
|
Weather-Related Issues |
An act of God (Earthquake) |
|
Weather Related Issues |
Pearson Correlation |
1 |
.211** |
|
Sig. (2-tailed) |
|
.000 |
|
|
N |
340 |
340 |
|
|
An act of God (Earthquake) |
Pearson Correlation |
.211** |
1 |
|
Sig. (2-tailed) |
.000 |
|
|
|
N |
340 |
340 |
|
|
**. Correlation is significant at the
0.01 level (2-tailed). |
|||
Pearson product-moment
correlation (PPMC) was used to test this hypothesis. Variables for this
hypothesis are weather-related issues and the act of God. The correlation coefficient shows that the P = 0.00 (two-tailed) > 0.01. This shows that the H1
which state There is a significant
relationship between weather-related issues and the act
of God in a road construction project. There
is a moderate correlation between the two variables.
4.
SUMMARY OF FINDINGS
This research has critical revealed the detailed analysis of delay and cost overrun of road construction projects in Abuja FCT Nigeria. The summary of the findings of this study based on the objectives is as follows.
The various factors mostly influencing the delays and cost overruns in road construction projects are identified as man related factors, money-related factors, machine-related factors, material related factors, related environmental factors, and method related factors.
The ranking of the these factors shows that money-related factors for delay ranked highest with RII and MV of 0.810 and 4.049, respectively. This was followed by machine-related factors with RII and MV of 0.693 and 3.463, and material related factors with RII and MV of 0.675 and 3.461 ranked third.
The ranking of factors responsible for cost-overrun of road construction projects shows that variables for man related factors for cost overrun ranked 1st having RII and MV of 0.753 and 3.767, followed by money-related factors with RII and MV of 0.731 and 3.657; machine-related factors with RII and MV of 0.698 and 3.488 as the 3rd most important factors affecting cost overrun.
Cronbach’s alpha coefficient was used to test for the reliability of the questionnaire. The Cronbach's alpha coefficient shows that a= .928. This shows that the questionnaire is very reliable.
Lastly, the hypothesis was tested using the correlation analysis in other to find if there is or no significant relationship between selected factors of delay and that of cost-overrun.
5.
CONCLUSION
This study critically analyses the factors responsible for delay and cost overrun of road construction projects in Abuja, Nigeria. Based on the findings of this research, it is concluded that money-related factors, machine-related factors, material- related factors, related environmental factors, method-related factors, and man related factors respectively are factors responsible for the delay of road construction projects in the study area. While man related factors, money-related factors, machine-related factors, material related factors, related environmental factors, and method related factors are factors responsible for cost overrun of road construction projects in the study area.
6.
RECOMMENDATION
Based on the findings of
this study, the following recommendations were offered as conservative ways to
address the challenges from delays and cost overruns of future road
construction projects.
1)
The Government should Endeavour to fast-track the process involved in the payment of
the contractors, consultants, and the project manager.
2)
Construction materials should be made readily available for contractors to avoid delay.
3)
The government policy should be designed
to create an environment that will be
suitable for the contractors and consultants to operate.
4)
The government
should do more in the fight against corruption.
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