A Study on the Factors Contributing to Cost Overrun Problems and Cost Control Techniques Available in Malaysia

Keng, Chuan Jia (2020) A Study on the Factors Contributing to Cost Overrun Problems and Cost Control Techniques Available in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

In the construction industry, a successful construction project is deemed to be completed before completion date and within the cost budget as estimated before. However, the cost management of a construction project is often the most difficult part during the construction stage due to the nature of uncertainties of the construction project. As according to the audit report of Public Accounts Committee (PAC), it was discovered that 50% of construction projects in Malaysia are found in suffering the cost overrun problem. With these data, Malaysian construction industry was suffering from the severity and negative effects resulting from the cost overrun problems. (Zayyana Shehu, Intan Rohani Endut, Akintola Akintoye, Gary D. Holt, 2014) The occurrence of cost overrun problems in construction project might arose from the absence or lack of knowledge regarding to the factors causing cost overrun problems and the suitable method in minimizing the occurrence and severity of these problems. The enhancement of cost performance in a construction project must be magnified as this may affects the economic growth of Malaysia. Hence, this research study concerned on identifying major contributors of cost overrun problems and understanding the effectiveness of various cost control techniques to control these factors contributing to cost overrun. In this research study, building contractors are selected as the targeted respondents as they are the main players of a construction project from inception to completion. Since building contractors play the most important role in a construction project, their decision in implementing any techniques have a significant relationship with the cost performance of the construction project. The method of managing a construction project implemented by building contractors is often the main reason which caused the occurrence of cost overrun in that particular project. Building contractors are responsible to minimize the occurrence of cost overrun problems in their projects and to improve the cost performance by implementing the proper and suitable cost control technique. This is because the cost performance of construction industry will directly affected the economic growth of the country. Therefore, it is said to be the building contractors have a close relationship with the cost overrun problems in Malaysian construction industry and it is acceptable to carry out this research and evaluate their responses regarding to the cost overrun problems and cost control techniques among the building contractors. A questionnaire survey was distributed to 120 building contractors located in Kuala Lumpur area but only able to receive 39 surveys. Among the 39 responses received, the finding of the first and second research objectives was identified the factors contributing to cost overrun problems in Malaysian construction industry and the most severe factor among others. Besides, the finding of the third and fourth research objectives had shown the techniques available in controlling cost performance of a construction project in Malaysia and identified the most effective cost control technique available among others. The findings and outcome of this research study will contribute to the identification of the most severe factor that causing cost overrun problems and the most effective cost control technique available to be implemented in a construction project. Hence, with these results or outcome, all Malaysian building contractors are able to minimize cost overrun problems in Malaysia and to improve the cost performance of a project while contributing to the construction industry and economic growth of the country.