Abstract
Construction is a major industry worldwide accounting for a sizeable proportion of most countries’ gross domestic product (GDP). This sector is also the largest industrial employer in most countries. The sector is, however, confronted with major delivery challenges such as late completion and excessive budget. This research was conducted in an attempt to identify the major causes and effects of cost overruns in public sector construction projects in South Africa. The study further attempts to establish the measures that can be taken to minimise the impact of cost overruns in public sector construction projects and to establish critical success factors for public sector construction projects in South Africa.
The methodology used for this study was quantitative. A structured questionnaire with the five-point Likert-type scale and open-ended questions was used to determine the participants’ responses with regard to the identified factors from the reviewed literature. Out of 120 questionnaires sent out, 119 were received, which represented a 99 per cent response rate. Findings from the survey revealed that the causes of the most severe cost overruns were variation orders, changes in scope of the project, cash flow and financial difficulties faced by contractors, and delays in decision making and adequate planning. The findings also indicated the major effects of cost overruns as time overrun, increased project cost due to extension of time, disputes between owner and contractor, bankruptcy and wastage of tax payers’ money.
Furthermore, the study also showed that the measures for minimising cost overruns in public sector construction projects were the use of experienced suppliers, proper project planning, the appointment of highly experienced committed design teams, effective strategic planning and proper project scheduling. Lastly, it was revealed that the critical success factors for public sector construction projects were the experience of the project manager, the experience of the contractor, the commitment of project team members, proper planning, awarding the bid to the right contractor, effective decision making and clear and realistic project goals. This study suggests that cost overruns in public sector construction projects could be minimised by careful management, proper planning by contractors, prompt release of funds by the employer and engagement of experienced contractors by the clients.
M.Tech. (Quantity Surveying)