Effect of Critical Risk Factors Causing Cost Deviation in Medium Sized Construction Projects

Abstract

To cite this article: Senthil Muthalvan Renuka and Chockkalingam Umarani (2018). Effect of critical risk factors causing cost deviation in medium sized construction projects. Journal of Construction in Developing Countries, 23(2): 63-85.Abstract: Risk is the outcome of an event which may be predicted on the basis of statistical probability. Construction projects have inherent risks associated with it. The main aim of this paper is to identify the critical risk factors and to propose a model to find the probability of cost deviation in medium sized construction projects. A total of 46 risk factors were shortlisted based on pilot study and experts' opinion. A questionnaire survey was conducted among 223 various construction professionals each representing one project i.e. from 223 different projects. Based on factor analysis, 46 risk factors which influence the cost deviation in construction projects were classified under nine key risk groups viz. project scope and evaluation risk, work environment risk, documentation and legal framework risk, construction and operational risk, resource productivity risk, knowledge sharing risk, site supervision risk, financial viability risk and lean construction risk. Logistic regression analysis was also carried out to develop a model to find the probability of cost deviation in construction projects. It is concluded that the risk groups such as project scope and evaluation risk, site supervision risk, knowledge sharing risk and lean construction risk are having higher influence in the cost deviation in medium sized construction projects. By setting the effective baseline of the project like estimation of original project cost and detailed project report, cost deviations in medium size construction projects can be eliminated. Detailed recommendations are also provided.

Isu-Isu Perancangan Projek Di Negeri Sabah

“…Proses pengambilan tanah juga mengambil masa panjang dan perlu diselesaikan mengikut undang-undang ditetapkan yang memberi kesan kepada tempoh lanjutan masa (Elawi et al 2016). Susanti (2020) dalam kajiannya telah mengenalpasti beberapa faktor yang menyebabkan kelewatan projek, antaranya kelewatan proses pengambilan tanah (Islam et al 2019), lokasi tapak (Venkateswaran & Murugasan 2017) dan sama ada terdapat sokongan atau bantahan daripada penduduk tempatan (Renuka & Umarani 2018). Rezouki dan Hassan (2019) dalam kajian mereka menemukan antara halangan kepada projek Public Private Partnership (PPP) di negara membangun ialah kelewatan dan masalah yang berkaitan dengan perolehan tanah, khususnya masalah yang berkaitan dengan setinggan dan pertikaian pemilikan tanah oleh pihak berkepentingan.…”

Success criteria-based impacts of risk factors on education building projects in southwestern Nigeria

“…Risks are associated with construction projects at pre-bidding, planning, design, execution, implementation and handing over stages (Renuka et al , 2014). Similarly, during the stages of TEBP, the risk sources include financial, political, environmental, management, logistics, legal, design and construction risk factors (Adedokun et al , 2021).…”

“…Furthermore, risks are very high because of various stakeholders connected with the project and several internal and external factors. While the construction industry has a poor risk track record compared to other industries (Mishra and Mishra, 2016), no construction project is risk-free (Renuka et al , 2014). Evidence abounds that risk factors can be managed, minimized, shared, transferred to other parties with capacity, or accepted; risks cannot be ignored (Renuka et al , 2014).…”

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