Studying the Reasons for Delay and Cost Overrun in Construction Projects: The Case of Iran

Abstract

2016). Studying the reasons for delay and cost overrun in construction projects: The case of Iran.Abstract: Undesirable delays in construction projects impose excessive costs and precipitate exacerbated durations. Investigating Iran, a developing Middle Eastern country, this paper focuses on the reasons for construction project delays. We conducted several interviews with owners, contractors, consultants, industry experts and regulatory bodies to accurately ascertain specific delay factors. Based on the results of our industry surveys, a statistical model was developed to quantitatively determine each delay factor's importance in construction project management. The statistical model categorises the delay factors under four major classes and determines the most significant delay factors in each class: owner defects, contractor defects, consultant defects and law, regulation and other general defects. The most significant delay factors in the owner defects category are lack of attention to inflation and inefficient budgeting schedule. In the contractor defects category, the most significant delay factors are inaccurate budgeting and resource planning, weak cash flow and inaccurate pricing and bidding. As for the consultant defects delay factors such as inaccurate first draft and inaccuracies in technical documents have the most contribution to the defects. On the other hand, outdated standard mandatory items in cost lists, outdated mandatory terms in contracts and weak governmental budgeting are the most important delay factors in the law, regulation and other general defects. Moreover, regression models demonstrate that a significant difference exists between the initial and final project duration and cost. According to the models, the average delay per year is 5.9 months and the overall cost overrun is 15.4%. Our findings can be useful in at least two ways: first, resolving the root causes of particularly important delay factors would significantly streamline project performance and second, the regression models could assist project managers and companies with revising initial timelines and estimated costs. This study does not consider all types of construction projects in Iran: the scope is limited to certain types of private and publicly funded projects as will be described. The data for this study has been gathered through a detailed questionnaire survey.Hamed Samarghandi et al. 52/PENERBIT UNIVERSITI SAINS MALAYSIAan important role as a major driving force in the growth of several other sectors in the economy, including but not limited to mining and natural resources extraction, transportation and logistics, insurance, consultation and management, and even education and training (Assaf and Al-Hejji, 2006). According to the statistics provided by the Central Bank of Iran, the construction sector has annually absorbed more than USD 13 billion in direct private investments between 2002 and 2014.Unfortunately, construction project delays are very common in Iran. Potentially profitable projects are regrettably tu...

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“…Unique factors (with the frequency of three or less) are: "'Slow decision making process by owner" in Norway [90], UAE [84], and Oman [98]; "Changes in material types and specifications during construction" in Saudi Arabia [102], Turkey [117], and Zambia [113]; "Change/selection of subcontractors in the project" in India [79], Saudi Arabia [112], and Vietnam [105]; "Mobilization delay" in India [127], Malaysia [109], and Malawi [81]; "Site constraints (site blockage, impact of other's land)" in Bangladesh [87], Cambodia [103], and countries with high geopolitical risks [104]; "Impact of subsurface (underground) conditions" in Libya [91], Cambodia [103], and Egypt [123]; "Conflict between parties' in Iran [101], Turkey [70], and Egypt [107]; "Errors in construction" in Iran [93], Zambia [113], and Denmark [89]; "Fluctuation in price of materials" in Saudi Arabia [102] and Ghana [100]; "Conflict between labours" in Saudi Arabia [88] and Zambia [113]; "Labour strikes" in countries with high geopolitical risks [104] and Zambia [113]; "Using inappropriate construction methods" in India [92] and Iran [110]; "Insufficient/inaccurate document preparation" in Turkey [70] and Iran [110]; "Inaccurate first drafts/plan" in Iran [110] and Taiwan [132]; "Delay/weak interaction due to vendor" in India [127] and Oman…”

Construction Delays in Developing Countries: A Review

“…In this category, materials and equipment are considered under resources. The factors in this group are lack of skilled workers [31,53,67], unskilled operator/technical person [4,35,45], escalation of resources price [53,72,73], equipment failure [13,16,67], shortage of equipment [17,21,33], delay in material procurement [14,27,69], slow delivery of material and equipment [12,17,49], and transportation problem [6,31,74]. In general, the factors lack of skilled workers, delay in material procurement and delivery, and shortage of equipment are most frequent in developing countries.…”

“…Some project related problem such as inaccurate site investigation [12,13], site constraints [21,77], change in site condition [24,78,87] obsolete construction methods and technologies [24,53,79], and delay in site clearance [23,81,82] were identified as the potential causes of construction delay. In this group most of the factors are moderately important regardless of geographic boundaries.…”

“…An experienced and competent professional project manager can solve frequently encountered causes of delays in construction industry all over the world [61]. The factors of delay in this group are lack of experience construction manager [7,23,36,83], poor site management [17,20,53], contractors' excessive workload [83,86,87], poor contract management [16,18,20,57], conflicts between the parties [4,12,27,34], poor material management [27,53,89], poor coordination among parties [13,17,18,53], contract related dispute/claim [3,17,91], and insufficient communication between the owner and designer in design phase [4,13,84]. Among these factors, poor coordination and communication, and poor site management are found as most frequent causes in all the regions.…”

Investigating Delays in Libyan Road Construction Projects Using Structural Equation Modelling (SEM)

“…Among these factors are some not previously highlighted in other studies in Malaysia. [11] presented a statistical model of factors contributing to delays in the construction industry, classified into four categories related respectively to owners, consultants, law and regulations, and general defects. They concluded that the most important and significant factors among these were budgeting and resource allocation defects.…”