W4_Austin_Causes and Effects of project delays and cost overruns

Problem recognition, definition and evaluation

The main reasons for project delays and cost overruns were analyzed and ranked according to different groups and classified on the basis of multi-attributes decision making tools and techniques, as follows;

Deficiency in Planning and scheduling                     (PSD)

Inadequate control procedure                                       (ICP)

Deficiency in cost estimates preparation                  (DCE)

Poor contract management and supervision             (PCM)

Contractors financial difficulties                              (CFD)

Shortage of technical and competent personnel               (STP)

Development of the feasible alternatives

Factors Effects	PSD	ICP	DCE	PCM	CFD	STP
Cost Overrun	8	7	6	5	4	3
Time Overrun	7	6	5	4	3	4
Variation Orders	6	5	4	3	2	3
Time Extension	5	4	3	2	1	2
Descoping	4	3	4	4	2	1

Development of the outcomes and cash flows for each Technique
Results indicate that the six principal and common causes of delays are: deficiency in planning and scheduling, inadequate control procedure, deficiency in cost estimates preparation, poor contract management and supervision, contractors financial difficulties and shortage of technical and competent personnel, arranged in order of severity;

Factors Effects	PSD	ICP	DCE	PCM	CFD	STP
Cost Overrun	8	7	6	5	4	3
Time Overrun	7	6	5	4	3	4
Variation Orders	6	5	4	3	2	3
Time Extension	5	4	3	2	1	2
Descoping	4	3	4	4	2	1

Selection of the acceptable criteria

According to the ranking, first rank is awarded to delay due to deficiency in Planning and scheduling. This particular factor is associated with contractors and consultants who are responsible for most of the delays in a project. Inadequate control procedure      was ranked second most important factor. Other factors that could be of interest are deficiency in cost estimates preparation, poor contract management and supervision, contractors financial difficulties and shortage of technical and competent personnel during construction. Hence, the recommended use of LoB and EVM techniques in order to minimize project delays and cost overruns.

Analysis and comparison of the alternatives

Comparison of five priority factors subject to analysis with the LoB and EVM capability improves productivity by 20% and saves money and time, faster planning process and superior visual control, due to its repetitive tasks schedules, where a certain defined delivery schedule of similar item must be maintained chronologically.

Selection of the preferred alternative

These factors were ranked in various groups as shown in above Table. The factors which were declared most influencing factors during the analysis are deficiency in planning and scheduling and inadequate control procedure were awarded highest marks and ranked as first and second respectively. In this way the most influential factors that caused project time and cost overruns were identified.

Performance monitoring and post evaluation of results

Evaluation of the five priority factors resulted in the assessment of the most influential factors to be deficiency in planning and scheduling, and inadequate control procedure were awarded highest marks and ranked as first and second respectively. Hence, the recommended use of LoB and EVM techniques in order to minimize project delays and cost overruns.

References/Bibliography

1.   Firmpong, J. O. and Crawford, L.C. (2003), “Causes of Delays and Cost overrun in construction of building projects in developing countries; Nigeria as a case study.” Retrieved from: http://www.civil.mrt.ac.lk/ICSECM_2011/SEC-11-69.pdf

2.   Van John Wittwer (2003-2012 Vertex42 LLC. All rights reserved).

Retrieved from: http://www.vertex42.com/ExcelTermplates/excel-gantt-chart.html

3.   Mind Tools Ltd, (1996-2012. All rights reserved.)

Retrieved from: http://www.mindtools.com/pages/article/newTMC_97.htm

4.     Gary C. Humphreys. Humphrey and Associates Management Consultants sixth Edition. (2002, 2011. All rights reserved) Chapter 6: Scheduling Methodologies and Scheduling Types:

Retrieved from: http://www.humphreys-associates.com/