Structural model of cost overrun factors affecting Pakistani construction projects

Abstract

Cost overruns are a global challenge to successfully completing construction projects. Cost overrun has a substantial impact resulting in most construction projects failing to be completed. Several factors have contributed significantly to the industry's decline. The factors were discovered in the literature, assessed, and applied to the construction industry in Pakistan. This study scrutinized and identified the relationships between the factors causing cost overruns in the Pakistani construction industry using the Partial Least Squares Structural Equation Modelling (PLS-SEM) approach. The structural model was created and tested with Smart-PLS software using data from a questionnaire survey of 131 construction practitioners. Six constructs were used to categorise the factors. The model identifies 21 critical factors in Pakistani construction projects, with resource management ranking first. Contract management issues can also contribute significantly to project cost overruns. Model assessment results indicate that the developed model has a substantial power of explaining the factors of cost performance while R2 value showed that 45.7% variance is explained by the model. The model developed model will serve as a jumping-off point for academics, researchers, and practitioners in developing a cost-control system. It is suggested that establishing an efficient and effective contract management protocol among stakeholders throughout the design and supervision stages is extremely beneficial for improving project cost performance and significantly reducing time overruns.