Time and Cost Overrun in the Saudi Arabian Oil and Gas Construction Industry

Abstract

Many construction projects exceed time and budget. The Saudi Arabian construction projects are not an exception to this phenomenon. However, the causes of time and cost overrun of Saudi Arabian oil and gas construction projects have never been studied. Thus, this paper endeavors to investigate the main causes of time and cost overrun in Saudi Arabian oil and gas construction projects. Thirty-eight causes of time and cost overrun were identified through the literature and an interview. Responses from 48 professionals based in the Eastern Province of Saudi Arabia were obtained. The respondents were solicited to evaluate the significance of the causes, which were then ranked and a test of agreement was conducted. All survey participants agreed that the five major causes of time and cost overrun, combined, were found to be “changing of design and scope by client during construction„, “poor planning and scheduling of project„, “design errors„, “Inadequate comprehension of scope of work at the bidding stage„, and “underestimating of cost and schedules/overestimating of benefits„. On the other hand, the major cause of time overrun was found to be “changing of design and scope by client during construction„. Finally, the major cause of cost overrun was found to be “underestimating of cost and schedules/overestimating of benefits„, respectively. The findings of this study will be beneficial to project stakeholders who must operate in an industry that is highly sensitive. The findings will also facilitate organizations planning to conduct construction projects in the Saudi Arabian oil and gas industry.

Keywords

• oil and gas industry
• time and cost overrun
• construction projects