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CAUSES OF TIME OVERRUNS IN CONSTRUCTION

PROJECTS IN DEVELOPING COUNTRIES


Peter Angatia
peter.angatia@gmail.com
Abstract
Time overruns in construction industry is a common occurrence world-over. In most cases it leads
to cost overruns and inconveniences to the project stakeholders in terms of time lost among others.
The end result is mistrust, litigation, cashflow challenges and adversarial relationship. This study
seeks to establish some of the causes of time overruns through review of existing literature. Some
of the identified causes include: award of tender to the lowest bidder, delay in payment,
procurement challenges and change of scope.

Key words: Time Overruns; Construction Projects

BACKGROUND OF THE STUDY


Construction industry plays a vital role in any given society. It is a tool through which nations
achieve their development agenda both in rural and urban areas (Enshassi et al. 2006). The industry
provides platform for wide range of economic growth of a given country. Battainehm et al. (2002)
states that when the construction industry prospers everything else prospers. The trend in
construction industry has been changing overtime as a result of sophistication in the construction
processes and the stakeholders in the process such as consultants, material suppliers, clients,
consumers as well as contractors (Mahamid et al. 2012)).
A construction project can be said to be successful if it meets its goals and objectives as outlined
in the projects charter. A project is successful if it has met its technical performance and remained
within its time schedule and budget ( Frimpong et al 2003). Over time; cost, time and quality have
been used as key measures of project success. Delays in construction projects is a universal
challenge and often results in cost overruns. Time overruns have negative effects on clients,
consultants and contractors in that it results in mistrust, litigations, cash flow problems and
adversarial relationship generally (Mahamid et al 2012). Time overruns means different thing for
different stakeholders for instance it means loss of revenue for the client while to the contractor it
means high costs in terms of long work time. A project is regarded successful if it meets the triple
constraints of time, quality and cost (Nega, 2008). Inability of completing projects within time
schedule and budget is a challenge world over and is worsening. In Uganda for instance the
problem has been in discussion among professionals and policy makers for a long time. For
example the Northern bypass was scheduled to take two and half years but took more than five
years and the cost overran by over 100% (Alinaitwe et al. 2013).
Project management tools play instrumental role in ensuring the challenges in construction projects
that result in time overrun are overcome and effective project management is realized. Effective
project management depends on how well the tools and techniques are well utilized. This involves
efficient management of resources including human resources, machines, funds and materials
(Frimpong et al 2002). However there are unpredictable instances that can lead to time overruns;
these include contractual relations, environmental issues, resources availability, site conditions and
performance of parties (Haseeb et al. 2011)

Statement of the problem


Construction industry is the backbone of economic development for any country as highlighted in
the preceding section. It plays a vital role in establishment of infrastructure and social wellbeing
of any given society. This industry however has not fallen short of challenges; it experiences
numerous problems world over but more so in the developing countries. One of the many
challenges faced by the industry is projects taking longer than scheduled. Time overrun is a
perennial problem in developing countries and stakeholders in the industry tend to agree that the
problem is mainly caused by delayed payments, financial constraints, change of scope and
procurement procedures. Disruption of cash flow in the construction project caused by delayed
payment or any other reason can greatly affect the operation of the project activities. It is therefore
paramount for the stakeholders in the project to ensure availability of funds to ensure daily
operations are not affected. The owner of the project should work well in advance to ensure his/her
financial problems does not affect the project while the contractor should ensure s/he ups his/her
financial management skills to ensure efficiency and effectiveness in using the funds.
Proper preparation by the stakeholders in the project will ensure all the required data is availed in
advance during initial stage before execution. This will reduce changes in scope during
implementation which may lead to time overrun. This will also ensure proper procurement process
is in place and therefore awarding of the tender will be to a contractor with ability to perform the
contract. It is a common tendency in developing countries for tenders to be awarded to the lowest
bidder. This does not necessary guarantee value for money of the project owner.
There is need to carry out an in-depth identification of the causes of time overruns in construction
projects in construction projects in developing countries. This will help the industry in searching
for corrective actions to mitigate the problem. The objective of this study would help mitigate the
problem of time overruns in construction projects in developing countries and open the avenue for
further studies in the area of controlling time overruns.
Objectives of the study
To establish the effect of delayed payment on time overruns in construction project in development
countries
To identify the effect of financial constraints on time overruns in construction projects in
developing countries

To identify the effect of change of scope on time overruns in construction projects in developing
countries
To establish the effect of procurement process on time overruns in construction projects in
developing countries
Research questions
What is the effect of delayed payment on time overruns in construction in development countries
What is the effect of financial constraints on time overruns in construction in development
countries
What is the effect of change of design on time overruns in construction in development countries
What is the effect of procurement process on time overruns in construction in development
countries
Importance of the study
Construction industry plays a vital role in economic growth of any given country. Most developing
countries are undertaking several infrastructural projects in order to enhance economic
development. This has seen several construction projects come up in building houses, roads, water
infrastructure, power generation and other areas. These development projects have faced several
challenges among them timely completion within budget. There seems to be agreement between
parties in construction that time overrun in a key concern. The time overrun can be attributed to
the stakeholders in the industry who either directly or indirectly through other factors. By the
owners of the projects failing to make timely payment to contractors they in turn delay to procure
required material and services in time. The owner or his consultant can change the scope of the
project, this will eventually lead to delay in completion of the project. This study seeks to
investigate these causes of delay among others in construction projects in developing countries.
Identification of the causes for time overruns forms the basis for development of control measures
to ensure they are controlled during initial stages of the project as a result mitigate the side effects.
Limitation of the study
The goal of this study was to establish causes of time overruns in construction projects in
developing countries. It mainly focuses on the causes of the time overruns in developing countries

in Africa and Asia. It will mention in passing some of the consequences of this causes on the
clients, contractors, consultants and end users.
Time overruns
Time overrun can be defined as non-completion of projects within stipulated time. One of the most
common challenges faced by both private and public developers in completion of projects within
scheduled time and budget. Time overrun in construction projects is one of the causes of negative
effects to the stakeholders. This situation has made several researchers to undertake studies
globally on this subject (Rathnaamali, 2013). Time overrun is commonly associated with
construction industry. This situation is more severe in developing countries where time and cost
overruns in some cases exceed 100%of the budget. In general construction projects take two
phases; the preconstruction and the construction phase. The construction phase takes most of the
time overrun in the entire project. Time overrun has adverse effects on the success of the project
with respect to cost, quality and safety. The effects extends to the material suppliers in terms of
change in cost of the materials. Studies have been undertaken by environmentally conscious
researchers in relation to the effects of construction projects to the environment. Researchers have
developed models to emphasis the effect of overruns on every angle of the construction project
(Sweis, 2013).
Many studies undertaken in different areas have highlighted different causes of project time and
cost overrun. Most have showed that the problem is caused by financing and payment for the
completed works (Ameh, 2011). Chelabi el al (1984) found out that time and cost overruns occur
mainly in the initial stages of project development that entails planning. The responsibility for the
time overrun may be due to the owner of the project when s/he fails to submit required data in
time, fails to approve and sign contracts and allowing access to the site (Ameh et al 2011). The
contractors to have responsibility on time overruns. They are responsible for labour productivity,
work scheduling, construction mistakes and equipment malfunction among others.
While we allocate the various causes of time overrun to the stakeholders in the construction
industry, there are instances where overrun occur as a result of forces majeure; instances of
weather, civil and industrial unrest (Ameh et al 2011).

Delayed payment
Delay can be regarded as the most common, complex, costly and risky challenge experienced in
construction projects. Delays in construction can be caused by several factors including difference
in plan interpretation, change of orders, site conditions and scope of works among others (AlGhafly et al. 1999). Delayed payment is a common challenge in construction projects and should
be recognized as a major problem since it keeps recurring from project to project. Payment is
required for purchase of material, labour, pay subcontractors and other general overheads. Delayed
payment lead to cash flow problems in the project which in turn lead to negative cash flow. In
general late payment affects time, cost and quality since all this items depend on prompt payment
(Ye et al 2010). Some practitioners in the industry tend to think that delays in payment is normal.
This perception has worsened the problem and made it difficult to deal with and can be disastrous.
Clients tend to reduce financing costs by delaying the payment. This puts pressure on contractors
who may not have the required capital and access to credit to cover all the payments. Davis (1999)
postulated that adage of strategic cash flow is to collect early and pay late. This has proved to be
counterproductive in which clients holdback on their money while contractors wish to obtain their
money as soon as possible. This makes late payment a challenge that is difficult to deal with due
to the different interests of the stakeholders (Ye et al 2010).
Cash flow problems in constructions projects is closely related to delayed payments. Construction
projects are generally long lasting and cash flow is critical. Any deviation as a result of cash flow
delays can have a major impact on the project. Delayed payment from owner of the project affects
the cash flow of the contractor and when the owner withholds the payment, it creates cash flow
problems to the contractor. Delayed payments starves stakeholders in the supply chain of the
money who in turn resort to borrowing which will end up making the cost high due to the interests
(Ye et al 2010). Delayed payment can be a result of the project owners financial problems which
affects the progress of the project resulting in change of wok schedule and specification, thus
affecting the quality of the project (Memon et al. 2014).
Financial constraints
Like any other endeavor, projects have limited resources that are to be utilized in their execution.
Finance is one such key resource required to ensure timely delivery. Financial constraints will have
direct impact on the success of construction projects. Financial challenges of the owner of the
project, contractor and the external market have negative impact on the project.

Poor cash flow


Cash flow is very critical in construction projects and any disruption can have adverse effect on
the project. Cash flow problems can be as a result of delayed payment from the project owner or
poor cash flow management by the contractor (Ye et al. 2010)
Financial problems of the project owner
Whenever the project owner suffers financial challenges, this affects the progress of the project
and results in the change of the project schedule
Financial difficulties of the contractor
Construction projects are labour intensive and should the contractor run short of finances for
whatever reason, the project will stagnate leading to need for variation and time extension. The
contractor has responsibility of paying workers and pay for day to day activities of the project
(Memon et al 2014).
Change of scope
Project are generally exposed to a variety of constraints; these constraints traditionally have been
taken as specification, time and budget. It is therefore critical to control the scope of a project
through an elaborate process which may lead to changes in the specifications of the project. This
has to be well controlled to minimize the impact of the change that may result. In the perspective
of the project owner, scope control means achievement of the project goals. Efficient and effective
project scope control management assures the investor efficiency in managing change that may
arise during project execution (Nahod, 2012). Change in construction projects is a common
occurrence and can occur at any stage from varied sources by different causes and may result in
negative impacts on the cost and time. A critical change has ripple effects on a series of consecutive
delays in schedule, work re-estimation, demand for more equipment and material among others. It
is therefore paramount to manage change well to avoid disputes that can lead to project failure.
Change can take various forms like emergent, proactive or reactive, elective or required etc (Hao
et al. 2008). Generally change can be classified as shown below
Stage

Stakeholder

Types
changes

of Impacts

Actions

Specification

Owner

Change

of Change in design Carefully

requirement e.g. and construction provide detailed


specifications,
scope,

process

specification

design

documents

brief
Design

Consultant

before bidding

Incomplete

Reward

drawing, design design


error,

of Better control of
and design versions,

design drawing; rework site

change,

in construction; investigation;

omissions

of change orders

conditions

consider
buildability

in

design
Construction

Contractor

As-builts

not Rework; change Quality control;

confirm with as- orders; changes site


design;

quality in design

operational

control;

defect;

coordinated

unanticipated

documented

site

documents

conditions;

and

value

drawings; daily

engineering;

logs

materials

or

equipment

not

available;
inclement
weather
Table 1: summary of construction changes (Hao et al. 2008)
From the summary table 1 above, it can be observed that the main cause of change in construction
project is the owner and the designers errors. The impact of change of scope in construction
projects should be evaluated on case by case basis in order to assist in decision making process.
Properly managed change brings benefits to the owner of the project otherwise it will bring

negative impacts that may lead to time and cost overruns. In general change in scope can be due
to the following.
Change in scope by the owner
Change of specification in construction project is a common occurrence especially those with
inadequate objectives. When these changes in the projects are carried out, they lead to variation in
the schedule and sometimes costs (Memon et al. 2014)
Change of design by the consultant
Consultants always seek to improve on their designs in order to satisfy their clients as a result they
may initiate a change in scope by changing the design in order to satisfy or please their client. This
is however common where projects are initiated before the design is finalized. The extent of the
effect of this change depend at the stage at which it is initiated (Memon et al. 2014).
Change in scope
Consultants can initiate change in scope in order to satisfy their clients. This is a frequent
occurrence and often led to time overruns (Memon et al. 2014).
Procurement process
Construction projects involve substantial financial and human resources for and during execution.
Procurement of construction material and or services has not fallen short of issues ranging from
inflated prices to substandard material. Governments and developers around the world are always
working towards improving the procurement processes. The procurement process range from
tendering, single sourcing, quotations among others. One of the most common procurement
method used in construction is tender award to the lowest bidder.
Award of tender to the lowest bidder
In most developing countries, procurement of construction material is generally based on the
lowest bid award system (Khan et al. 2015). Most governnments put this system in place to ensure
lower cost of completing projects. The system has generally been accepted because it doe not only
ensure low cost of construction but also reduces chances of fraud (Irtished, 1993). Although this
system has been in place for many years with legal backing and has ensured competitiveness, some
developers hav voiced concerns that it over rellies on cost and does not factor quality aspect of the

project. This makes it less likely that the contract will be awarded to a contractor who has the
capacity to perform and deliver the highest quality. This therefore implies that the lowest bid
system may not result in the best value for money. The system exposes the developer to a lot of
claims from the contractor on design and execution (Khan et al. 2015).
Awarding tender to the lowest bidder has several challenges such as time overruns, cost overruns,
quality compromise and adverse relationship among stakeholders (Thomas, 2009). This system
encourages less qualified bidders to participate in the bidding process and discourages more
qualified ones.
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