Statistical Analysis of Factors Causing Cost Overrun in Construction Industry (Case Study: Jordanian Construction)

Abstract

Cost overruns problem is still a critical issue in the construction industry worldwide as it is in Jordan. This paper attempts to identify the main factors influencing the cost overruns in building projects covering both private and public sectors. This research commenced by performing a literature review to identify the factors influencing cost overruns followed by the preparation and distribution of a questionnaire to 150 local Jordanian construction practitioners to distinguish those most significant factors.

 A statistical analysis was carried out on the survey results to identify the significant top ten causative factors using the importance index ranking method as perceived by each construction group and sector. The compatibility between different construction groups and sectors were tested using Spearman rank correlation. While the differences between constructions groups were determined by the ANOVA technique.

The top ten causative factors were determined from all construction groups viewpoints followed by conducting a factor analysis to extract the most critical. Results of the questionnaire survey showed that the additional work/ direct change orders by client, lack of coordinated construction documents, cash flows and financial difficulties faced by contractors and inaccurate budget estimation were the main variables affecting cost overrun.