I Cast 2017 Published Paper
I Cast 2017 Published Paper
I Cast 2017 Published Paper
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Abstract
Construction project cost control practice is one of the difficult tasks in cost management of
which most contractors have not fully enjoyed its benefits. The aim was to identify current
challenges of project cost control practice in the construction industry. The methodology
followed literature searching, and selecting and analysing the selected papers. Thirty-three
challenges were identified. Out of the thirty-three challenges, eleven were thoroughly elaborated
whereas the rest lacked detailed literature. The eleven challenges are; using obsolete methods
and concepts, lack of knowledge on the use of available tools and technology, overemphasizing
on results while ignoring the cost control process, lack of project cost control processes and
systems suitable to the enterprise, abandonment of complicated strategies, lack of consistency
in cost management by managers, serious decision failure, exorbitant marketing expenses,
poor attitude towards information communication technology (ICT) usage, difficulty in
monitoring different sources of day-to-day cost data, variations in contract and lack of
financial commitment in projects. It was realised that the challenges can be grouped under
managers’ personal characteristics, knowledge of cost control process and technology used in
the practice of cost control. Attitudinal change is required for the successful implementation
of project cost control practice in organisations.
Key words: challenges, cost control practice, cost management, construction project,
construction industry.
Introduction
Construction project cost control (PCC) practice is one of the difficult tasks in the
current project cost management faced by most contractors and have not fully enjoyed its
benefits. The practice of cost control is a required task for the survival and growth of every
construction organization in every nation. The practice of PCC assists organizations to
eliminate and/or reduce unnecessary wastage of resources in the execution of construction
projects (Bahaudin et al., 2012; Adjei et al., 2017). According to Cleland and Ireland (2002)
cost control is the process of monitoring; evaluating and comparing planned results with
actual results to determine the status of the cost of the project, schedule and technical
performance objectives of the project. It is therefore essential that, every construction
company operates in an effective way by practicing cost control procedure during the post
construction stage of the construction project, to keep the cost of executing the project
within the budgeted cost as initially prepared and approved for (Adjei et al. 2017; Adjei et
al. 2015; Sanni and Hashim 2013; Olawale and Sun 2010). Bahaudin et al. (2012) have also
explained that when construction work commences, the budgeted cost of the construction
project serves as the baseline for the contractor or whoever is undertaking cost control to
use it to check and control the construction costs. A broader understanding of the various
aspect of cost control principles are vital to enable project managers or cost engineers to
effectively prepare their PCC and in the development of future cost forecasting techniques
for effective project delivery (Skitmore and Marston 2005).
The cost control principles are also expected to act as telltale or offer early warning
system, notifications of possible budget difficulties at predetermined periods for corrective
measures to be decided to solve the cost variances. The project quantity surveyor or the
cost engineer needs to apply the cost control methods to develop a series of options for
the other project members to consider and select one of the best options that fit within the
approved budget limit (Adjei et al., 2017; Khamidi et al., 2011; Dikko 2002).
There exist high numbers of projects that fail to meet critical success factors like cost and
time over the years. Both private and public sectors in the construction industry have
lost substantial amounts of money as a result of failed projects in cost and time. In the
developing and Sub-Saharan countries, project cost overrun is severe which indicate
that PCC is a challenge to contractors and also among project team members handling
construction projects.
In the construction industry, very little study has been conducted on the challenges of
cost control. Researchers such as Kirun and Varghese (2015); Sanni and Hashim, (2013)
and Ademola, (2012) identified challenges of PCC but with very limited literature review.
The aim of the study is to identify current challenges of project cost control practice in the
construction industry. This study therefore assessed the current challenges of project cost
control practices that are related to the construction industry. It will enable construction
project members or cost engineers develop mitigating measures in order for construction
organisations to fully enjoy the benefits of the practice of cost control.
Research Methods
This study was conducted using research papers from the literature search and successively
processing and analyzing the papers gotten. Well-known texts relating to cost control and
other cited publications in referred journals but limited to papers that relates to issues
focusing on the challenges of cost control.
The following steps were used:
i) Searching for titles, keywords and abstracts with words like ‘challenges’, ‘cost control’,
‘cost management’ through the electronic databases since such platform has a lot
of collection of texts and therefore provides an extensive coverage of texts than of
individual journals.
The electronic databases used includes Google scholar, Google search engine,
Ebscohost ASCE, Emeralds, Taylor and Francis, Sage, Wiley online library, DOAJ,
AJOL, and Science Direct. Different papers identified were scanned with the
keywords above. The papers included research articles that principally focused on
the challenges of cost control and others that relate to cost control practice.
ii) An appraisal of the abstracts of these papers were conducted to sieve out the less
related papers. This was attained by means of selecting technical papers and reviews,
eliminating duplicate articles, and doing away with papers which were not directly
related with the topic of the study.
iii) All the outstanding papers were read, analyzed and numerous descriptive words were
identified. The part of the paper that relate to challenges of cost control were singled
out for further examination for the purpose of this study.
the management of cost; specifically cost control in construction project delivery (Song,
2014; Adjei et al., 2015).
and high investment budgets) (Ba¨ckblom et al., 2003; Bjo¨rk, 2003). Construction
professionals are also very satisfied with using traditional methods and tools in managing
cost which makes it a barrier in cost control (Samuelson, 2002; Achar et al., 2005). One
of the key critical factors for the successful use of ICT is the individual and organisation’s
attitude to communication. In most construction firms, individual attitude and behaviour
towards technology usage and attitudinal change have always become a problem in the
delivery of construction projects (Brewer and Gajendran, 2009; Brewer and Gajendran,
2006; Davis and Songer, 2008).
• Variations in contract
Ashworth and Hogg (2002) stated “that the initial estimate of variations to the contract is
likely to be of a budgetary nature and it is important that such estimates be progressively
updated as more detailed information becomes available in the form of measurement
quotations or day work records”. Charoenngam and Sriprasert (2001) recommended that
some decision support systems must be provided at all levels of management with updated
information about the various aspects of the project cost performance. Besides, exception
reports can enhance the management’s productivity by concentrating on the most critical
subset of performance information. Moselhi et al (2004), added that “the earned-value
method is widely used for reporting project status with consideration of two performance
indicators (time and cost) in an integrated manner”. The competencies of the personnel
in the contracting organization should be high in construction PCC practices. The more
efficient the cost managers are, the better for the progress and growth of every construction
organisation. Pries et al. (2004) stated that, the construction businesses today are about
fulfilling client satisfaction through efficient production and delivery of construction
projects. So, if the contractor’s cost managers are very efficient in discharging their work, it
may result in high cost-effective construction project delivery by the organization (Sanni
and Hashim, 2013).
3 (Ademola, 2012) South Lack of knowledge on the use of available tools and tech-
Africa nology,
Abandonment of complicated strategies
4 (Song, 2014) China Using obsolete methods and concepts
Over emphasizing results, and ignoring the process of
PCC
Lacking PCC processes and systems suitable to the
enterprise
Lack of consistency in cost management by managers
Serious decision failure, exorbitant marketing expenses.
Lessons Learnt
Lessons learnt from the study include the classification of the challenges under managers’
personal characteristics, knowledge of cost control process and technology used in the
practice of cost control. Critically studying the challenges, some of the managers’ personal
characteristic challenges include poor attitude towards ICT usage, using obsolete methods
and concepts, and over emphasizing results, and ignoring the process of PCC. This shows
that cost mangers have a role to play in the practice of cost control in the organisation. Their
individual personal skills and characters will as much affect the practice of cost control.
Some of the cost control process challenges include serious decision failure, inadequate
access to software packages, difficulty in monitoring different sources of day-to-day cost
data. These challenges also clearly indicate that the cost control process and structures
should be considered by every organisation. The organisations should make good decisions
as well have a clear monitoring system.
Surprisingly, some of the challenges of cost control identified are really factors that affect
construction cost or barriers that make controlling of projects cost very difficult. It is not
directly connected to the practice of cost control. Most challenges identified by Kirun &
Varghese, (2015) and Sanni & Hashim, (2013) include unstable market condition, choice of
procurement method, non-clarity of exclusions, improper planning and schedule, reworks
due to errors, lack of research and innovation, price and design risk. It is quite debatable
that barriers of controlling construction cost could be considered as challenges of cost
control practice. This study draws challenges mainly for the practice of cost control.
Conclusion
PCC practice plays a key role for the successful delivery of construction project and also
enables contractors to remain in business. The aim is to identify current challenges of
project cost control practice in the construction industry. The source of data for conducting
this study was literature review. Current related literature was consulted and successively
processed and analysed.
The study has showed that challenges are plugging the way of the implementation of
effective cost control practices in the construction industry. The antecedents of these
challenges are to a large extent, the results of attitude of management and the people in
whose hands cost control practices lay. This has created the barriers preventing the adoption
and implementation of modern cost control practices in the construction industry.
Attitudinal change is required for the successful implementation of project cost control
practice in construction firms.
References
Journal Articles
Acar, E., Kocak, I., Sey, Y. and Arditi, D. (2005). Use of information and communication
technologies by small and medium-sized enterprises (SMEs) in Building Construction,
Construction Management and Economics, 23, 713–722
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Research in Business, 4 (9), 367 – 374
Song, L. (2014). Cost control for small and medium-sized enterprises (SMEs), Journal
of Chemical and Pharmaceutical Research, 2014, 6(5):409-412
Theses
Ademola, W. O. (2012). Examining a new approach to cost control methods and
mechanisms for SMMEs in construction projects, MSc Thesis, University of
Johannesburg, South Africa
Martin, L. (2010). Transfer mechanisms of knowledge and skills in co-operations
between emerging and established civil engineering contractors, PhD Thesis,
University of Cape Town, South Africa
Conference Proceedings
Adjei, K. O., Aigbavboa, C. O. and Thwala, W. D. (2015). Contractors management
team roles for project cost control in Ghana In: Mojekwu, J. N., Nani G., Atepor,
L., Thwala, W. D., Ogunsumi, L., Awere E., Ocran, S. P., and Bamfo-Agyei, E.
(Eds) Procs 4th Applied Research Conference in Africa (ARCA) Conference, 27-
29 August 2015, Ibadan, Nigeria.
Adjei, K. O., Aigbavboa, C. O. and Thwala, W. D. (2017). Corrective measures for
construction project cost control, International Conference on Construction and
Real Estate Management (ICCREM 2017), Nov. 10th – 12th, 2017, Guangzhou,
China, Publishers: American Society of Civil Engineers (ASCE), Accepted paper
Bahaudin, A. Y., Elias, E. M., Dahalan, H. and Jamaluddin, R. (2012). Construction cost
control: A review of practices in Malaysia, The 3rd International Conference on
Technology and Operations Management, Sustaining Competitiveness through
Green Technology Management, Bandung – Indonesia, July 4-6, 2012.
Books
Ashworth, A. and Hogg, K. (2002). Practice and procedure for the quantity surveyors,
Oxford, Blackwell Science Ltd.