International Journal of Engineering Inventions

e-ISSN: 2278-7461, p-ISSN: 2319-6491

Volume 9, Issue 8 [August. 2020] PP: 20-33

Causes and Monitoring of Delays and Cost Overrun in

Construction Projects in Pakistan
Hafiz Muhammad Nadir1, Ash Ahmed2
1
PhD Researcher, 2Reader/ Associate Professor, Civil Engineering Group, Leeds Beckett University, UK

Abstract—Cost overrun and delay are very frequent phenomenon and are generally associated with nearly all
projects in the world especially in developing countries. Generally, 71 percent of projects suffer from cost/time
overrun in the world with an average cost overrun of 43%. In this study, 25 factors causing cost and time
overrun were considered. The ranking of 25 factors causing cost overrun and delay in construction projects
made on the basis of mean value of impact which was determined from 65 project data file and 65 executive’s
opinion on structured instrument, giving equal weightage to both the values. The factor of “Inconsistent Cash
Flow” was the most significant factor with impact value of 7.78 in severe category and “Weather Severity” was
the least significant factor with impact value of 3.40 in moderate category. In this study, 65 projects of different
departments executed by Frontier Works Organization (FWO) were considered which include 48 completed and
17 running projects. FWO is one of the biggest construction organizations of Pakistan with a financial worth of
Rs.36 billions and annual turnover of Rs.22 Billions working all over Pakistan and abroad. Out of 65 selected
projects, 38 were roads projects, 12 infrastructure and development projects (private sector) and 15 projects of
Government Departments (Railway, WAPDA, Structures, Irrigation/ Power, Airports &Telecomm). Out of 65
projects, only 7 projects were completed within budget thus showing that 90 % projects are suffering from cost
variation including 74% projects over running cost and 15% projects under running cost due to scope
reduction. Only 2 projects were completed on planned schedule thus showing that 97% of projects were
suffering from delay. Overall average cost overrun was 28.27% with an average delay of 2.1 years per project.
The highest cost overrun has been observed in projects of Government Departments i.e. 37.59% and highest
delay per projects was observed in roads projects i.e. 2.3 years per project. The public/private organizations,
regulatory bodies, financing institutions and government should control the financing, planning, management
and technical aspects of projects to minimize the cost/time overrun.
Keywords: - World construction industry, project management, causes of cost/time overrun, impact
ranging/ranking, earned value analysis.
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Date of Submıssıon: 05-12-2020 Date of Acceptance: 20-12-2020
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I. INTRODUCTION
The construction industry is an industry which transforms the shadow images of living means
generated in human minds into physical reality. It adds value to social living standards, places for entertainment,
ways of communication, factories for manufacturing, structures for power generation, offices, residential
buildings, hospitals, laboratories, universities, irrigation channels, hydraulic structures and every thing which
facilitates human beings and adds value to advanced living and modern societies. Advancements in construction
are emerging due to enhanced human needs, necessity of change in outlook and performance of living means,
development of new social set ups, establishment of new trends in social standards and generation of innovative
ideas in human minds. Construction industry is very a dynamic industry which is susceptible to changes every
moment and for every new endeavour. It can rightly be considered as the most dynamic and most booming
industry in the world with unfathomable scope and indefinite innovation. Construction industry implies the
advancement in the world and dictates the economic trend as it contributes almost 10% of global GDP and
employs around 6-7% of manpower. A country is well known by its modern infrastructure and historical
architect contributed by a solid and progressive construction sector [1]. Cost and time overruns are considered as
core issues in every construction project which can cause the budget/ schedule/ scope creep. Understanding the
specific causes of cost and time overruns due to design or changed conditions can help control cost and time
extension on projects. They may be related to external or internal factors that may cause the construction of a
project to time and cost overrun [2]. Cost overrun is a glaring issue in project management in developing and
developed countries alike. The trend is more severe in developing countries where these overruns sometimes
exceeds manifold [3]. These overruns/ creeps not only impact the pace of projects but also hampered the
economic growth of country [4]. Construction activity requires major investment outlays in most developing
countries; therefore, their timely completion is of paramount importance [5]. The study identifies that most

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

delayed projects also experience cost overruns. An unusual cost and schedule variation are generally part and
parcel in projects. Further we identify the root causes of project delay and cost overrun [6].

A. Problem Statement
The construction industry is one of the major economic growth sectors in Pakistan which consumes a
major chunk of annual budget allocations and heavy private investment along with setting the pace of nation
building and economic development. Moreover, hundreds of big/small firms and millions of employees are
related to this industry. Any failure, cost overrun and over scheduling will affect all tiers of life and business.
There is a need to establish the root causes of cost overrun and delays in construction projects in Pakistan by
analyzing projects and expert opinions of different departments along with recommendations to avoid these
factors to timely complete the projects within allocated budgets.

B. Objective of Study
The main objective of this study is to determine and analyse the causes of cost overrun and delays in
construction projects in Pakistan and recommending ways to address these factors during project planning/
execution/ financing. The purpose is to identify the primary causes of delays and cost overrun factor and
ascertain their impact in causing time/cost overruns and then ranking these factors as per their severity impact.
To determine the application of earned value analysis as monitoring tool to identify/monitor the delays and cost
overrun in ongoing construction projects. Finally, to make certain recommendations to avoid these factors of
cost overrun to complete the projects within budget and with efficient financial control.

C. Significance of Research
Construction industry is a progressive industry and grew by around 16% in last decade, driven
primarily by increased state-spending on infrastructure development specifically under China Pakistan
Economic Corridor CPEC Projects like road construction (coastal and inter-provincial highways/ motorways),
power generation plants, hydropower projects and dams, Mass Transit projects like Metro Bus and Orange Line
Train projects, airports and Gwadar Seaport projects and reconstruction work in the earth quake-affected areas
but almost 90% projects overrunning the cost and schedule [7]. This study will establish the causes of cost
overrun and delays in construction projects in Pakistan by analyzing projects and expert opinions of different
departments along with recommendations to avoid these factors to timely complete the projects within allocated
budget. Avoiding the causes of cost overrun and delays identified in this study will result in more development
by doing more projects instead of expending more time and finances on same projects, more job opportunities
and no closure and bankruptcies on economic grounds by construction firms.

D. Research Design and Methodology

A logical research methodology has been adopted starting from exploring the background of subject,
thorough literature review, data collection tools preparation/validation, questionnaire design/validation, data
collection/validation, analysis of data collected, earned value analysis of ongoing construction projects and
finally making the recommendations and conclusions. The financial data of 65 construction projects of different
public and private organizations have been collected and it has been analysed on a check list of 25 factors of
cost overrun in the light of collected data, executer‟s experience and opinion of the executives in construction
field giving equal weightage to both the values of project data file and executive opinions. Minimum worth of
projects is Rs.30 million. Projects selected from the last 10 years period from 2000-2010. Severity impact
calculated on the scale of 1 to 10 giving score 1 to the least significant factors and a score of 10 to most
significant factors generating cost overrun in projects to rank the severity of factors ranging from mild (1-3),
moderate (>3-6) to severe (>6-10). The mean of two opinions has been taken as the number to rank the impact
of the factors from 1-25. Impact of each factor was calculated by simple calculation:
I = Σ (F)/N
Where I = Severity Impact of each factor,
F = Factor Severity,
N = Total number of projects
E. Research Questions
The study provided the answers of following questions:
 What is the status of world and Pakistani construction industry?
 What is cost and schedule creep/ overrun in construction projects?
 The historical examples of delay and cost overrun in the world;
 What are the causes/classification of delay and cost overrun in construction projects in Pakistan?
 What is the severity impact of causes of delay/cost overrun factors?
 What is the ranking of cost/time overrun factors based on their severity impact?
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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

 How can the early warning and monitoring of delay and cost overrun be carried out in construction
projects using earned value analysis?

II. LITERATURE REVIEW

A. World Construction Industry
The statistics of Economy Watch (2019) show World Construction Industry is around a US$15 trillion
industry and one of the mega growth sectors having more than 10% contribution to global GDP, 6-7% labor
employment, bulk consumer of energy and resources and 10-12 % emitter of greenhouse gases [8]. Pakistani
construction sector has displayed impressive growth of 9% in first decade of 2000 but reduced in second decade
due to economic crises. However, multibillion-dollar Chinese investment in CPEC and allocation of around Rs.
2000 Billion in Public Sector Development Projects by Pakistan Government and private sectors has given it a
zealous impetus. The statistics showing different aspects of construction industry of different countries of the
world are given in Table 2.1.

TABLE 2.1: World Construction Industry Statistics [9]

Construction Industry World USA UK INDIA CHINA PAKISTAN

Contribution to GDP %AGE 10 9 8 4.6 14 2.52

Growth rate % 9 6.5 6 8 11 9

$15 $825 £184 $60 $586 $7.5

Financial Allocation 2019-2020
Trillion billion billion Billion billion Billions

Workforce Employment % 7 6 4 16 11 6

Consumption of energy 40% - - - - -

B. Evolution of Construction Engineering

The construction industry has its starting evidence since 10000 BC in prehistory period and has passed through
Egyptian pyramids, Roman and Greek empires to modern construction and now it is passing in Nano
Technology age [10].

C. Global Competitiveness Statistics of Infrastructure Development

Construction industry has revolutionized the living standards, transportation means, irrigation systems,
water reservoirs, construction in sea; desert, underground, snowy arctic and in mountains. The introduction and
collaboration of science and technology with state of the art project planning/monitoring techniques, usage of
innovative structures, new materials, huge mechanization, revolution in electromagnet, information technology,
planning /monitoring/ designing software, monitoring techniques and dedicated/skillful control of construction
projects have changed the entire world for human beings only in the last few years. The infrastructure
development is considered to be the 2nd pillar in assessing the development of the countries of the world as
determined by World Economic Forum. The infrastructure development pillar is calculated on seven elements
mainly concerning with construction sector. The statistics showing comparison of different countries on
infrastructure development is shown in Table 2.2.

Table 2.2: Comparison of Infrastructure Development Competitive Statistics [11]

Competitiveness Element Pakistan Turkey UAE India China Japan USA
Quality of overall infrastructure 87 62 11 89 66 29 14

Competitiveness Pillars used to calculate

Pakistan Turkey UAE India China Japan USA
overall infrastructure

Quality of roads 65 48 7 89 50 42 11
Quality of railroad infrastructure 51 63 - 20 27 84 17

Quality of port infrastructure 73 78 7 90 61 52 13

Quality of air transport infrastructure 76 54 3 65 80 33 20
Available seat kilometers 48 24 11 10 2 62 1
Quality of electricity supply 124 84 16 106 61 35 17

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

D. Critical Success Factors in Construction Projects

A project life cycle comprises many milestones and critical factors especially affecting the critical path
environment and successful completion of projects. success than others. These factors can be termed as critical
success factors (CSFs). Rockart (1982) defined and is as those factors predicting success of projects some of
which have been shown in Table 2.3.

Table 2.3: Critical Success Factors in Construction Projects [14]

Project Success Factors
Timely Decision Swift Modifications
Expert Team Professional Monitoring
Efficient financing and budgeting Project Planning
Contractor experience Project life cycle Management
Customer Requirements Swift Decisions by Clients and Consultants

E. Project Management in Pakistan

The project management life cycle with specific reference to Pakistan is illustrated in Fig 2.2. It shows
that a project is perceived by Public sector and initial planning is done as the feasibility report/ project cycle PC
1&2. The project is then approved by competent authority and funds are released and monitoring mechanism is
constituted through a consultant who supervise the project till implementation of client requirements and
completion of project and also transform any modifications/ cost/ scope creep as PC3 progress report. After
completion of project final details of are summarized as PC4 project closure report having the actual figures on
the closure. Any modifications and financial/ scope modifications are evaluated and then presented as PC5
report and ex-post facto sanction of such modified effects are again given by the approving authority. All these
steps make part of a project management life cycle in Pakistan Public sector projects [15]:

Figure 2.2 Project Management Life Cycle [15]

F. Cost Overrun and Delays in Construction Projects

It has been observed that projects often lack in schedule, gain financial negativity and sometimes fully
collapse because of number of cost and time overrun factors [3]. These factors can be arisen by client/
consultant/ project manager or contractor [2]. Pakistan is also facing these issues in its major projects due to
political uncertainty, frequent changes in development/projects plans/policies, departmental
corruption/kickbacks, and fluctuation in prices of construction materials, late provision of construction
design/drawings, inappropriate cost estimation, additional works, improper planning, late of acquisition of
land/site, removal/relaying of existing/new services, social and religious impediments, non availability of labour
and materials, late payments and project financing, security and law & order issues, weather severity,
incompetent managers/consultants and unsupportive government policies etc. Cashflow can be termed as the
lifeline of a project and its overrun (increase between completion cost and initial cost) can be fatal outcome
hampering the successful completion [16]. According to one very comprehensive research made on cost
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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

overruns in global construction by Hackney and Humphries (2001), it was found that 90 percent of projects
suffered more than 50% cost creep in major projects in 5 continents in the last 7 decades. The Sydney Opera
House suffered by 14 times cost overrun and 10 years delay, the cost creep of Boston's Big Dig was 2.75 times
with about 12 years‟ time overrun. The Channel Tunnel project crept by 1.8 times the initial cost and
considerable double the delays [17]. The cost creeping in mega projects is not only impactive for the projects
but jeopardize the economic outlook of a country too [4]. The projects are combination of set of activities and
when one-activity experiences a delay due to a late start or late finish, the succeeding activities will also
experience a late start and cause the project extra time and money [18]. The delays in projects can be because of
internal issues of modifications in design/ scope by client, defected design by consultant or wrong/ delayed
execution by contractor or because of external issues like non removal of services, land acquisition, weather
conditions or force majeure etc. Some issues are critical and can have compensation by client in cost/ time or
vice versa [19]. Cash flow management is the responsibility of client and generally paid as 10-20 % advance as
mobilization, then interim bill payments followed by final bill and release of security after completion of
maintenance period. Any issue in cash flow will hamper the progress, suffer the delay and will result in
increased cost due to increase in overhead charges, labor and material cost [20].

G. Earned Value Analysis as Monitoring Tool for Running Projects

EVA is a project performance measurement technique developed by US Armed forces that integrates
scope, time and cost data. Earned Value Analysis compares the current project status with the original (baseline)
plan to know how well the project is going on. It computes several performance metrics for individual activities
and for the entire project. It focuses on cost and schedule performance. It‟s a useful tool for project control.
Earned value concept combines cost reporting & aggregate performance reporting into one comprehensive
chart. We can ascertain a project by using earned value analysis whether it is under-budget and ahead of
schedule, over-budget and ahead of schedule, on budget and ahead of schedule, under-budget and behind
schedule, over-budget and behind schedule, on budget and behind schedule. The graphical representation is
shown in figure 2.3 [21].

Figure 2.3: Graphical Representation of Outcomes of Earned Value Analysis [21]

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

H. Historical Examples of Cost and Time Overrun in Famous Projects of The World
Some of the famous construction projects of the world with huge cost overrun and delay are shown in Table 2.4.
These examples show that delays and cost overrun in construction projects is common all over the world both in
developed and developing countries.

Table 2.4: Famous Projects with Huge Cost/Time Overrun

Name of Project Cost Overrun Delay
Million (Years)
The Big Dig or Central Artery/Tunnel Project USA [22] $11000 12
The Sydney Opera House [23] $95 10
The Channel Tunnel [24] £ 2050 18
The Scottish Parliament Building [25] £374 3
The Olympic Stadium Canada [26] C$791 11
The Holland‟s Tunnel [27] SEK 9000 20
Denver International Airport [28] $2000 2
Eastern Span Replacement Of The San Francisco Oakland Bay Bridge [29] $4100 million 6
Ghazi Barotha Hydropower Project Pakistan [30] Rs 38000 6

III. RESULTS AND DISCUSSION

A. Data Collection
For the purpose of this research work, 65 constructions projects of different departments have been
selected executed by Frontier Works Organization FWO (A renowned construction organization of Pakistan).
Moreover, causes of cost/time overrun in each project have been documented based upon project execution
history and experience/opinion of project executers. Details of these projects basing on their nature of work and
cost are shown in figure 3.1. Basing on the data collected for 65 construction projects and discussion with the
projects executers, the checklist of 25 major factors has been established which has been used to get opinion of
65 executives concerned with construction projects in different construction organizations. The categories of
executives who were interviewed on predetermined causes of cost/time over runs in construction projects
comprise the client departments, executing/contractor‟s organizations and consultants including highways,
building and heavy engineering projects.

Projects Classification Total Projects

Closed Projects

Open Projects
70 65

60 Roads Projects

48
50 Infrastructure Development &
Building Projects (Private
38 Sector)
40
Number of Government Departments
Projects (Railway, WAPDA, Irrigation&
30 power, airports &Telecomm
23 Projects)
21 Projects Up to 100 Millions

20 17 15
12 12
9 Projects Up to 500 Millions
10

Projects Up to 1000 Millions

0
Number of Projects
Projects more than 1000
Millions

Figure 3.1: Detail/Classification of Projects for Analysis and Data Collection

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

B. Factors Causing Cost Overrun and Delay in Construction Projects in Pakistan and Their Impact
The financial data of 65 construction projects of different public and private organizations have been
collected and it has been analysed on a check list of 25 factors of cost overrun in the light of collected data,
executer‟s experience and opinion of the 65 executives in construction field giving equal weighting to both the
values of project data file and executive opinions. Severity impact calculated on the scale of 1 to 10 giving
score 1 to the least significant factors and a score of 10 to most significant factors generating cost overrun in
projects to rank the severity of factors ranging from mild (1-3), moderate (>3-6) to severe (>6-10). The mean of
two opinions has been taken as the number to rank the impact of the factors from 1-25. Ranking and impact
ranging of 25 factors of cost/time overrun in construction projects in Pakistan are given in Table 3.1 and in
Figure 3.2. The factor of “Inconsistent Cash Flow” is the top factor with impact value of 7.78 in severe category
and Weather Severity is the least factor with impact value of 3.40 in moderate category. Only three factors got
severity impact more than six to fall in severe category and the remaining factors lie in moderate impact
category.

Table 3.1: Ranking and Impact Ranging of Cost/Time Overrun Factors

Code Factors Causing Cost Overrun Mean Impact Impact Category Ranking
A Inconsistent Cash Flow 7.78 Severe 1
B Inappropriate Cost and Time Estimation 7.57 Severe 2
C Deficiencies In Project Planning 6.04 Severe 3
D Consultant/Monitoring Staff 5.94 Moderate 4
Additional Work Because Of Moderate
E 5.64 5
Design/Scope
F Late/ Incomplete Provision of Drawing 5.62 Moderate 6
Delay and increased cost in Land Moderate
G 5.54 7
Acquisition
H Improper Project Financing 5.53 Moderate 8
I Poor Financial Control 5.22 Moderate 9
J Fraud, Kickbacks, Corruption 5.21 Moderate 10
K Frequent Design Changes 5.06 Moderate 11
L Shifting Of Existing Services 5.05 Moderate 12
M Low Cost Bidding Mechanism 4.91 Moderate 13
N Inconsistent Government Policies 4.90 Moderate 14
Cost / Availability of Construction Moderate
O 4.45 15
Material
P Poor Project/ Site Monitoring 4.43 Moderate 16
Q Site Location/Remote Areas 4.30 Moderate 17
R Cost and Non-Availability of Labor 4.24 Moderate 18
Cost / Availability of Construction Moderate
S 4.23 19
Machinery
T Wastage on Site 4.12 Moderate 20
U Inappropriate Contracts 4.11 Moderate 21
Litigation with Client, contractors & Moderate
V 4.10 22
people
W Law & Order and Security Situation 3.84 Moderate 23
X Stealing on Site 3.44 Moderate 24
Y Weather Severity 3.40 Moderate 25

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

Ranking of Cost / Time Overrun Factors

9
Moderate Severe

7.78
7.57

6.04 5.94
6 5.64 5.62 5.54 5.53
5.22 5.21 5.06 5.05
4.91 4.9
4.45 4.43 4.3
4.24 4.23 4.12 4.11 4.1
3.84
3.44 3.4

3
Mild

0
A B C D E F G H I J K L M N O P Q R S T U V W X Y

Factors
Figure 3.2 Ranking/Impact Ranging of Factors Causing Delay and Cost Overrun

C. Classification of Major Factors Causing Cost Overrun and Delay

All the factors of cost overrun were classified into five major factors which are as under. Classification of major
factors and their ranking has been shown in Figure 3.3. Factors caused by financial impacts are on number 1 and
management/condition factors are on number 5 to cause cost/time overrun in construction projects in Pakistan.
 Factors of Cost Overrun in Planning Phase
Factors in this category are the ones which are considered in conception and development phase of projects.
 Factors of Cost Overrun in Execution Phase
Factors in this category are the ones which are considered in execution and termination phase of projects.
 Factors of Cost Overrun Due to Financial Aspects
These are the factors which are caused due to cash flow, financing of and financial control projects.
 Factors of Cost Overrun Due to Consultants/ Monitoring Staff
These are the factors caused by incompetency and inadequacy of consultant and monitoring staff during
execution of projects.
 Management and Conditions Factors of Cost Overrun
These are miscellaneous management and conditions factors which include wastage and embezzlement, remote
areas, law and order conditions, litigation and dispute resolution etc.

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

Comparison of Major Cost Overrun Fators

10.00
Impact Range
8.00
5.69 5.94 5.51
6.00 4.59
3.91
4.00
2.00
0.00

Factors of Cost/Time

Monitoring Staff
Factors of Cost and

Management/Condition
Factors in Planning

Factors Due to

Factors of Cost/Time
Consultants/
Time Overrun in
Execution Phase

Financial Aspects
Overrun Due to
Phase

Overrun
Factors in Planning Phase
Factors of Cost and Time Overrun in Execution Phase
Factors of Cost/Time Overrun Due to Financial Aspects
Factors Due to Consultants/ Monitoring Staff
Management/Condition Factors of Cost/Time Overrun

Figure 3.3 Comparisons, Classification and Severity Impact of Major Cost/Time Overrun Factors

D. Major Findings of Research

In this study a total of 65 projects have been considered comprising 48 completed and 17 running
projects, out of 65 projects 38 are roads projects (National Highway Authority), 12 infrastructure and
development projects (Private sector) and 15 projects of other government departments (Railway, WAPDA,
Structures, Irrigation/ Power, Airports &Telecomm Projects). Out of 65 projects only 7 projects have not
suffered from cost overrun thus showing that 90% of projects are suffering from cost variation including 48
projects over running cost and 15 projects under running cost. Only 2 projects have been completed on planned
schedule thus showing that 97% of projects are suffering from delay. Overall average cost overrun is 28.3%
with an average delay of 2.1 years per project. The highest cost overrun has been observed in projects of
Government departments (Railway, WAPDA, Structures, Irrigation/ Power, Airports &Telecomm Projects) i.e.
37.6% and highest delay per projects has been observed in roads projects @ 2.3 years per project. The lowest
cost overrun is 4.2% and minimum delay observed is 1.8 years in private sector. Out of 65 projects 12 projects
are of worth up to Rs.100 Millions, 23 projects of worth up to Rs.500 Millions, 9 projects of worth up to
Rs.1000 Millions and 21 projects are of worth more than Rs.1000 Millions. The highest cost overrun has been
observed in Projects up to 500 Million i.e. 35.7% and highest delay per project has been observed in projects
more than 1000 Millions i.e. 3 years per project. The lowest cost overrun was observed in projects less than
Rs.100 Millions i.e. 16% and least delay was observed in projects less than 500 million. Percentage Cost
overrun and delay statistics found from this study in 65 construction projects are shown in Table 3.2.

Table 3.2: Statistics of projects suffering Cost Overrun and Delay

%age of
%age Cost %age of projects %age
Projects Classification projects with
Overrun suffering from Delay Delay
cost overrun

Total Projects 28% 74% 97% 124%

Closed Projects 16% 73% 97% 124%

Open Projects 41% 77% 100% 135%

Roads Projects 28% 82% 97% 135%

Infrastructure Development & Building Projects

4% 58% 100% 95%
(Private Sector)

Government Departments (Railway, WAPDA,

38% 67% 93% 150%
Irrigation& power, airports &Telecomm Projects)

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

Projects Up to PKR 100 Million 16% 83% 92% 150%

Projects Up to PKR 500 Million 36% 78% 91% 88%

Projects Up to PKR 1000 Millions 19% 67% 100% 175%

Projects more than PKR 1000 Millions 29% 67% 100% 136%

E. Comparison/Trend of Cost Overrun and Delay in Construction Projects in Pakistan

The highest rate of projects suffering from cost overrun was observed in roads projects i.e. 82% and in
projects less than Rs. 100 million i.e. 83%. The highest cost overrun rate was observed in projects of
government departments i.e. 37.59% and in projects less than Rs. 500 million i.e. 35.67% as shown in figure
3.4. Generally, more than 90% projects suffered from delay. The highest delay was observed in projects of
government departments i.e. 150% and in projects up to Rs. 1000 million i.e. 175% as shown in Figure 3.5.

Cost Overrun Trend in Construction Projects in Pakistan

82% 83%
90% 74% 73% 77% 78%
75% 67% 67% 67%
58%
60%
%age

40.64% 37.59%
45% 35.67%
28.27% 27.80% 28.60%
30% 15.97% 16.00% 19.27%
15% 4.20%
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%age Cost Overrun %age of projects with cost overrun

Figure 3.4 Comparison of Cost Overrun in Construction Projects in Pakistan

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

Delay Trend in Construction Projects in Pakistan

210% 175%
180% 150% 150%
150% 124% 124% 135% 135% 95% 88% 136%
%age

120% 97% 93% 92%

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Projects Classification

%age of projects suffering from Delay %age Delay

Figure 3.5 Comparison/Trend of Delay in Construction Projects in Pakistan

F. Monitoring of Construction Projects Using Earned Value Analysis

The earned value analysis is used to keep the record of project cost and time performance and can be used as a
warning system to warn about the coat overrun and delay in the projects. It compares the current project status
with the original (baseline) plan to know how well the project is progressing. Followings are the terms and
formulas used in earned value analysis: - [21]
 ACWP = (Actual cost of work performed)
 BCWP (Budgeted cost of work performed)
 BCWS (Budgeted cost of work scheduled)
 STWP (scheduled time of work performed)
 ATWP (Actual time of work performed)
 CV (cost variance) CV = BCWP – ACWP (negative value means cost overrun)
 SV (schedule variance) SV = BCWP – BCWS (negative value means behind schedule)
 TV (Time variance) TV = STWP – ATWP (negative value means delay)
 BAC (Budgeted cost at completion) = Total cost of project
 CPI Cost Performance Index (CPI) = BCWP/ACWP
 SPI Schedule Performance Index (SPI) = BCWP/BCWS
 TPI Time Performance Index (TPI) = STWP/ATWP
 A CPI / SPI / TPI that is less than 1 or 100 percent indicate problems
 ETC Estimated (remaining cost) To Completion = (BAC – BCWP) / CPI
 EAC Estimated (Total Cost) At Completion EAC = ETC + ACWP

Earned value analysis of 17 projects out of 65 projects considered for this study, has been carried out
using the above-mentioned formulas and data collected for the projects. The analysis showed that 10 out of 17
projects have positive cost variance or CPI more than one thus showing that these projects have not exceeded
the prescribed cost of work done as compared to the budgeted cost. All 17 projects are suffering from time
overrun and they are behind schedule in terms of time and scheduled cost of work done as values of schedule
and time variance are negative or values of schedule performance index and time performance index are less
than one. All 17 projects will be suffering from cost overrun at the time of completion as the estimated cost to

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

completion ETC and estimated cost at completion EAC are more than the original cost of projects as shown in
table 3.3. This analysis showed that all the running projects will be suffering from delay and cost overrun due to
present political conditions and mainly due to financial crises/poor cash flow conditions in Pakistan.

Table 3.3 Earned Value Analyses of Ongoing Projects

Proj
ACWP BCWP BCWS STWP ATWP CV SV TV BAC CPI SPI TPI ETC EAC
Code

- -
Can1 189.39 129.72 6657.2 2.00 3.00 -59.68 6657.21 0.68 0.02 0.67 9530.66 9720.05
6527.5 1.00

- -
Rd1 468.15 422.12 1331.0 1.25 3.25 -46.03 1331.02 0.90 0.32 0.38 1008.02 1476.17
908.90 2.00

- -
Rd2 439.93 363.96 779.59 1.00 2.00 -75.97 779.59 0.83 0.47 0.50 502.38 942.31
415.62 1.00

-
Rd3 1335.0 1267.5 1297.0 2.00 6.00 -67.50 -29.50 1297.00 0.95 0.98 0.33 31.07 1366.07
4.00

-
Grd 362.33 310.50 374.84 2.00 5.00 -51.83 -64.34 374.84 0.86 0.83 0.40 75.08 437.41
3.00

- -
Rly 303.00 388.69 530.25 1.00 3.00 85.69 530.25 1.28 0.73 0.33 110.35 413.35
141.56 2.00

- -
Rd4 754.40 790.00 1157.4 1.50 5.00 35.60 1157.41 1.05 0.68 0.30 350.85 1105.25
367.41 3.50

- -
Rd5 1096.0 1102.0 2777.0 1.00 2.00 6.00 2777.00 1.01 0.40 0.50 1665.88 2761.88
1675.0 1.00

- -
Rd6 111.00 128.83 262.00 0.75 1.75 17.83 262.00 1.16 0.49 0.43 114.74 225.74
133.17 1.00

- -
Rd7 175.23 156.00 753.00 1.50 3.00 -19.23 753.00 0.89 0.21 0.50 670.59 845.82
597.00 1.50

- -
Rd8 358.00 254.00 3000.0 1.25 4.00 -104.0 3000.00 0.71 0.08 0.31 3870.35 4228.35
2746.0 2.75

- -
Rd9 873.23 876.24 1166.3 1.50 3.00 3.02 1166.36 1.00 0.75 0.50 289.12 1162.35
290.12 1.50

- -
Rd10 7000.0 7187.0 8234.3 2.50 8.50 187.00 8234.32 1.03 0.87 0.29 1020.07 8020.07
1047.3 6.00

- -
Can2 8950.7 9039.2 16794 4.00 9.00 88.52 16794.30 1.01 0.54 0.44 7679.16 16629.8
7755.1 5.00

- -
Airp 79.00 79.50 680.00 1.00 1.25 0.50 680.00 1.01 0.12 0.80 596.72 675.72
600.50 0.25

- -
Rd11 1433.4 1438.5 2269.7 3.00 4.00 5.17 2269.74 1.00 0.63 0.75 828.20 2261.59
831.19 1.00

-
Rd12 862.07 916.68 921.72 2.00 3.50 54.61 -5.04 921.72 1.06 0.99 0.57 4.74 866.81
1.50

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 Causes and Monitoring of Delays and Cost Overrun in Construction Projects in Pakistan

IV. CONCLUSION
A study of world construction industry was carried out taking into consideration some of the historical projects
and 65 projects of different departments in Pakistan to assess the causes of cost overrun and delays in
construction projects. The main conclusions are summarized below:
1. World Construction Industry is a major sector where cost overrun and delay occur in most of the
projects and badly impacts the world economy especially in developing countries.
2. Factors caused by financial reasons are on number 1 and management/condition factors are on number
5 to cause cost/time overrun in construction projects in Pakistan. The factor of “Inconsistent Cash Flow” is the
top factor with impact value of 7.8 in severe category and Weather Severity is the least factor with impact value
of 3.4 in moderate category. Only three factors got severity impact more than six to fall in severe category and
remaining factors lie in moderate impact category.
3. Out of 65 projects considered in this study, 90% of projects are suffering from cost variation. Only 2
projects have been completed on planned schedule thus showing that 97% of projects are suffering from delay.
Overall average cost overrun is 28.3% with an average delay of 2.1 years per project.
4. The highest cost overrun has been observed in projects of Government departments i.e. 37.59% and
highest delay per projects has been observed in roads projects @ 2.3 years per project.
5. The lowest cost overrun i.e. 4.2% and least delay i.e. 1.8 years were observed in private sector.
6. The highest cost overrun has been observed in Projects up to 500 Million i.e. 35.7% and highest delay
per project has been observed in projects more than 1000 Million i.e. 3 years per project.
7. lack of management techniques and timely decision-making lead to a creeping project, therefore, a
competent project management team with swift support from client and consultant throughout the project life
cycle is the key to success.
8. The highest cost overrun has been observed in projects of government departments; therefore,
government departments need incorporation of better project management practices free from political
influences and financial malpractices.
9. Performance of private sector in construction industry is found better but need implementation of better
project management for better results.
10. The highest cost overrun has been observed in Projects up to 500 Million i.e. 35.7% and highest delay
per project has been observed in projects more than 1000 Millions i.e. 3 years per project. Therefore, a good
supervision by a competent management team is even more essential for larger projects.
11. The earned value analysis can show the cost/ time status of running projects and may be employed by
project managers as an essential monitoring tool to timely assess any delay and cost overrun due to poor cash
flow or any other factor.

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