Investigation of Construction Cost Overrun Issues and Management: Evidence from a Public University in Ghana

Philip Kofi Asiwome Segbedzi
Directorate of Physical Development and Estate Management, University of Cape Coast, Cape Coast, Ghana

DOI: https://doi.org/10.51584/IJRIAS.2023.8708

Received: 09 June 2023; Accepted: 30 June 2023; Published: 31 July 2023

Abstract: This study investigated the issues and management of construction cost overruns in a public university in Ghana. Specifically, the study answered the following research questions: (1) What types of project experience construction cost overrun? (2) What are the causes of project construction cost overruns? (3) How are project construction cost overruns managed? The study used the qualitative research approach. Documentary reviews and participant observation were the research methods employed for the data collection. The study showed that all types of construction project irrespective of the source of funding (i.e., internally generated funded, Ghana Education Trust Funded and externally funded project) experienced cost overruns. Also, it was established that contractors, location of the project, project consultants and funders were responsible for construction cost overrun in the university. In terms of the management of projects with cost overrun, they were based on the circumstances surrounding each project. The study recommends that due diligence should be done before awarding construction project contracts to avoid contractual stalemates in the future. Also, the income statement of contractors should be thoroughly analyzed to ensure they are not concurrently executing numerous projects and have the financial capacity to execute the project. Other resources like human resources and machinery should also be thoroughly analyzed to ensure their adequacy. Additionally, project consultants should ensure that their roles in projects that have been awarded for construction are effectively and efficiently carried out.

Keywords: physical development; construction project; cost overrun; project management; budgeting

I. Introduction

Construction is the process of building an infrastructure. It involves the collaboration of many different disciplines, including project management, sustainability, risk management, engineering, and management of the architectural design (Alshihri et al., 2022). All countries place a great deal of importance on the construction sector since it is responsible for building the foundation for many of the key social and economic changes that take place in these nations (Asiedu & Adaku, 2019; Enshassi et al., 2009). Ghana’s overall industrial development is significantly aided by the construction industry (Famiyeh et al., 2017). Notably, the sector is frequently vulnerable to a variety of risks, including changes in the scope of the project, financial difficulty and cash flow issues, unstable ground conditions, and labour and material shortages with associated costs and timeline implications (Asiedu & Adaku, 2019).

Targets and uncertainty are a burden on all projects, regardless of size, as a result of the growing complexity of construction projects. The complexity of construction projects is rising, placing more pressure on construction managers to complete projects on time, under budget, and to a high standard. Cost overruns are a persistent issue that most nations’ building industries must contend with (Vaardini et al., 2016). Cost is one of the key indicators of a project’s success, therefore this is worrying (Olupitan et al., 2021). The centrality of cost to a project’s success is echoed by Asiedu and Adaku (2019). According to them, the cost criterion has featured prominently in most definitions of project management performance, particularly success. They add that although other variables have been added to the definition of project success, the cost aspect still plays a crucial role. It is important to note that project time overruns go hand in hand with cost overruns as projects that exceed their timelines almost always experience cost overruns.