International Journal of Civil Engineering and Technology (IJCIET)

Volume 11, Issue 1, January 2020, pp. 105-111, Article ID: IJCIET_11_01_011
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ISSN Print: 0976-6308 and ISSN Online: 0976-6316
© IAEME Publication

FACTORS EFFECTING THE COST

MANAGEMENT IN CONSTRUCTION
PROJECTS
A M Faten Albtoush, S I Doh, Abdul Rahimi Bin Abdul Rahman
Faculty of Civil Engineering & Earth Resources, Universiti Malaysia Pahang,
26300 Gambang, Pahang, Malaysia

Ja'far A.Aldiabat Albtoush

Jerash Uneversity, Jerash, Jordan, Irbid International Street
Jerash, 26150, Jordan

ABSTRACT
Cost management is an important stage in construction project life cycle,
construction projects need cost management in the first stage to finish the project
within required cost, time and quality, it's considered as the most factors affecting in
the success of construction projects in all developing and developed countries. Many
researchers focused to studying the factors affected in cost performance in
construction projects in different countries, because cost is an important attribute in
construction projects. The project considered as success project when it finished
within limited cost and time with required quality, the three items (cost, time and
quality) depend on each other, any change in one of them affects the other, whether
the effect was positive or negative, the main item of them is cost, so this encourage
many researchers to study the factors affected in cost management. This research is
carried out to highlight the information on the factors that affected in cost
management during the life cycle on construction project, the data collected through
41 reviews focused in studying factors affected in cost performance of construction
project. In this research it is to be found different factors in different countries and
different projects, the most important factors found through literature review are:
design changes, poor management in the site, delay in progress payment by owner,
fluctuation in material price.
Keywords: cost management, construction project, success project.
Cite this Article: A M Faten Albtoush, S I Doh, Abdul Rahimi Bin Abdul Rahman
and Ja'far A.Aldiabat Albtoush, Factors Effecting the Cost Management in
Construction Projects. International Journal of Civil Engineering and Technology
11(1), 2020, 105-111.
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 Factors Effecting the Cost Management in Construction Projects

1. INTRODUCTION
Construction sector is an important sector in developed and developing countries and affects
other sectors in direct and indirect ways. Therefore, special attention should be given to
control and manage it wisely particularly in the aspect of cost management. Cost management
is one of the important factors determining project complete successfully within limited time
with reasonable profit. Cost management can be defined as a strategic process that stresses the
optimization of efficiency and focuses on the customer and on profitability, it is “a
philosophy”, “an attitude” and “a set of techniques” to create more value at lower cost, that
consisting of six steps including: Understanding of what causes the cost and revenue
structure of the business, Understand and reduce inter-functional complexity, Provide the
tools to manage costs, Involve employees in decisions, Increase effectiveness and
continuously improve costs, Measure decisions against the strategic business plan [1, 2].
Burke et al [3] suggested that there are two types of construction cost: Direct cost as
material, labour and equipment, Indirect cost as general overhead and job overhead, these
costs need to be controlled and managed. Halepota [4] recommended eight techniques in
construction projects, namely: budget planning and control, estimating, budgeting, cash flow
forecasting, financial reporting and cost reporting, cost code systems, value management and
judgement.
Cost planning should be applied in order to reduce problems through the life cycle of
construction projects, the six overall cost planning advantages proposed by Ashworth &
Perera [5] are as the follows: 1) the tender amount is more likely to match the approved
budget estimate, 2) there is less possibility of addendum in bills of quantities or re-costing
being required, 3) it is more likely to achieve cost-effectiveness and value for money design,
4) a more rational design is likely to result in a balanced distribution of expenditure, 5) the
amount of pre-tender analysis by the architect and quantity surveyor should make it possible
to take more decisions earlier, resulting in a smoother running of the project on site, 6) a
sound basis for comparing different projects is cost planning.
The aim of this research is to review the past literatures that studied factors influencing the
cost performance in construction projects, to highlight the information on the factors that
affected in cost management during the life cycle on construction project, in order to
encourage other researchers to study these factors in other way to reduce its problems in the
future

2. PROBLEMS OF COST MANAGEMENT

Construction projects are a huge sector in all countries, because it involved different types of
works which need various materials, experiences, equipment, techniques and specializations.
These need to be managed and plane, so cost management is important in the construction
projects. Many researchers study the cost performance in different stages through the life
cycle of construction projects, Life cycle costing as an important contribution to feasibility
study in construction projects [6], a decision-making scheme for the investors, allowing
evaluation of not only investment costs, but also of life cycle savings and benefits is crucial,
thus shifting the objective from decision-making based only on the construction costs towards
life cycle costs [7]. Cost overrun is a major problem in project development and is a regular
feature in construction industry [8], one of the reasons of cost overruns in construction
projects is rework. The cost impact value represents the cost effect of rework, if it happens,
and consists of two parts. The first part is the total daily rate of successor activity, which
includes daily salaries and daily overheads. The second part is related to any other costs (other
than the daily rate of successor activity) [9]. There are many problems impact in cost overrun
as determined by various studies, for example Ahmed et al [10] stated that minor delays are

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 A M Faten Albtoush, S I Doh, Abdul Rahimi Bin Abdul Rahman and Ja'far A.Aldiabat Albtoush

often neglected because they develop slowly during the construction process, but their
cumulative effect impacts the project financially. Another studies concluded that insufficient
basic project data and a delay in the process of preparing, submitting and approving shop
drawings could adversely affect the schedule and cost performance of project [11, 12,
13].According to Sriprasert [14] inefficient construction management and poorly established
cost control systems cause cost overruns. Koushki et al [15] revealed that material-related
issues contribute to cost overrun. In addition to that, a project might be face different
problems because of inaccurate, incomplete or untimely information [16].

3. FACTORS AFFECTING IN COST MANAGEMENT

Cost management is one of the fundamental criteria of success in construction projects, thus it
should be managed and control along the lifecycle of the project, the study focused on
evaluation of cost management practices in large construction project in south Malaysia, the
results indicated the most effective cost management techniques were: Cash Flow
Forecasting, Tender Budgeting/Estimating and Elemental Cost Plan [17]. The most important
factors that affected in cost management of construction projects in South-western Nigeria
were: poor leadership and inappropriate management, inefficient deployment of resources,
excessive wastage of materials on sites, complex payment mechanisms, theft of materials on
sites and variation during construction works [18].
Iyer & Jha [19] indicated the success and failure factors from literature review to found
the factors affecting cost performance of Indian construction projects, the results of
questionnaire survey concluded that the Critical success factors obtained by the analyses
were: project managers competence; top management support; project managers coordinating
and leadership skill; monitoring and feedback by the participants; coordination among project
participants; and owners’ competence and favourable climatic condition, on the hand , the
factors affecting the cost performances of projects, were: conflict among project participants;
ignorance and lack of knowledge; presence of poor project specific attributes and non-
existence of cooperation; hostile socio economic and climatic condition; reluctance in timely
decision; aggressive competition at tender stage; and short bid preparation time.
Cost estimation is an important stage in the cost management of construction projects as
mentioned by Hatamleh et al [20], to estimate the cost of construction project there is an
important element should be considered as: Comprehensive information, expanded
knowledge, considerable expertise, and continuous improvement to have accurate estimation,
this study identified the factors that affected in cost estimation to increase accuracy in cost
estimation of projects, the most important factors that affecting the accuracy in cost
estimation were: clear and detail drawings and specification, pricing experience of
construction projects, perception of estimation importance, equipment (cost/availability/
performance), project complexity, clear scope definition, accuracy and reliability of cost
information, site constraints (access, storage, services), material availability, financial
capabilities of the client, and availability of database of bids on similar project (historical
data).
The study of Sinesilassie et al [21] aimed to indicate and evaluate the factors affected in
success of cost performance in Ethiopian public construction projects, the research method
followed the steps below: Identification of attributes affecting project, Performance,
Development of questionnaire, Selection of respondents, Data analysis method, the results
emerged seven success and six failure factors which affected in cost performance of Ethiopian
public construction projects.

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 Factors Effecting the Cost Management in Construction Projects

These factors were:

Success factors: Project manager’s competence, Scope clarity, Owner’s competency,
Monitoring and feedback, Coordination and communication among project Participants, Top
management support, Quality control and assurance.
Failure factors: Conflict among project participants, Project specific factor, Indecisiveness of
project participant, Project manager’s ignorance and lack of knowledge, Socio-economic and
climatic condition, Owner’s incompetence.
The key factors affecting construction performances are: 1) Time, 2) Cost, 3) Quality, 4)
Safety & Health, 5) Internal Stakeholder, 6) External Stakeholder, 7) Client Satisfaction, 8)
Financial Performance, 9) Environment, and 10) Information, Technology & Innovation.
Which indicated through developed a multidimensional performance evaluation framework
for a construction company [22].

Figure 1 Main Factors of Cost Management in Different Countries

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 A M Faten Albtoush, S I Doh, Abdul Rahimi Bin Abdul Rahman and Ja'far A.Aldiabat Albtoush

Cost overrun is observed as the most frequently problem found in construction projects
which impact in the cost management of projects in different countries, this agreed with
Shehu et al [23] stated that, the majority of construction projects in Malaysia suffering from
cost overrun, for example In Afghanistan construction cost overrun, Niazi [24] was reviewed
through studying literature review, sixty-nine causes of project cost overruns classified in
three Categories, these causes were initiated by: Client, Contractor, Consultant, the most
important factors were: corruption, delay in progress payments by clients, difficulties in
financing project by contractors, security, and change order by clients during construction
phase. India have little studies in cost overrun of construction projects according to Wanjari &
Dobariya [25], revealed in its study that cost overrun in India have little studies, the
researcher indicated 15 factors to be ranked through a questionnaire survey distributed to
construction professionals across India (northern region, southern region, western region,
eastern region and central regions) and only three factors indicated as a most important in
causing cost overrun of the construction projects in India, which are: price escalation of raw
material, delay in planned activity and lack of co-ordination between construction parties. In
order to reduce the impact of these factors on cost overruns, the framework of each factor is
suggested.
The main factors of cost overrun in construction projects in the Gaza Strip are: price
fluctuations of construction materials, contractor delays in material and equipment delivery,
and inflation, while the importance factors of delay were as follow: strikes and border
closures, material-related factors, lack of materials in markets, and delays in materials
delivery to the site [26].
The findings of the study revealed the different factors affecting in cost management in
construction projects which found in literature review of different researchers in different
countries as in the following chart, indicate the most important factors affected in cost
management in different countries.

4. CONCLUSION
Cost is one of the important key factors affected of construction performance, its need to
manage and control along a life cycle of construction project. So cost management is
important in construction project to ensure the success of project, the most factors affected in
cost management that indicated through literature review in this study are: Poor scope
definition, Inaccurate activity cost estimate, Poor work breakdown structure definition,
Change in schedule, Unrealistic time schedule imposed in contract, Ineffective frequency of
project budget updates, Lack of proper training and experience of project manager, Not
implementing project management tools like primavera and other management software’s.
The majority of construction project in different countries suffered from cost overrun, cost
management reduce it and help the project managers to achieve the success in their projects,
so this study encourage the engineers and other parts interested in construction projects to
implement the cost management actively. Various studies can be done in the future with
different to indicate other factors or to do deep studies for the same factors, to help the stock
holders in construction project to understand the cost management and how to apply it along
the life cycle of project.

ACKNOWLEDGMENTS
This research is supported by Universiti Malaysia Pahang (Grant No PGRS190316)

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 Factors Effecting the Cost Management in Construction Projects

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