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CAUSES AND EFFECTS OF COST OVERRUN ON CONSTRUCTION PROJECTS IN NIGERIA
Abstract – Many projects experience cost overrun and there for exceed initial contract amount. In Madhya Pradesh, the number of construction projects is increasing from time to time. However, it becomes difficult to complete projects in the allocated cost and time. Taking into account the scarce financial resources of the country, cost overrun is one of the major problems in Madhya Pradesh. Therefore, this research was carried out to dig-out information on the factors that cause cost overrun during construction and their effects on construction projects in Madhya Pradesh. Questionnaire survey together with desk study was used to collect data on cost overrun. A total of 27 questionnaires from clients, consultants and contractors were collected and a desk study of 34 completed public building construction projects in Nigeriawere investigated and analyzed using both descriptive and inferential statistics. From these results it was found that 44 out of 15 public building construction projects suffered cost overrun. The rate of cost overrun ranges from a minimum of 0% to the maximum of 120% of the contract amount for individual projects. In this research it was found that the rate of cost overrun decreases with the increase in contract amount. The case of time and cost overruns in any sort of projects is a long standing one. However, reviewing the existing literature reveals that most of the projects in developing countries often encounter problems with delays and cost overruns. While a significant number of transportation projects in Nigeriaexperience several puzzles with delays in completion and cost overruns, there hardly exist any of investigations on these major concerns. The purpose of this study is to identify this is important causes of cost and schedule overruns in transportation sector projects of Nigeriaand to suggest possible solutions for reducing such overruns. The most common effects of cost overrun identified by this research were delay, and supplementary agreement or adversarial relations among stakeholders, and budget shortfall of project owners. It is so hoped that these findings will guide efforts to improve the performance of the construction industry in the future.
Key words – cost overrun, cause, effect, rate, public buildings.