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Modelling Of Cost Overruns In Building Projects
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CHAPTER ONE
INTRODUCTION
Globally, the construction sector is inundated with cost overruns in the delivery of building projects. This experience has brought about loss of clients’ confidence in consultants, added investment risks, lack of ability to deliver value to clients, and disinvestment in the construction industry (Mbachu and Nkado, 2004).It is of essence that the objectives of a building contract are met to the contentment of the parties involved. Cost, time and quality are significant, interrelated and interdependent targets for achieving the objectives/goals expected of building contracts (Ashworth, 1999, Gould, 2002). Thus, it is crucial to keep up a proper balance between the three so that project outputs are realised on time, within the financial plan and with the requisite quality (Akinsola and Potts, 1998). However, it is an admitted fact that in Nigeria, the majority of contracts suffer undue time extensions and /or additional cost to the client and /or inadequate quality of work (Oluwole, 2008b).
Project cost overruns can be either avoidable or unavoidable. Overruns due to design plan or project management problems are avoidable because they could have reasonably been foreseen and prevented (Shanmugam et al., 2006). However, there are some unavoidable costs such as those due to unanticipated events which cannot reasonably be prevented. Cost overruns may add value to projects when extra work is done with the intention of producing a better output. Overruns may also add value when they involve work that was omitted from design plans but clearly needed to be done. However, some overruns may not add value and represent wasted money if they do not result in a better product.
Cost overrun of a project refers to the actual ‘cost increase’ to the client during construction of a building project (Janaka, 1992). It is merely the difference between the value originally envisaged for the project and the value reflected in the final certificate. Cost overruns occur from overspending the allowances, making changes and encountering unforeseen problems. Proper planning can greatly reduce cost overruns.
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ABSRACT - [ Total Page(s): 1 ]Construction of building projects is an endeavour that involves capital expenditure, which is either borrowed or self-financed by clients. The expected outcome of such expenditure is value for money, which is usually dictated by project objectives of cost, time and quality. Project cost, as a project objective, is a crucial determinant of project success in the prevailing economic challenges being experienced globally. Construction cost overrun has become a reoccurring phenomenon in the delivery ... Continue reading---
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ABSRACT - [ Total Page(s): 1 ]Construction of building projects is an endeavour that involves capital expenditure, which is either borrowed or self-financed by clients. The expected outcome of such expenditure is value for money, which is usually dictated by project objectives of cost, time and quality. Project cost, as a project objective, is a crucial determinant of project success in the prevailing economic challenges being experienced globally. Construction cost overrun has become a reoccurring phenomenon in the delivery ... Continue reading---
CHAPTER ONE -- [Total Page(s) 1]
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CHAPTER ONE -- [Total Page(s) 1]
Page 1 of 1