ANALYIS OF DELAYS AND COST OVERRUN IN CONSTRUCTION PROJECTS IN PAKISTAN

Abstract

World Construction Industry is one of the most booming industries in the world. It contributes 10% of the global GDP to the tune of $4.6 Trillions. It employs almost 7% of the total employed persons and, consumes around 40% of the total energy. The Pakistani construction sector has displayed impressive growth of 9%. The industry is forecasted to reach PKR 420.33bn (US$6.04bn) by 2012 with 2.52% contribution to GDP over a period of two years. Cost overrun and delay are very frequent phenomenon and is generally associated with nearly all projects in the world especially in developing countries. Generally 71 percent of construction projects suffer from cost/time overrun in the world with an average cost overrun of 43%. The ranking of 25 factors causing cost overrun and delay in construction projects considered in this study was 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. 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 48 i.e. 74% projects over running cost and 10 i.e. 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. Planning before the finalization of projects and before execution is essential by client, consultant and contractor to avoid any unforeseen and changes/additions in design and scope. All efforts should be made to acquire land and resources before commencement and qualified staff should be employed by all client, consultant and contractor organization avoiding all kind of fraud, corruption, kick backs and contract rigging by incorporating fair approach for fair work for a fair completion overrun in construction projects in Pakistan.