In (2006), it was reported that a minimum average

today’s construction industry, cost overrun is a very common phenomenon
worldwide. The problem of cost overrun is critical and needs to be studied more
to improve the issue (Angelo and Reina, 2002). In a study conducted by Omoregie
and Radford (2006), it was reported that a minimum average of cost escalation
in construction projects in Nigeria is 14% every year. Cost overruns in
building construction projects can occur due to various causes, and a number of
researchers have investigated the various causes of cost overruns. For
instance, Ameh et al., (2010) in his study investigating 42 cost overrun cases,
found that lack of experience of contractors, cost of material, fluctuation in
the prices of material, frequent design changes, economic stability, high
interest rates charged by banks on loans and mode of financing, bonds and
payments as well as fraudulent practices and kickbacks were dominant factors
causing cost overruns in Nigeria. Doloi (2011) found out in his work that
factors causing cost overruns in construction projects in Nigeria were
increment of materials prices, delay in supply of raw materials and equipment
by contractors, fluctuations in the cost of building materials, unsettlement of
the local currency in relation to dollar value, project materials monopoly by
some suppliers, resources constraint of funds and associated auxiliaries, not
being ready, lack of cost planning/monitoring during pre-and post-contract
stages, improvements to standard drawings during construction stage, design
changes and inaccurate quantity take-off. The problem of cost overruns is not
only a Nigerian thing. It is a problem worldwide for example, Le-Hoai et al.
(2008) found out that poor site management and supervision, poor project
management assistance, financial difficulties of owner, financial difficulties
of contractor, design changes were most severe and common causes of cost
overrun in Vietnamese construction industry. Also, Memon et al. (2010)
investigated large projects in Malaysia and found out that cash flow and
financial difficulties faced by contractors, contractor’s poor site management
and supervision, inadequate contractor experience, shortage of site workers,
incorrect planning and scheduling by contractors were most severe factors that
cause cost overruns, while changes in scope of project and frequent design
changes were least affecting factors on construction cost. Koushki et al.
(2005) studied private residential projects in Kuwait and concluded that
contractor related issues, material related problems and financial constraints
were major reasons of cost overruns.



is one of the primary measures of a project’s success. This is true, especially
for public projects in developing countries like Nigeria, because public
construction projects in these countries are executed with scarce financial
resources. Most literature review on construction projects suggested that the
common criteria for project success are generally considered to be cost, time
and quality Frimpong et al, (2003). A project is deemed successful if it was
completed on budget, on schedule, conformed to user expectations, met
specifications, attained quality of workmanship and minimized construction
aggravation Olawale et al., (2010). Generally, a project is considered
successful in Nigeria if the project is completed within a stated cost or
budget, getting the project into use by a target date, meets the technical
specification, and if there is a high level of satisfaction concerning the
project outcome among the project participants. In Nigeria, the present state
of the construction industry falls short of meeting domestic and international
quality standards and the performance demand expected from the sector. Construction
projects especially building projects, have problems with construction
techniques and management as well as limitations of funds and time. The
critical problems are inability to complete the projects on schedule, low
quality work and cost overruns.. In general, most (if not all), construction
projects experience time overrun and cost overruns during their execution
phase. An examination of the records of more than four thousand construction
projects by Morris et al, (1990), showed that projects were rarely finished on
time or within their allocated budgets in Nigeria.

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