טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
M.Sc Thesis
M.Sc StudentShabtay Iuclea
SubjectInitial Root Causes Analysis of Cost Overruns
in Construction
DepartmentDepartment of Civil and Environmental Engineering
Supervisor Professor Rosenfeld Yehiel
Full Thesis text - in Hebrew Full thesis text - Hebrew Version


Abstract

The primary purpose of this study was to identify the main root causes for cost overruns in building and infrastructure projects, using tools from the Total Quality Management (TQM) domain. Treating root causes, contrary to treating symptoms, is crucial for effective problem solving. Drawing the attention of owners and project managers to the root causes of construction overruns can reduce the extent of the phenomenon. The secondary purpose, due to the absence of sufficient previous research on the subject, was to attain some numeric rates of the overruns.

Similar to the purposes, the research method is also divided into two main stages: First - Analysis of the current state - by sampling 50 completed construction projects, using face-to-face structured interviews to get an initial grasp of the phenomenon’s scope. Second - Root Cause Analysis, using the principles of the ASQ (American Society for Quality). The methodology is based on the ‘Expand-Focus’ principle, which in systematic use promises to treat the broad problem. It included: 1. conducting a workshop with prominent experts in construction. 2. Building a data-base of possible causes by merging the compilation of the literature survey  with the findings of the local workshop. 3. Refining the merged data-base into a small number of root causes. 4. Leading a wide survey among 200 engineers of relevant backgrounds, in order to pin-point the most significant individual causes for construction overruns.

The comprehensive width survey offered 15 causes from the merged data-base, from which three prominent root causes were identified, in the following order of significance:

1.      Premature tender documents.

2.      Too many changes in owners requirements or definitions.

3.      Tender win-prices are unrealistically low (‘suicide tendering’).


Additional conclusions found by the research:

        Designers recognize that the level of their product is responsible, to some extent, for construction overruns. However, they blame the low wages they receive, which doesn’t allow them to raise their output to a higher level.

        The owner’s point of view, in the matter of claims-causes, is significantly different from any of the other construction professionals’ points of view.

        In infrastructure projects ‘unexpected ground conditions’ is a substantial, high impact cause for construction claims.