ASSESS THE CAUSE OF COST OVERRUN IN ROAD CONSTRUCTION PROJECTS IN THE CASE OF SOUTH ROADS AUTHORITY HOSANNA DISTRICT

Abstract

In Ethiopian, under a government regulatory body, i.e. South Roads Authority, number of road construction projects is increasing from time to time. However, it becomes difficult to complete projects in the allocated budget. Cost overrun is one of the major problems of road construction projects undertook by South Roads Authority. This project was carried out to assess and rank the severity of major factors that cause cost overrun during construction projects in the Corporation. Questionnaire surveys together with desk study were used to collect data on time and cost overrun. The south roads authority have a total of above 1000 workers in all 12 district and head office level in addition to over 100 workers from south nation nationality people representatives transport bureau I have selected only 75 respondents which means 23 from client, 27 from contractor and 25 from consultant by using stratified random sampling technique. A total of 67 valid responses comprising 21 clients, 26 contractors and 20 consultants were collected and a desk study of 6 completed road construction projects in South Roads Authority Hossana district were investigated. The data was subjected to descriptive statistical analysis and subsequently mean scores were determined to rank factors level of severity. From the study it was found that all of road construction projects finished with severe cost overrun. The rate of cost overrun ranges from minimum of 8.26% to the maximum of 23.55% for individual projects of the work executed and certified amount. The study identified 20 causes of cost overrun for the case of South Roads Authority. The most important causes of cost overrun were found to be Inflation of construction material price with weighted average mean score of 3.97, Delay in release of budget allocated for the project with weighted average mean score of 3.88, Increasing the price of fuel with weighted average mean score of 3.72, Types of contract used in the organization and Fluctuation of foreign currency exchange rate with weighted average mean score of 3.67 and Unavailability of quarry (gravel material) on the site or near the site with weighted average mean score of 3.67 are the six most important factors affecting cost of construction projects. It is likely that these findings will help focus on very significant factors to improve the construction performance of the Authority in the future