EVALUATION OF COST OVERRUN ON WATER WORKS CONSTRUCTION PROJECTS; CASE OF SOUTH NATIONS, NATIONALITIES & PEOPLES REGION OF ETHIOPIA

Abstract

Project cost is one of the most important criteria of success of project and is of high concern to those who are involved in the construction industry. This research is focusing on the evaluation of cost overrun on water construction (water supply and irrigation) projects i.e. assessing critical factors that causes cost overrun in SNNPR of Ethiopia. To evaluate the cost overrun factor attributes, the study was conducted by method of desk study and questionnaire survey. Desk study was done to explore whether there exists cost overrun or not, and the questionnaire survey was to find the supreme critical factors that causes cost overrun on water construction projects in the region. A total of questionnaire survey of 50 were distributed to the construction participants (contractors, consultants and clients) and out of 50, 45 questionnaires were returned back for the analysis. From the analysis and results of desk study, it was found that there exists cost overrun rate with a range of 1.03% to 99.33% and an average rate of 32.32%. The analysis of the questionnaire survey showed that the most critical factors that causes cost overrun on water construction projects based on an agreement/disagreement of the variables causing cost overrun were: Effects of weather, Acceleration required by the owner (shortening of contract time), Additional costs due to variation works, Fluctuations in the cost of labor and/or material or any other matter affecting the cost of the execution of the works, Project location, Inflation or increase in the cost of construction materials and so on. Based on the chances of occurrence of the variables, Inflation or increase in the cost of construction materials, Project location, Fluctuations in the cost of labor and/or material or any other matter affecting the cost of the execution of the works, Difficulties in obtaining construction materials in the local market and Effects of weather were the major ones. Factors such as Effects of weather, Wrong cost estimation method, Funding problems or client's shortage of finance or delayed payments to contractors, Inflation or increase in the cost of construction materials and Project location were the top ones based on the impact of them on construction. The correlation analysis was done to show the significance level of agreement between the construction participants and it is generally concluded that there is strong correlation between the respondents on the ranking of the factors that causes of cost overrun on water construction projects.