Cost Performance for Building Construction Projects

Topics: Project management, Construction, Cost overrun Pages: 13 (4232 words) Published: April 9, 2012
Journal of Building Performance ISSN: 2180-2106 Volume 1 Issue 1 2010

COST PERFORMANCE FOR BUILDING CONSTRUCTION PROJECTS IN KLANG VALLEY A.S. Ali*, S.N. Kamaruzzaman University of Malaya, Faculty of Built Environment Building Performance and Diagnostic Group 50603 Kuala Lumpur, Malaysia Tel: +603-7967 4494 Fax: 603-7967 5713 Corresponding Author: Abstract Since seventies, the economic of Malaysia has undergone rapid growth. Construction industry constitutes an important element of Malaysian economy. It shows how important to control and manage the projects in good quality and efficiently. There are four fundamental constraints needed to be considered when managing the construction projects, which are scope, cost, time, and quality. In order to manage the projects successfully, it is necessary to consider whether the project is within those four constraints. However, it found that there were many problems on cost performance in many countries. One of the major problems was cost overrun in construction projects. In Malaysia, the problem of cost overrun considered significance in construction industry. There were many factors that contribute to cost overrun in Malaysian construction projects. The factors might become risks and lead to negative effect to the projects. Hence, this research is to identify factors that contribute to cost overrun and potential measures to overcome the problem with the focus given to construction projects within Klang Valley. The method used in this research is quantitative based. A questionnaire survey conducted to collect data from the respondents that consisted of project manager, quantity surveyor, M & E Engineer, C & S Engineer, and other related respondents. Questionnaires were distributed to 30 respondents from construction firms in Klang Valley. Data collected form a database for analysis using Statistic Package for Social Sciences (SPSS) version 17.0. Descriptive statistics and ranking analysis were used in data analysis. The result shown that the most serious factor contributes to cost overrun was inaccurate or poor estimation of original cost and the factor do not affect most was mistake in design. The most important method to control construction cost is proper project costing and financing. On the other hand, the least important approach was establishing a system in design. In conclusion, the problem of cost overrun is not a small issue but could cause serious problems to the construction industry in Malaysia. Keywords: Construction projects, Cost overruns, Cost performance, Malaysia Introduction Malaysia is in the process of rapidly developing. Intan Rohani et al. (2009) reported that since seventies, the economic in Malaysia has undergone rapid growth. It found that construction industry constitutes an important element of Malaysian economy. According to Chan (2001: 10), “the construction sector achieved a more moderate growth of 11.8% in 1996 after recording a high growth of 15.2% in 1995”. Its constribution to GDP (Gross Domestic Product) is estimated to be stabilised at 4.5%. In construction industry, it is important to have control on cost performance of projects to ensure the construction cost is within the budget. So, project cost management is needed to keep the project within its defined budget. Project Management Institute (2004: 14) defines project management as “application of knowledge, skills, tools and techniques to project activities to meet project requirements”. A project gets more scientific and systematic when the project gets larger and more complex. This is because the project becomes necessary to integrate and coordinate human inputs and some of physical components within the four fundamental constraints which are scope, cost, time and quality.

Universiti Kebangsaan Malaysia The Institution of Surveyors Malaysia

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Journal of Building Performance ISSN: 2180-2106 Volume 1 Issue 1 2010...
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