Costs And Resources Allocation To Reduce Material Cost Overrun In Industrial Construction Projects

Davied Insja


Cost overrun is a very frequent phenomenon and is almost associated with nearly all projects in the construction industry. This trend is more severe in construction projects where is located in relatively remote areas. In order to reduce cost overrun, this paper is aimed at identifying the dominant factors that affect cost overrun and its corrective action, preventive action or mitigation in industrial construction projects. Survey questionnaires were distributed to construction professionals, and data were analyzed through a statistical method. From the seventy-four factors which were identified through literature review, there were classified into thirteen risk events and sixty-one risk sources. Utilizing the Delphi method, thirteen risk events became ten risk events and thirty-six risk sources. Furthermore, with the factor analysis method, thirteen risk events became nine risk events and twenty-five risk sources. Nine factors which affected cost overrun in industrial construction projects, such as material price fluctuations, material distribution costs on project’s site, material delay costs, the change of specifications and material type costs, material shortages, material damages, material loss, and excessive material quality.The scope of this study only focuses on the quantitative approaches of risk events allocation that have been shared to contractor side in work implementation, such as costs and resources allocation to modify risk; to reduce material cost overrun.


cost overrun; industrial construction project; costs and resources allocation

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