Cost overruns in Building Construction Projects: A Case Study of a Government of Ghana Project in Accra

Abstract

Cost overruns leading to delays are common in building construction projects in Ghana. A construction project comprises of two distinct phases: the pre-contract phase - the period between the initial conceptions of the project and the signing of the contract and the post-contract phase – the period after the award of the contract when actual construction begins through to its completion. Although cost overruns occur in both phases, majority of the causes occur in the post contract phase. This paper focuses on the post-contract phase of the building project and the initiation for this was due largely to personal observation and the low performance of the building project in terms of cost, time and quality. The paper seeks to identify factors contributing to high cost overruns in the renovation of a building project in order to investigate the extent of possible impact on building projects. Results from the study indicate that several factors contributed to the high cost overruns but salient among them was that, the total cost of additional works not initially included in the total estimate in the bills of quantities was high. An item of work whose initial cost was difficult to determine and as such was given provisional sums was later found to be exceptionally lower than the actual cost. The changes in the specifications and details of materials or components and the non-prompt payment of the contractor led to construction delays and increase in fluctuation costs.

Keywords: Cost Overruns, Pre-Contract, Post-Contract, Provisional Sums, Delays.