1Dept. of Management Studies, VFSTR (Deemed to be University).
2Dept. of Management Studies, VFSTR (Deemed to be University).
The Andhra Pradesh state government has created Andhra Pradesh Capital Region Development Authority (APCRDA) for constructing new capital, popularly known as Amaravati in between Guntur and Vijayawada cities after bifurcation of state in 2014. The Construction activities have reached a higher level after opening this region to the outside investors and to the state government projects. In view of the faster completion of the construction projects, the cost control aspects of the project have not been paid enough attention. The very first key requirement for the cost management is controlling the cost overruns in the construction projects. By ignoring this aspect, the organizations will lose their long-term profits and unable to meet the on-time demands of completing the world class capital city as per schedule.
The adoptions of an advanced level of construction cost management techniques are vital for the development of the construction companies. Improving construction methods, controlling cost effectively, allocating resources equitably and aiming at a maximum profit are the important factors for the development of construction industry.
In order to unfold the major reasons for cost overruns, an in-depth investigation was carried out by circulating the questionnaires to 25 respondents. The data was collected from contractors, project management consultants (PMC) and client’s perspectives in various APCRDA region projects. The major reason for choosing APCRDA region is a large number of ongoing project works worth of Rs 21,000 Crores are under execution by several multinational companies and other companies in both public & private sector.
The main objective of this article is to identify the factors affecting cost overruns and to develop a practical set of measurement criteria. Another objective is to identify and evaluate the major cost overruns in the various ongoing projects of this region. Some of the factors identified are Poor Planning & Budgeting, Lack of Knowledge of Engineers & Site Teams, Insufficient use of Management techniques, Delay due to Additional Works and Promised Date of Delivery. The findings from this study will help the construction industry for controlling cost overruns at the earliest stage of project life cycle and for successful completion of projects on time.
Cost overruns, Cost Control, Cost Management, Construction Projects
