SSRN Id3311303
SSRN Id3311303
SSRN Id3311303
p-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 05 Issue 23
December 2018
significant role in project management, without management and ultimately leads to cost and time
proper plan and control project can lead to many overruns, conflicts, and sometimes relinquishing
problems. However, in practical sense, being within projects. Thus, successful execution of construction
the budgeted costs is rather a challenging task for projects is often affected by financial constrains due
project managers because they have to be in a to the high cost. Accordingly, in construction project
continuous process of measuring the progress, cost overruns can be identified as one of the major
evaluating implemented decisions and taking and challenging issue (Kerzner, 2003). As a solution,
remedial actions (Kerzner, 2003; Lowden and project management applies various project
Thornton, 2015). management tools and techniques to control the
higher costs. Most of literature has focused on cost
Most of the literature has been documented that control techniques to overcome the financial
recent construction projects experience failures since constraints. However, a few researches have been
they became unsuccessful to manage cost and time conducted regarding effect of cost control techniques
during the project implementation stage. Thus, cost on construction project delivery.
controlling has become a dominant factor to be
considered in the constructions projects (Koushki, Aim and Objectives
Al-Rashid and Kartam, 2005).In general most This study focuses to analyse the impact of cost
construction projects experience cost overruns and control methods related to project delivery with
time delays during the implementation stage. Cost respect to the building construction industry in
overruns can be considered as one on the main issue Maldives. Further, study intents to address the
during the execution of the project. Further, this issue following research questions:
of cost overrun is an inherent challenge for 1. Do cost control techniques affect
developing countries and Developed economies cope construction project delivery?
up with cost obstacles in construction projects as The key objective of this study is to analyse cost
well (Mansfield, Ugwu and Doran, 1994). Therefore, control techniques used in building construction
cost control aspect is essential with the background industry and to examine whether there is an impact
information related to the construction projects and of those applied cost control techniques on final
investigation. The impact of cost control on project delivery. This intended to be achieved by the
constructions project delivery has been becomes a fallowing objectives.
significant research area in the current industrial 1. To analyse impacts of cost control
community. techniques on building construction project
delivery
Research Problem 2. To analyse factors relate to the final project
The construction industry can be viewed as a delivery
vigorous industry that is often confused and 3. To identify cost control techniques used in
disturbed with uncertainties coming from weather building construction projects.
changes, economic factors political and legislative 4. To identify the most effective cost control
factors. This ambiguous situation creates poor cost technique use in Sri Lanka.
resulting lack of productivity, idle equipments and United States Department of Defense. Earn Value
waste of materials. Thus, bad resource management Management (EVM) is a precautionary advisory
can cause to lose money and time on project. system for risk planning and cost accounting. The
Therefore, project success depends on the return value provides a fixed measurement unit
performance of input resources when controlling which analyses the actual cost and schedule
costs (Hendrickson, 1998). According to performance with what is intended to give a
Hendrickson (1998), materials wastage can take complete picture. The EVM technique facilitates a
place during the procurement process, storage, and proactive approach to observe project progress and
during utilisation. Large amount of materials wastage respond to the variance (Hayes and Miller, 2002).
can cause problem on most building sites and effect Earned Value Management Method engages many
to the financial management constraints (Saidu and principles of PERT/CPM and WBS and is frequently
Shakantu, 2016). In addition to above mention found as an analysis tool in most mainstream project
factors, design changes, scope changes, inappropriate management software packages. Project Evaluation
and inadequate procurement also can leads to delays and Review Technique (PERT) is developed and
and cost overruns (Olawale and Sun, 2010). tested as a cost control method which allows
management to identify the estimated probability of
Cost Control Techniques project completion within a certain amount of time
The primary responsibility of project management is and cost. PERT method is similar to Critical Path
to control the cost of the project, time, performance Method (CPM), but Pert is more events oriented
and quality goals. Cost management is a one of the whereas CPM is activity oriented. This PERT chart
important task which drives project to a successful provides the graphical illustration of the entire
completion. This includes resource planning, cost growth of the project indicating major events,
budgeting, cost estimating and cost control. This cost dependent tasks, parallel tasks and tasks that should
management process can be enhanced through be accomplished in order, but that do not require
different software’s, tools and techniques in order to resources or finishing time. Thus, PERT is used to
control the costs. According to ‘Project management schedule, organize, and coordinate tasks within a
book of knowledge (PMBOK)’ there are few project as a project management (Burke, 2013).
techniques which would be useful for monitor and
To-complete performance index (TCPI) is one of the
control construction project .Some of those
forecasting tolls of earned value management. It is a
techniques are earned value management(EVM),
useful tool for people who are engaged in
Project cost–value reconciliation, forecasting, To-
construction field (project managers, team members
complete performance index (TCPI), Contract
and other stakeholders). TCPI calculate projection of
variance analysis(Unit costing) and performance
the cost performance of the project based on the
review, reserve analysis.
value of reaming work. TCPI helps to reach set goal
From above mention techniques most popular by improving cost performance of the project (Scott,
decision making tool for project management is earn 2012). Cost value reconciliation (CVR) is used in
value concept. This system was firstly used by the scrutinizing profitability of a project comparing cost
with value and time. This process is based on the and Abourizk, 1994). In order to comply with
comparison between payments received from the estimated cost expectations during the project
client for the interim bills issued by the contractor for executions, construction industry uses Cost
the cost incurred in executing the work. CVR assists Breakdown Structure (CBS) with the assist of Work
in providing management information for Breakdown Structure (WBS). Every item in the
identification of problems, reasons for loss, necessity project is classified and identifies the list of
for reserves and provide information to avoid expenditure categorization to obtain a more detailed
repeating of losses. Compared to Earned value assessment of cost. Therefore, CBS allows
analysis, Cost value reconciliation does not provide construction projects to identify Labour, material,
expanded details. Therefore, CVR is more suitable as equipment, overhead costs other related costs and
a monitoring tool for upper management (Potts, further facilitate to control the costs as optimizing the
2008). In Contract variance – unit costs is calculated core activities (Burke, 2013).
by dividing actual cost from each type of work that Cost control Techniques on Construction Project
has been completed in the project. This provides Delivery
actual unit costs that can be compared with the rates Most of the construction professionals and other
mention in contract document (Potts, 2008).Using planning bodies have recognized the importance of
above generated rates report can prepare to forecast cost control techniques in the practical context. As
final profit/loss situation of the project. Further, the per the study, Olawale and Sun (2010) there are 84%
final report is prepared based on monthly interim of respondents indicate that larger extent of cost
valuations agreed and approved by the client. As control techniques use during their projects and 16%
highlighted by Potts (2008) this method is mostly of respondents reflects that they are continuously
useful for projects with repetitive works, where applying cost control measures for their projects. The
urgency of corrective action possible. Therefore, this survey shows that there are no respondents or do not
will help to reduce cost of future repetitive similar use cost control techniques. Therefore, findings of
tasks in projects. the study reveal that the importance of controlling
the cost leads to the successful delivery of projects in
Further, Gantt Chats or Bar Charts are useful in the the UK. The supportive evidence from Sohail and
construction projects as a cost control tool because it Baldwin (2004) reveals that professionals in the
enables to schedule resources in an effective and construction field have identified that cost control as
efficient manner. To complete a project successfully, the most crucial factor which impact to the on-time
it must control a large number of project activities delivery of construction projects other than time
and make sure that they are arranged in a sequential controlling factors and project specific factors.
manner. If an activity passes beyond a certain time Further, researchers found that cost control
period, the end result will be affected by the rest of techniques applied in the planning stage may not
the project. As a result, project could be delayed and practical in the project implementation. Therefore,
a higher amount of money would spend. Accordingly those unrealistic cost targets derived through cost
bar charts help to identify everything that needs to be control tools and techniques cause to the final project
done when each activity completed (Ahuja, Dozzi, delivery to the clients since revisions for costs, tasks,
Population 400
Data Collection and Analysis
Sample 50
The study expects to gather data through primary and Male respondents 32
secondary sources. Preliminary information will be
Female respondents 18
gathered from structured questionnaires and semi
Managerial respondents 38
structured interviews. Secondary data will be sourced
from company publications. The questionnaire will Non managerial respondents 12
be consisted with multiple choice scale questions As the qualitative approach, this study aims to obtain
related to cost control techniques and on time project semi-structured interviews from 06 respondents and
deliveries. The questionnaire will be initially expect to discuss on cost control techniques on
generated in English, and it will be translated into construction project delivery.
Sinhala for the purpose of getting better responses
from non-managerial level employees. The 1.1. Descriptive Analysis
Table 4: Descriptive Statistics understanding the study has been testing the
hypotheses to reach the objectives of the study.
N
Range
Minimum
Skewness
According with the analysis of the descriptive it has
been identified the normality of the data set by which
the researcher has been used the parametric test for
Statistic 50
Statistic 2.00
Statistic 3.00
Statistic 4.0040
Statistic .46509
Statistic .216
Statistic .411
Error
Std.
the testing the hypotheses. In other words the base
assumption of using the parametric test for testing
very
Project_Deli Cost_Contr
.337
the hypotheses is that the normality of the data set
which has been observed by the researcher.
50
1.79
3.21
5.00
4.0714
.39441
.156
.633
.337
Objective One
The both the variables are having the mean value
To analyze impacts of cost control
which is close to the 4 which identifies that the
techniques on building construction project
majority of the respondents agreed on the indicators
delivery
testing in the conceptual model of the study.
Furthermore it has been identified that standard
According it has been developed two hypotheses to
deviation which is less than 0.5. By analyzing the
achieve the identified objectives for the study.
data it can be identified that the all the variables are
According the following hypotheses has been
having the positive skewness which is below 1.5.
developed and tested.
And the social role shows the highest skewness
value. With this it can be identified the same H1a: There is a significant relationship between
tendency in the data set with the same standard error. project delivery and the cost control.
The positive skewness further emphasis the tendency
H1n: There is no significant relationship between
of the data towards the agreed opinion which shows
project delivery and the cost control.
the positive relationship with each other variable.
The level of the relationship will be varied according
Since the hypothesis developed was a relational
with the data behavior. But still with the available
hypothesis it has been used the correlation analysis
data it seems that all the variables are having the
for testing the hypothesis. The following tables
same tendency which says the positive relationship
demonstrated the results of the hypotheses testing for
between each variable. Furthermore the study has
testing the hypothesis.
been identified the tendency of data set with the
In achieving the first objective it has been further Furthermore with the testing result of the hypothesis
develop a hypothesis to check the impact of the cost it has been acted the alternative hypothesis and
control techniques on the project deliver of the rejected the null hypothesis. In which it conclude as
Model Unstandardi Standa t Sig. identified that only the project cost value
Based on the developed conceptual model it has been Table 8: Model Summery
already achieved the objective in which the
Model Summary
comprehensive review of literature it has been
Model R R Adjusted R Std. Error
already identified the cost controlling techniques
Square Square of the
used in the industry.
Estimate
a
Objective Four 1 .666 .443 .432 .35056
a. Predictors: (Constant), Cost_Control
To identify the most effective cost control
technique use in Maldives Source: Survey Data, 2018
In identifying the most effective tool in the cost The model summary explains the R value of 0.666
controlling it has been used the multiple regression and the adjusted R square value of 0.432 which
analysis which has been in testing the hypothesis demonstrate that the model used by the study
three in which the study has been considered the beta explains the 43.2% of the dependent variable. In
value of the regression analysis. In which it has been other wordings the independent variable of the study
selected the highest beta value for the regression explains 43.2% of the changes of the dependent
analysis. Accordingly it has been identified variable. As per the results it can be identified that
forecasting as the most effecting factor since the beta the model used in the study is suitable for the study
value is 0.316 which is the highest positive value. in which it explains the 43.2% of the change in the
Accordingly it has been identified that the dependent variable.
forecasting is the cost controlling technique which is
Accordingly it has been identified the reliability as
having the most effecting factor on the project
well as the validity of the data set which has been
delivery.
collected by the researcher in which it has been
Accordingly it has been achieved all the objectives of consider as the reliable as valid information for the
the study by analyzing the data. But still it is purpose of decision making. Therefore it has been
important to identify the validity of the model used used for the making conclusions and
by the study. The nest section of the study provide recommendations. According with the discussions
the analysis of the model fit used by the study which that the researcher had with the industry experts it
conclude the usability of the information derived by has been identified that the ideas or the opinions that
the researcher in the study setting. the study findings has similar meaning.
The model summary describes the fitness of the With the understanding the researcher created on the
model for describing the dependent variable for the comprehensive review of the literature which has
study purpose. The following table demonstrates the been making the construct validity for the used
model summary for the study. conceptual model. The study has been used the
conceptual model which has been validated by the
support of the empirical evidences. The analysis of comprehensive review of the literature. In other
the data has been reach to the objectives which has wordings the prevailing literature the opinion was on
been set in the initial stage of the study setting. The the primary responsibility of project management is
testing hypotheses for the study have been done with to control the cost of the project, time, performance
the objective of achieving the identified objectives of and quality goals. Cost management is a one of the
the study as the solutions for the identified study important task which drives project to a successful
questions. According with the study it has been make completion. This includes resource planning, cost
the conclusion on the followings in the study. As per budgeting, cost estimating and cost control. This cost
the study it has been identified that there is a management process can be enhanced through
significant impact on the project delivery by the cost different software’s, tools and techniques in order to
controlling techniques used by the organization. The control the costs. According to ‘Project management
same has been identified by the (Aibinu & Jagboro, book of knowledge (PMBOK)’ there are few
2002) in the study in the different economic techniques which would be useful for monitor and
condition accordingly it has been identified that even control construction project. But still the study
the economic conditions are different the impact of finding the providing the different opinion than
the cost controlling techniques on the project prevailing acceptance in the industry. Since the study
delivery is having the same impact. Furthermore it finding emphasis only the two tools are having the
has been identified that the organization has to make impact on the project delivery and the other tools are
the proper attention on the used cost controlling not having the significant impact on the project
techniques by the organization. Therefore it has been delivery. But still the identified two tools which is
further analyzed the data for getting in depth having the significant impact on the project
understanding on the cost controlling technique it has delivering has been identified as the most commonly
been used the further data analysis for the collected used and the most recommended tools in the
data. The other important facts have been reviled by identified context. The same fact has been emphasis
having that in depth analysis which is demonstrated by the (Clark & Edwards, 1999) which also been
in the above chapter. The next section of the chapter conducted in the same context. The other important
has been made the attention on deriving the fact is that the organizational employee’s willingness
conclusions on the detailed analysis undertaken by in implementing the identified tools in the business
the researcher. context than the other tools available which has been
identified the user friendliness as the ley reason for
Accordingly it has been identified that the project
the situation identified in the study findings (Zaha,
cost value reconciliation and the forecasting is an
2017).
effecting techniques on the project delivery among
the selected cost control techniques for the study. In The final point to make the attention is that in
which it has been identified that the other factors are identifying the most effective tool out of the
having the insignificant impact on the project identified impactful tools on the project delivery. As
delivery which is having the different findings than per the analysis it has been identified the forecasting
the empirical evidences that the researcher has in the as the most significant tool impact on the project
delivery of the organizational product delivery is high the level of having the variations is
process. The important fact is that the study findings high especially because of the time factor.
are having the higher impact from the economic The other important fact is that the
conditions in the country especially since the organization has to select the most effective
developing economies are having the higher tool in implementing it in to the actual
probability of having the frequent fluctuations in the organizational context. In other wordings
economic factors. With the context it has been select the effective tools and use it as the
identified the same behavior which has been cost controlling techniques for the
identified by the (Sarker, Egbelu, Liao, & Yu, 2012) organization. As per the result it can be
within the study as well. The other important fact is recommend the project cost value
that the identified trend is having the higher tendency reconciliation and the forecasting as the
towards the changing with the economical and socio most effective two tools that organization
cultural factors of the country which the organization can use
operating. The other important factor is that the
organization has to make the priority
Accordingly it has been developed the
attention on the most significant factor as
recommendations for the organization based on the
per the analysis it is forecasting which has
study findings which has been highly influenced by
been implemented in the organization.
the identified factors under the conclusion. Therefore
the nest section of the chapter provide the Limitations of the Study
recommendations for the organizations operating in This research carries out within several constrains,
the industry to improve the project delivery which is strategies and procedures which may affect
a critical aspect of the business success. negatively to the final findings.
Firstly, the sample does not reflect a fair illustration
5.2. Recommendations
to represent the entire building construction industry
in Maldives.
With the conclusion made it has been developed the
Secondly, final project delivery can be influenced
following recommendations for the practice with the
from project particular and external environmental
limitation of using the recommendations on the
factors. However, this research does not take into
similar economical and the socio cultural
consideration those influential factors on final project
background. Accordingly it has been identified the
delivery as control variables within the study model.
following recommendations,
Last, there may be some bias information from the
Use cost controlling techniques for the respondents since expectations of the company
organization in achieving the effective management towards company owners may vary.
results for the final output of the project in
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