Int. J. Built Environment and Asset Management, Vol. 1, No.

3, 2014 193

Significant contributors to construction cost

overruns: findings of Kuwait

Abdulaziz M. Jarkas*
Projects Development Department,
Al Mazaya Holding Co., KSCP (Holding),
P.O. Box 3546, Safat 13036, Kuwait
Email: jarkas@mazayarealestate.com
*Corresponding author

Sasa Marenjak
Faculty of Civil Engineering,
University of Osijek and Zagreb,
P.O. Box 716, HR-3000, Osijek, Croatia
Email: sasa.marenjak@zg.htnet.hr.com

Abstract: Notwithstanding the improvements of project management

accomplished over the years, cost overrun continues to be among the critical
problems within the construction industry, and the State of Kuwait is no
exception. The main objective of this investigation, therefore, is to identify,
explore, and rank the relative importance of the contributors to construction
cost overruns in the state. To achieve this objective, a structured questionnaire
survey comprising 45 factors was distributed to a statistically representative
sample of contractors. Using the relative importance index technique, the
significant contributors related to the client, consultant, contractor, and
external groups are identified. The results can be used by academics,
industry practitioners, clients, and policy makers, to develop a wider and deeper
perspective of the prominent causes established, which may lead to the
development of reasonable control measures thereto, not only during the
construction stages, but also along the evolution of the design phases of
projects, thus assist in achieving an acceptable level of competitiveness and
cost effective operation.

Keywords: cost; overrun; construction; projects; contractors; State of Kuwait.

Reference to this paper should be made as follows: Jarkas, A.M. and

Marenjak, S. (2014) ‘Significant contributors to construction cost overruns:
findings of Kuwait’, Int. J. Built Environment and Asset Management, Vol. 1,
No. 3, pp.193–220.

Biographical notes: Abdulaziz M. Jarkas received his Bachelor of Science in

Civil Engineering and Master of Civil Engineering degrees from The
University of South Carolina, Columbia, USA, and his PhD in Construction
Engineering and Management from the University of Dundee, Scotland, UK. In
addition to his membership in several professional societies and associations,
he is a registered Chartered Engineer by the UK Engineering Council,
recognised and placed on the International Professional Engineers Registry of
the UK Engineering Council, and a member of the Institution of Engineering
Designers. His industrial experience involves over 20 years in the fields of

Copyright © 2014 Inderscience Enterprises Ltd.

194 A.M. Jarkas and S. Marenjak

structural engineering, planning, design, and construction project management,

whereas his research interests include buildability/constructability, construction
productivity, risk analysis and management, bidding practices, cost estimating
and control, motivation and performance improvement, mediation, arbitration,
and alternate dispute resolution (ADR), in addition to the learning phenomenon
in construction.

Sasa Marenjak is a Professor in the Faculty of Civil Engineering at the

University of Osijek and Zagreb, Croatia, and a Director at Whole Life
Consultants, Ltd., a spin out company of the University of Dundee. He received
his BS, MS and PhD in Construction Project Management from the
University of Dundee, Scotland, UK. He is a team member of specialists for
Public Private Partnership of the United Nations Economic Commission for
Europe (UNECE), member of the Association of Project Managers,
and the International Project Funding Association (IPFA). His research
interests include construction labour productivity, project cost and time
modelling, whole life costing, value and asset management, sustainability, and
private-public-partnership (PPP) procurement. He has over 20 years of
combined, industrial and academic experience, and has authored and
co-authored numerous publications.

1 Introduction

While cost performance remains among the most important success measures of
construction enterprises (Chan and Chan, 2004), cost overrun continues to be a major
problem within the industry, where projects are rarely completed within budgeted costs
(Chimwaso, 2001; Azhar et al., 2008; Abdul Rahman et al., 2013). This chronic dilemma,
moreover, exists both, in developed and developing countries, and is associated with
almost all types and scales of projects (Reina and Angelo, 2002; Koushki et al., 2005; Ali
and Kamaruzzaman, 2010; Abdulazis et al., 2013).
Flyvbjerg et al. (2003), in one of the most elaborate studies aimed at exploring the
global problem of cost performance in transport construction projects, investigated
258 projects located in 20 developed and developing nations worth approximately
US$90 billion, and found that cost overrun was evident in nine out of ten projects, with
an average increase of 28%, in comparison with budgeted costs. The study concluded, on
the one hand, that the average cost overruns were 25.7% in Europe, 23.6% in
North America, and 64.6% in other geographical areas, and that cost performance has not
improved over the past 70 years, on the other. This phenomenon, therefore, has become
the rule rather than the exception in the construction industry (Baloi and Price, 2003;
Flyvbjerg et al., 2003).
Several definitions of cost overrun, also referred to as budget overrun or cost
increase, are encountered in the literature (e.g., Avotos, 1983; Dlakwa and Cuplin, 1990;
Iyer and Jha, 2005; Azhar et al., 2008; Enshassi et al., 2009; Durdyev et al., 2012;
Kasimu, 2012; Sweis et al., 2013). Nonetheless, they can all be practically considered as
synonyms to: “the additional expenditure or cost incurred in excess of the original
budgeted amount, at the time of a project completion.”
Construction cost overrun can occur due to many reasons. However, it is crucial to
distinguish between the following two quite different issues, which are frequently, yet
 Significant contributors to construction cost overruns 195

erroneously, conflated, to understand the nature of the cost growth in construction

projects:
1 cost underestimating
2 cost overrun.
Cost underestimating, although beyond the scope of this investigation, is worth brief
highlighting to place the subject under investigation in its appropriate contextual
paradigm. Cost underestimating involves the possible effects of ‘strategic
misrepresentation’, ‘optimism bias’, ‘prospect theory’, and ‘Kruger-Dunning’.
Succinctly, strategic misrepresentation occurs when sponsors and estimators, especially
on large publically funded works, tend to purposely underestimate the cost of the project
in what Flyvbjerg (2003) described as the ‘Machiavelli factor’, in order to garner for
project approval and financing.
Optimism bias, as the name suggests, is a subjective inclination to examine
prospective events with the most optimistic scenario possible, overlooking what risk,
uncertainty, and potential error, may actually be in reality (Lovallo and Kahneman,
2003). Even though such an approach may not be originated out of a deceptive intent as
the case with strategic misrepresentation, the outcome often leads to cost
underestimation.
The prospect theory of Kahneman and Tversky (1979), suggests that decisions are
commonly based on the likelihood of gain or loss, but not necessarily upon what the
‘real’ result or outcome of the decision might be. Furthermore, the theory postulates that
decision-making is usually impaired by methodical biases and that the error in
judgement, rather than random, is often systematic and predictable.
The Kruger-Dunning effect is formulated around the hypothesis made by Kruger and
Dunning (1999) that the intellectual skills required to judge the accuracy of a decision is
the same required to evaluate the error in the same decision, and thus, to lack the former,
is to err in the latter too.
In view of the preceding discussion, overlooking or ignoring the possible
consequences of errors, coupled with the impacts of optimism bias and prospect theory,
lead to a predisposition to an underestimation of cost. Concurrently, the Kruger-Dunning
propensities further purblind estimators to the shortfall and flaw in reaching unrealistic
cost estimates for projects. All of these factors, separately or collectively, in addition to
the potential influence of risk and uncertainty, strategic misrepresentation, and fierce
competition entrenched within the lowest-bidder tendering culture, comprise the
provenance of cost underestimating (Ahiaga-Dagbui and Smith, 2014).
On the other hand, cost overrun mainly emerges as a result of, among others: scope
change; whether mandated by project circumstances or requested by the employer;
unforeseen ground conditions; cost escalation due to inflation; unintentional error in cost
estimate; overlooked significant risk factors of relevance to the project; technical
obstacles; and managerial shortcomings or difficulties. Love et al. (2011) describe such
factors as ‘pathogens’; upon which, this study will focus.
Notwithstanding that underestimation factors and pathogens interact to drive up the
‘actual’ cost of a project; ultimately leading, in comparison with the initial budgeted cost,
to an overall cost overrun, it is essential to descry the root causes of cost growth,
recognising therefore the distinction between the two – most often conflated phenomena
– of ‘cost underestimation’ and ‘cost overrun’ on construction projects. For detailed
196 A.M. Jarkas and S. Marenjak

information about construction cost underestimation and cost overrun, the reader is
referred to Ahiaga-Dagbui and Smith (2014).
There are many challenges facing the construction industry in the State of Kuwait, but
as the case with other countries, cost overruns in projects is among the most pressing. In
spite of all the technological advancements, abundance of construction equipment, tools,
and financial means available to local contractors, most construction projects are
significantly overrunning their budgeted costs (Jarkas and Bitar, 2012).
The primary objective of this research, therefore, is to identify and rank, based on the
perception of ‘general contractors’ operating in the state, the relative importance of
factors instigating cost overruns in projects, so that the findings can be used by
academics, local and international contractors, in addition to clients, consultants, and
policy makers, to develop a wider and deeper perspective of the significant factors
determined, which can lead to the development of reasonable control measures thereto,
not only during the construction stages, but also along the evolution of the design phases
of projects, and further assist in achieving an acceptable level of competitiveness and cost
effective operation.
This paper starts with a literature review of previous related studies, presents the
research method and data analysis, provides a discussion of the results obtained, and
concludes, based on the results emerged from this investigation, with practical
recommendations geared toward alleviating the adverse influence of the critical factors
discerned on the cost performance of construction projects in Kuwait.

2 Literature review

Construction cost overrun has been the subject of numerous research studies. Arditi et al.
(1985) carried out a survey to identify the main causes for construction cost overruns in
Turkish public projects, which were constructed between the 1970s and 1980s, and
reported the following critical factors:
a increase in material prices
b inflation
c difficulties in producing products at official prices due to the fast growth of inflation
d frequent changes in design and specifications
e inaccurate estimates at the time of creating the budget of the project.
Okpala and Aniekwu (1988) examined the factors instigating construction cost overrun in
Nigeria, and discerned:
1 shortage of materials
2 finance and payment of completed works
3 poor contract management, as most important.
Kaming et al. (1997), on the other hand, investigated the causes of cost overruns in the
Indonesian construction industry, and recognised the following factors as most
influential:
 Significant contributors to construction cost overruns 197

1 inflationary increases in material cost

2 inaccurate material estimating
3 project complexity.
Bubshait and Al-Juwait (2002) explored the factors contributing to cost overruns on
construction projects in Saudi Arabia, and reported the following ten top causes:
a inclement weather
b number of projects under concurrent development
c social and cultural impacts
d project location
e lack of local productivity standards
f level of competitors
g supplier manipulation
h economic stability
i inadequate local production of raw materials
j absence of local construction cost data.
Koushki and Kartam (2004) studied the impact of materials on cost overruns of housing
construction in Kuwait, and indentified:
1 materials procurement time
2 type and local availability of materials specified
3 the presence of a supervising engineer, as most important.
In a subsequent study of the Kuwaiti private residential sector, Koushki et al. (2005),
moreover, revealed the following crucial cost overrun inciters:
1 owner’s financial difficulties
2 contractor’s financial difficulties
3 contractor non-conformance to project specifications
4 design changes
5 frequent change orders.
Whereas Iyer and Jha (2005) researched the factors adversely affecting cost performance
in the Indian construction industry, and disclosed the following influential causes:
1 conflict among project participants
2 ignorance and lack of knowledge
3 presence of poor project specific attributes and non-existence of cooperation
4 hostile socio economic and climate conditions
198 A.M. Jarkas and S. Marenjak

5 reluctance in timely decision.

Azhar et al. (2008) examined the causes instigating construction cost overrun in the
neighbouring state, Pakistan, and recognised the following major factors:
a fluctuation in prices of raw materials
b unstable cost of manufactured materials
c high cost of machineries
d lowest bidding procurement method
e poor project and cost management
f long period between design and time of tendering
g wrong method of cost estimation
h additional work
i improper planning
j inappropriate government policies.
Contributors to construction cost overrun in Vietnam were further investigated by
Le-Hoai et al. (2008), whose research distinguished the subsequent significant factors:
1 lack of supervision
2 owner’s lack of financial resources
3 financial difficulties of contractors
4 frequent changes in design
5 poor project management.
In exploring the causes inducing cost overrun in the Zambian road construction projects,
Kaliba et al. (2009) reported the following cardinal factors:
a inclement weather
b scope changes
c environment protection and mitigation costs
d schedule delay
e frequent strikes
f technical challenges.
Enshassi et al. (2010) surveyed the factors affecting construction cost performance in
Gaza Strip, Palestine, and recognised:
1 increase in material prices due to continuous border closures
2 construction delay
3 delay in supply of raw materials and equipment
 Significant contributors to construction cost overruns 199

4 fluctuations in material prices

5 project materials monopoly by suppliers
6 instability of local currency, as most important.
In an effort to identify the major causes of cost overruns in Canadian industrial
megaprojects, Jergeas and Ruwanpura (2010) isolated:
a lack of knowledge of the project
b project complexity
c inaccurate estimation of costs
d the absence of a plan that copes with the changes in design and execution
requirements
e lack of managerial strategies.
Olawale and Sun (2010) investigated the causes of cost overruns in the UK construction
industry, and discerned the following preeminent factors:
1 design changes
2 risk and uncertainty associated with projects
3 inaccurate evaluation of construction duration
4 non-performance of subcontractors and nominated suppliers
5 complexity of works
6 conflict between project parties
7 discrepancies in contract documentation
8 contract and specifications interpretation
9 inflation of prices and financing difficulties
10 payments delay.
In a study geared toward characterising the key factors leading to cost overrun in
Ethiopian federal road construction projects, Turkey (2011) distinguished, as most
crucial, the following:
1 unexpected inflation
2 delays on completion time
3 scope changes
4 unstable cost of manufactured materials
5 inadequate site investigation and right of way problems.
Furthermore, causes of cost overruns in the Turkish residential construction projects were
explored by Durdyev et al. (2012), whose findings revealed:
a improper planning
200 A.M. Jarkas and S. Marenjak

b inaccurate project cost estimation

c high cost of needed resources, money, labour, materials, and machinery
d lack of skilled workforce
e prices of construction materials, as most significant contributors.
Abdul Rahman et al. (2013) examined the factors causing cost overruns in Malaysian
large construction projects, and reported:
1 fluctuation of material prices
2 cash flow and financial difficulties of contractors
3 poor site management
4 schedule delay
5 inadequate planning and scheduling
6 inaccurate cost estimates
7 delay in payments by owner
8 mistakes during construction
9 incomplete design at the time of tender
10 poor design, as most critical.
Alhomidan (2013) researched the causes of cost overrun in the Saudi Arabia road
construction projects, and determined the following prominent factors:
1 internal administrative problems
2 payments delay
3 poor communication between construction parties
4 delays in decision-making.
Alinaitwe et al. (2013), on the other hand, investigated the causes of cost overruns in
Uganda’s public sector construction projects, and identified the following principle
factors:
1 changes in the work scope
2 high inflation and interest rates
3 poor monitoring and control
4 delayed payments to contractors
5 deficiencies in contract documents.
While Doloi (2013) focused on the construction cost overrun determinants in Australia,
and distinguished the following factors:
a poor planning and scheduling
b inefficient design
 Significant contributors to construction cost overruns 201

c ineffective site management.

Mahamid and Dmaidi (2013) investigated the causes contributing to cost overruns in
building projects within the West Bank, Palestine, and identified the following leading
factors:
1 political situation
2 prices fluctuation of materials
3 level of competitors
4 previous experience of contractor
5 financing difficulties
6 inflation
7 poor contract management and planning
8 duration of contract
9 inaccurate estimation
10 frequent changes in design.
Even though the relative influence and the underlying causes of construction cost
overruns, depending on the social, cultural, economical, political, and environmental
conditions, can be different in different countries and across geographical regions, and
apart from the special circumstances, such as the cases with the Gaza Strip and West
Bank of Palestine, where some of the factors identified are directly attributed to the
chronic political instability, which has been persisting over the past 60 years, an overall
reasonable consensus exists on the significant factors highlighted in the literature. It may
be concluded, therefore, that to effectively explore such causes, a simultaneous
assessment of a large, yet inter-related number of factors which are further classified
under different categories, is required.
To classify construction cost overrun causes into global major groups that can best
encompass and relate to the instigating source of the various corresponding factors,
several approaches have been adopted. Ogunlana et al. (1996) classified the factors
contributing to construction cost overruns into the following five main groups:
1 client
2 consultant
3 contractor
4 sub-contractors or suppliers
5 external.
Azhar et al. (2008), on the other hand, allocated factors instigating construction cost
overruns into three broad categories:
a macroeconomic, that is, aggregates comprising the total cost of construction
b management
202 A.M. Jarkas and S. Marenjak

c business and regulatory environment.

Baloyi and Bekker (2011) grouped the factors responsible for construction cost overruns
into the following three major categories:
1 client, which further includes causes related to design and technical issues
2 contractor and supplier
3 external.
In addition, while Mahamid and Burland (2011) assigned such factors to 4 main
classifications:
1 financial
2 construction parties
3 construction items
4 environmental and political.
Durdyev et al. (2012) categorised causes of cost overruns in construction projects into the
following five major groups:
a macroeconomic
b workforce
c project finance
d project management
e external.
Abdulazis et al. (2013), however, expanded the classification of factors influencing
construction cost overrun to the following eight main groups:
1 contractor
2 information and communication
3 project management and contract administration
4 labour
5 material and machinery
6 external
7 design and documentation
8 financial.
Abdul Rahman et al. (2013), similarly, partitioned cost overrun causes to seven major
categories:
a contractor
b design and documentation
c financial
 Significant contributors to construction cost overruns 203

d information and communication technology

e labour management
f material and equipment
g project management.
Alhomidan (2013) allocated the contributors to construction cost overrun into the
subsequent six major groups:
1 project
2 managerial
3 consultant
4 external
5 construction items
6 financial.
Whereas Mahamid and Dmaidi (2013) divided such factors into five main groups:
1 cost estimating
2 construction items
3 projects participants
4 environmental
5 financing.
Notwithstanding that several group taxonomies have been proposed by different
researchers, a careful consideration of the various terminologies presented, the authors
argue, reveal a considerable level of redundancy, subordinate augmentations and
sub-settings. Despite the fact that major causes of construction cost overrun may be
different in different countries, even across sites, a universal agreement on a
categorisation scheme, under which such causes can be partitioned, the authors proclaim,
is possible, since the terms of such classifications can hold tenable regardless of the
geographical regions, environments, or jobsites, on which the specific causes assigned,
vary in their importance level.
The authors, therefore, propose a classification scheme, which can include and
represent all of the previously discussed group-categories, by relating the specific factor
to its source. For instance, causes related to: macroeconomic issues, i.e., world
commodity prices for materials, current state of the local economy, the quality of
materials and workmanship specified, supply and demand; design and technical
documentation; subcontractors and suppliers; construction project management;
communication; environmental regulations, permits, and government approvals;
unforeseen circumstances; or even force majeure factors, can be either traced to the party
responsible for, or simply partitioned under an external classification.
In view of this, the authors recognise the categorisation adopted by Ogunlana et al.
(1996), and Baloyi and Bekker (2011), and thus, with a slight amendment to both
schemes, propose the following four major groups:
204 A.M. Jarkas and S. Marenjak

a client
b consultant
c contractor
d external, under which the various causes explored by this research study shall be
allocated.

3 Research method and data analysis

Even though it may be criticised on the grounds of causal explanation (Ackroyd and
Hughes, 1981), this research study is inherently quantitative, where the results are mainly
used to underpin the qualitative interpretations, and thus, is not in conflict with the
phenomenological paradigm.
The related data to this investigation were collected by a structured – close-ended –
questionnaire survey. The logic underlying the selection of such a data collection method
is four-fold:
1 compared to telephone or face-to-face interviews, it is less intrusive and cost
effective, which is particularly advantageous for collecting large sample sizes
2 the familiarity of the questionnaire survey concept to most potential respondents
3 the practicality and relative simplicity, with which the sets returned can be analysed
4 in comparison with telephone and interviews methods, it assists in alleviating the
bias that may be introduced by researchers’ verbal and visual clues, respectively.
Based on previous reviewed studies on causes of cost overruns in the construction
industry, but most importantly, their applicability and relevance to local construction
projects, as recognised by industry practitioners and experts in the state, 45 causes were
identified and shortlisted as being potentially significant, or among the relatively
influential contributors to construction cost overruns in Kuwait. Table 1 presents the
causes surveyed, and the associated four major groups under which categorised.
Table 1 Contributors to construction cost overruns in Kuwait and related groups

No. Contributor Related group

1 Slow decision-making process by client Client
2 Lack of construction knowledge and experience of client Client
Representatives
3 Lack or limited authority granted to client representatives Client
4 Poor estimation of construction budget Client
5 Frequent change orders issued by client during construction Client
6 Delay in payment process by client Client
7 Difficulties in financing the project by client Client
8 Client’s poor communication and coordination with consultant Client
9 Contract procurement method Client
10 Design complexity level Consultant
 Significant contributors to construction cost overruns 205

Table 1 Contributors to construction cost overruns in Kuwait and related groups (continued)

No. Contributor Related group

11 Clarity of technical specifications Consultant
12 Discrepancy in contract documents Consultant
13 Incomplete design details at the tendering stage Consultant
14 Errors and omissions in design drawings Consultant
15 Design changes during construction Consultant
16 Contractual clauses and specifications interpretation Consultant
17 Consultant’s poor communication with contractor Consultant
18 Delay in responding to requests for information (RFI) Consultant
19 Delay in shop drawings review and approval by the engineer Consultant
20 Delay in review and approval of materials submission by the engineer Consultant
21 Stringent inspection procedures applied by the engineer Consultant
22 Inadequate qualifications and experience of consultant Consultant
23 Delay in payment review and certification by the engineer Consultant
24 Underestimation of construction cost Contractor
25 Difficulties in financing the project by contractor Contractor
26 Employment of unqualified and inexperienced contractor’s site Contractor
management personnel
27 Inadequate construction methods Contractor
28 Low labour productivity Contractor
29 Improper planning and scheduling of project’s activities Contractor
30 Delay in materials procurement Contractor
31 Lack or improper selection of suitable tools and equipment Contractor
32 Delay in subcontracting work packages Contractor
33 Poor communication between site management and labour force Contractor
34 Rework due to errors and faulty work Contractor
35 Inadequate labour supervision Contractor
36 Inadequate qualifications and experience of contractor Contractor
37 Accidents resulting from poor safety programme applied on site Contractor
38 Site layout Contractor
39 Inclement weather External
40 Unforeseen site conditions External
41 Unavailability or shortage of specified materials External
42 Frequent changes in statutory regulations External
43 Shortage in skilled labour and technical staff External
44 Cost escalation due to inflation External
45 Delay in performing inspections and certifications by statutory External
authorities
206 A.M. Jarkas and S. Marenjak

The target population included classified construction firms by the ‘Central Tenders
Committee’ (CTC) of the state. The classification criteria for Kuwaiti construction
contractors are based on:
a the credentials of the technical and administrative staff employed
b equipment and tools available
c the financial position and strength
d previous experience.
As a result, a total number of 400 organisations, classified under the first, second, and
third categories, were identified (CTC, 2013).
In order to obtain a statistically representative sample of the population, the formula
shown in equation (1) was used (Hogg and Tannis, 2009).
m
n= (1)
⎛ m −1 ⎞
1+ ⎜ ⎟
⎝ N ⎠
where n, m and N represent the sample size of the limited, unlimited, and available
population, respectively. On the other hand, m is estimated by equation (2).
z 2 * p *(1 − p )
m= (2)
ε2
where z is the statistic value for the confidence level used, i.e., 2.575, 1.96, and 1.645, for
99%, 95%, and 90% confidence levels, respectively; p is the value of the population
proportion which is being estimated; and ε is the sampling error of the point estimate.
Since the value of p is unknown, Sincich et al. (2002) suggest a conservative value of
0.50 be used so that a sample size that is at least as large as required be obtained. Using a
95% confidence level, i.e., 5% significance level, the unlimited sample size of the
population, m, is quantified by equation (2), as follows:
(1.96) 2 *0.50*(1 − 0.50)
m= = 385
(0.05) 2

Therefore, for the total number of 400 classified contractors, i.e., N, the representative
sample size of the population required is determined by equation (1), as shown below:
385
n= = 196
⎛ 385 − 1 ⎞
1+ ⎜ ⎟
⎝ 400 ⎠
The questionnaire comprised an ordinal measurement scale ranking the effect level of
each factor surveyed in an ascending order from 1 to 5. Nonetheless, it is important to
note that the numbers assigned to the scale do not indicate equal intervals or absolute
quantities, rather, the effect degree of each factor, from the respondents’ perception.
To establish a reasonable validity of the results obtained, and assess the reliability of
the questionnaire, a pilot test was conducted on samples of the prospective respondents.
The questionnaire, thus, was distributed to 22 contractors, who have expressed genuine
 Significant contributors to construction cost overruns 207

interest in providing objective assessment and feedback on the research data collection
instrument. The aim of this test was four-fold:
1 to assess the clarity, comprehensibility, interpretation, and appropriateness of the
questions provided in capturing the causes of cost overruns in construction projects
in Kuwait
2 to test the range adequacy of response choices
3 to assess the internal consistency of the questionnaire
4 to determine the efficiency, with which the respondents complete the questionnaires.
Apart from minor comments, which were related to some contextual interpretations of
few questions, the respondents’ feedback was positive. Therefore, the authors
rearticulated such questions using simpler expressions and incontrovertible background
to avoid any future confounding of the framework, within which the response of the
participants is sought.
The internal consistency of the questionnaire was tested by computing the
‘Cronbach’s alpha’ of the sets returned. The alpha coefficient ranges in value from 0 to 1,
and is used to describe the reliability of factors extracted from dichotomous, multi-point
formatted, or ordinal rating scale questionnaires. Cronbach’s alpha (α) is calculated by
equation (3) (Howitt and Cramer, 2008).

α=
n ⎛⎜
1−
∑ Vi ⎞
⎟ (3)
n −1 ⎜ Vtest ⎟
⎝ ⎠
where n is the number of questions; Vi is the variance of scores on each question; and Vtest
is the total variance of the overall scores. The higher the alpha coefficient score, the more
reliable the generated scale is. Nunnaly (1978) indicated that a value of 0.700 is an
acceptable reliability coefficient; however, lower thresholds are commonly encountered
in the literature.
Cronbach’s alpha for the sample group of contractors was computed by the Statistical
Package for the Social Sciences (SPSS V18) software, where a coefficient value of 0.782
was obtained, which indicates an acceptable measure of questionnaire reliability by all
respondents. Therefore, a total of 250 randomly chosen firms from the CTC list of
classified contractors were approached to participate in the survey, and followed up,
when possible, by phone calls, direct contacts, and frequent reminders.
The data collection phase spanned approximately ten months, after which, a total of
174 questionnaires were received, of which, 162 were deemed acceptable, representing
approximately 83% of the required sample size; however, suggests reasonable reliability,
validity, and robustness of the findings. The respondents are considered senior ranking
officials within their organisations, mainly comprising technical directors, contracts
managers, and construction project managers, with a minimum of 20 years of practical
experience in the local construction industry. Such a background of respondents lends
further credibility to the results obtained, the authors append.
The data collected were subsequently analysed using the ‘relative importance index’
(RII) technique (Fugar and Agyakwah-Baah, 2010; Jarkas and Bitar, 2012; Jarkas et al.,
2012). The RII for each cause surveyed was quantified by the formula shown in
equation (4).
208 A.M. Jarkas and S. Marenjak

5(n5) + 4(n 4) + 3(n3) + 2(n 2) + n1

RII = (4)
5(n1 + n 2 + n3 + n 4 + n5)

where n1; n2; n3; n4; and n5, are the number of respondents who selected: 1, for no
effect; 2, for little effect; 3, for moderate effect; 4, for strong effect; and 5, for very strong
effect, respectively.
The RII, which value ranges from 0 (not inclusive) to 1, was used to determine the
rank of each cause explored; the higher the RII value, the stronger the perceived
influence of the factor causing cost overrun within construction projects in the State.
On the other hand, the rank for each of the four main groups, as perceived by
contractors, was determined by quantifying the average value of the RIIs for all causes of
cost overruns allocated under; the higher the average value, the stronger the collective
effect of the related group (Sambasivan and Soon, 2007).

4 Results and discussion

The importance of the 45 contributors to construction cost overruns, as perceived by

general contractors operating in the State of Kuwait, is determined. The RIIs, and thus,
the ranks of causes surveyed, are presented, discussed, and where possible, compared to
previous related findings. The average RIIs of the main groups, moreover, are quantified,
and a comparison among their influence levels is carried out.
Table 2 depicts the RIIs, related groups, and ranks achieved, for each factor explored.
Table 2 Overall RIIs, related groups, and ranks of contributors surveyed
a
Contributor RII Related group Rank
Frequent change orders issued by client during construction 0.886 Client 1
Errors omissions in design drawings 0.841 Consultant 2
Incomplete design details at the tendering stage 0.833 Consultant 3
Design changes during construction 0.825 Consultant 4
Slow decision-making process by client 0.819 Client 5
Discrepancy in contract documents 0.802 Consultant 6
Unavailability or shortage of specified materials 0.797 External 7
Clarity of technical specifications 0.778 Consultant 8
Delay in payment process by client 0.767 Client 9
Contractual clauses and specifications interpretation 0.761 Consultant 10
Difficulties in financing the project by contractor 0.756 Contractor 11
Inadequate qualifications and experience of consultant 0.743 Consultant 12
Improper planning and scheduling of project’s activities 0.722 Contractor 13
Unforeseen site conditions 0.718 External 14
Inadequate labour supervision 0.714 Contractor 15
Delay in materials procurement 0.710 Contractor 16
Note: aRelative importance index
 Significant contributors to construction cost overruns 209

Table 2 Overall relative importance indices, related groups, and ranks of contributors surveyed
(continued)
a
Contributor RII Related group Rank
Underestimation of construction cost 0.698 Contractor 17
Inadequate construction methods 0.693 Contractor 18
Low labour productivity 0.690 Contractor 19
Inclement weather 0.687 External 20
Delay in review and approval of materials submission by 0.681 Consultant 21
the engineer
Contract procurement method 0.677 Client 22
Difficulties in financing the project by client 0.673 Client 23
Design complexity level 0.671 Consultant 24
Lack or limited authority granted to client representatives 0.667 Client 25
Poor estimation of construction budget 0.662 Client 26
Delay in responding to requests for information (RFI) 0.659 Consultant 27
Shortage in skilled labour and technical staff 0.653 External 28
Rework due to errors and faulty work 0.648 Contractor 29
Inadequate qualifications and experience of contractor 0.639 Contractor 30
Lack or improper selection of suitable tools and equipment 0.633 Contractor 31
Consultant’s poor communication with contractor 0.624 Consultant 32
Delay in payment review and certification by the engineer 0.607 Consultant 33
Employment of unqualified and inexperienced contractor’s 0.602 Contractor 34
site management personnel
Lack of construction knowledge and experience of client 0.593 Client 35
representatives
Delay in shop drawings review and approval by the 0.589 Consultant 36
engineer
Stringent inspection procedures applied by the engineer 0.581 Consultant 37
Client’s poor communication and coordination with 0.578 Client 38
consultant
Poor communication between site management and labour 0.567 Contractor 39
force
Site layout 0.564 Contractor 40
Cost escalation due to inflation 0.558 External 41
Accidents resulting from poor safety programme applied on 0.552 Contractor 42
site
Delay in subcontracting work packages 0.548 Contractor 43
Frequent changes in statutory regulations 0.535 External 44
Delay in performing inspections and certifications by 0.511 External 45
statutory authorities
Note: aRelative importance index
210 A.M. Jarkas and S. Marenjak

According to the overall perceived importance of factors surveyed, the results obtained
show that the ten top contributors to construction cost overruns in the State are the
following:

a frequent change orders issued by client during construction

b errors and omissions in design drawings

c incomplete design details at the tendering stage

d design changes during construction

e slow decision-making process by client

f discrepancy in contract documents

g unavailability or shortage of specified materials

h clarity of technical specifications

i delay in payment process by client

j contractual clauses and specifications interpretation.

Since some of the significant causes distinguished share common characteristics and
dependencies, to avoid redundancy, the discussion of such causes is carried out
collectively, irrespective of the rank order determined.
In comparison with the 45 causes surveyed, ‘frequent change orders issued by client
during construction’, with an RII of 0.886, is perceived as the salient contributor to
construction cost overruns in the state. This finding agrees with the results obtained by
Koushki et al. (2005), Oladapo (2007), Kaliba et al. (2009), Osman et al. (2009), Turkey
(2011), and Alinaitwe et al. (2013), whose investigations have asserted the adverse effect
of clients’ change requests on cost performance of construction projects in Kuwait,
South Africa, Zambia, Malaysia, Ethiopia, and Uganda, respectively.
According to Parker (2002), a change order is defined as “works, processes, or
methods that deviate from original plans and specifications.” Frequent disruptions and
redirection of works associated with change orders can, not only result in prolongation in
construction schedules, but also in labour productivity degradation, demolition and
rework, additional procurement activities, and possibly, disputes and litigations, all of
which can translate into significant construction cost overruns in projects under
development.
This outcome may be largely attributed, individually or collectively, to the following
three reasons:
1 clients’ little involvement, in particular those belonging to the private sector, in the
various design phases of projects
2 the lack of foreign designers’ experience in the social, cultural, and physical
environment of the state
3 simply due to clients’ ‘change of heart’, particularly to plans (i.e., architectural
layouts and circulations), fixtures, ornamental features, and finishes.
 Significant contributors to construction cost overruns 211

Consequently, changes are often requested after contractual agreements have been
executed; at times, even after physical erections of major parts of projects have taken
place.
With quantified RIIs of 0.841, 0.833, 0.825, 0.802, 0.778, and 0.761, ‘errors and
omissions in design drawings’, ‘incomplete design details at the tendering stage’, ‘design
changes during construction’, ‘discrepancy in contract documents’, ‘clarity of technical
specifications’, and ‘contractual clauses and specifications interpretation’, rank 2nd, 3rd,
4th, 6th, 9th, and 10th, respectively.
Noting that 60% of the discerned critical causes instigating cost overruns are related
to the consultants’ outputs, further corroborate the results obtained by Jarkas and Bitar
(2012), whose research study has identified ‘constructability’ as the most prominent
concept affecting the performance of construction projects in Kuwait.
Constructability, commonly referred to as ‘buildability’ in Europe, as defined by the
Construction Industry Institute (CII) (1986), is “the optimum use of construction
knowledge and experience in planning, design, procurement, and field operations to
achieve overall project objectives”. On the other hand, the Construction Industry
Research and Information Association (CIRIA) (1983), describes buildability as “the
extent to which the design of a building facilitates ease of construction, subject to the
overall requirements for the completed building”. Although both expressions target
similar issues, the term constructability covers wider range of disciplines including
conceptual planning, design, procurement, and construction.
Nevertheless, an early attempt to address this concept can be credited to
Sir Harold Emmerson (1962), when he suggested a new form of relationship between
designers and contractors. The point of concern was the lack of cohesion between the two
parties and their inability to see the whole construction process through each other’s eyes.
Errors and omissions in design drawings, incomplete details, discrepancy in contract
documents, unclear technical specifications, and ambiguous contractual clauses, require
continuous requests for information, clarifications, and interpretations, and thus,
consecutive disruptions and interruptions to work progress. Furthermore, numerous
changes or substantial alterations to design documents during construction, may lead to
complete halt of related activities, productivity degradation, possible demolition and
rework, schedule slippage, and ultimately, cost overruns (Jarkas, 2013; Subramanyan
et al., 2012).
The perceived effects of such constructability factors on construction cost overruns
can be ascribed, in whole or in part, to the following primary causes:
1 the insufficient durations and tight schedules imposed upon consultants to develop
and review design alternatives, related details, specifications, and contract
documents, and therefore, contract documents are often unclear, incomplete, and
contain serious discrepancies, errors, and omissions among the various disciplines
involved
2 the shortfall in applying constructability principles among several consultants
operating in the state, which may further suggest a lack of awareness on their part of
the importance of this concept to the successful progress of the construction
operation
3 the deficiency of some consultants in providing ‘quality’ work and effective
professional services.
212 A.M. Jarkas and S. Marenjak

Supporting the findings of Odeh and Battaineh (2002), Iyer and Jha (2005), Faridi and
El-Sayegh (2006), Tumi et al. (2009), and Alhomidan (2013), whose research studies
have determined the detrimental impact of clients’ inefficiency in decision-making on
construction cost performance in Jordan, India, UAE, Libya, and Saudi Arabia,
respectively, ‘slow decision-making process by client’, with an RII of 0.819, ranks 5th, in
comparison with the 45 causes surveyed.
In accordance with local industry practice, important decisions are most often
required by clients both, before and during the physical developments of construction
projects. For instance, the formal approval of shortlisted subcontractors, suppliers,
mechanical, electrical and plumbing (MEP) equipment and fixtures models (including
trade-marks and country of origin), architectural facades, finishes and colour samples of
materials, hard and soft landscape features, revised plans, in addition to technical
specifications for alternatives and substitutions, must be obtained from clients prior to
materials procurement and commencement of related activities.
‘Delay in payment process by client’, a finding which is directly related to clients’
inefficiency in decision-making, and in further agreement with the results obtained by
Olawale and Sun (2010), Abdul Rahman et al. (2013), Alhomidan (2013), and Alinaitwe
et al. (2013), whose studies have identified this factor among the major causes of
construction cost overruns in the UK, Malaysia, Saudi Arabia, and Uganda, respectively,
with an RII of 0.767, ranks 9th among the causes examined.
However, in order to position this factor within the framework of the study, it is
important not to confuse this cause with ‘clients’ financial difficulties’, the importance
level of which is elicited separately, on a justifiable ground that prolonging payments
process due to clients’ pure inefficiency or sheer reluctance in decision-making, and/or
unnecessarily bureaucratic procedures, should be distinguished from constraining
financial circumstances, which can, on the one hand, be related to unexpected and
unforeseen events, and thus are beyond the control of clients, or may simply be linked to
clients’ mismanagement of financial resources, on the other.
Irrespectively, excessive delays in processing contractors’ due payments can
create financial overburdens on contractors to meet their obligations toward their
subcontractors, suppliers, site technical staff, and direct labourers, and hence, this may
lead to a serious ‘knock-on’ cash flow problem, where the financial stability of the whole
chain may be severely impacted.
In view of the preceding discussion, the inefficiency in clients’ decision-making
process can be attributed, in whole or in part, to the following reasons:
a the clients’ bureaucratic chain of approvals, most noticeably in public projects
b the limited authority vested in clients’ staff, especially those at the supervisory
levels, to render timely decision on submitted samples of proposed materials,
specifications of alternatives or substitutions, and payment applications received
c the cultural perception, as the case with most developing countries, of possible
contractors’ favouritism in the case of prompt evaluation and acceptance of
submissions, including positive recommendation for payments processing
(Al-Tabtabai, 2002), encourages clients’ representatives to either prolong the
decision-making process, or simply shift such a responsibility toward the higher or
top clients’ administrative staff, where the decision could be significantly delayed.
 Significant contributors to construction cost overruns 213

Juxtaposing all of the aforementioned required decisions with the frequent changes
requested by clients along the course of the construction operation, in addition to the
financial difficulties encountered by contractors as a result of payments stagnation, and
the pernicious effect of clients’ inefficiency in decision-making on construction cost
performance of projects becomes palpable.
With an RII of 0.797, ‘unavailability or shortage of specified materials’, ranks 7th
among the 45 causes of cost overruns explored. This outcome substantiates the findings
of Okpala and Aniekwu (1988), and Koushki and Kartam (2004), whose investigations
have recognised the inimical impact of this factor on cost performance of construction
projects in Nigeria and Kuwait, respectively.
Although it can be reasonably argued that this finding is connected with foreign
consultants’ lack of knowledge of the local availability of specified construction
materials, the outcome may be further ascribed to the current ‘supply-demand’ curve,
where the demand for some materials, in relation to its local availability, could be much
higher, and thus creating a major shortage of supply to projects underway. It could also
be referred, according to the results obtained by Bubshait and Al-Juwait (2002), and
Enshassi et al. (2010), to local suppliers’ manipulation and market monopoly, in order to
induce an ‘artificial’ inflation of prices.
The result is conceivable as materials are essential to the construction process, and
hence, work cannot be accomplished without them. Consequently, unavailability,
shortage, or interrupted supply of materials to jobsites leads to disruption of the
workforce momentum and progress of activities, which may necessitate, at times,
procuring at higher than contractual prices, otherwise resort to change orders for
substitutions or alternatives, and subsequently undergo through the wasteful approval
cycle process, as previously highlighted. Nonetheless, either route entails a construction
cost overrun, the findings suggest.
Table 3, on the other hand, presents the overall ranking of the four major groups,
under which the factors investigated are categorised.
Table 3 Groups average RIIs and ranks

Group Number of contributors surveyed Average RII Rank

Consultant 14 0.714 1
Client 9 0.702 2
Contractor 15 0.649 3
External 7 0.637 4

With an average RII of 0.714, ‘consultant’ related causes rank 1st in their collective
influence, and hence, are perceived as the most significant contributors to construction
cost overruns in the State of Kuwait. Causes partitioned under the ‘client’ group, with an
average RII of 0.702, rank 2nd over the ‘contractor’ and ‘external’ group factors, which
come in 3rd and 4th in ranks, with average RIIs of 0.649 and 0.637, respectively.
It is worth noting that equal basis comparison of group rankings necessitates similar
taxonomies. Contrasting the pattern established by this study to those determined by
previous investigations is, therefore, inapplicable.
The pattern depicted, in view of the critical causes determined, is justified, where out
of the top 10 factors, 6 and 3 (i.e., 90%) belong to the consultant and client groups,
respectively. The outcomes further reveal an interesting trend. By inspection, it can be
214 A.M. Jarkas and S. Marenjak

realised that the ‘mean values’ of the RIIs of the groups make modicum distinctions
between the collective effects of causes belonging to the ‘consultant and client groups’
(0.714 vs. 0.702), on the one hand, and those related to the ‘contractor and external
groups’ (0.649 vs. 0.637), on the other, a pattern which may be expected, noting that the
respondents belong to the ‘contractor’ group, and thus may suggest some sort of a ‘bias’
on the respondents’ side, as a result of an anecdotal ‘blaming’ attitude.
However, upon further examination of the RIIs values of the causes allocated under
the contractors’ category – although none is identified within the significant contributors
established – coupled with a perfunctory comparison between the mean RII value of the
contractors’ group and the average RII values of the other groups, the overall pattern
emerged reasonably negates such a plausible inclination. Simply put, the quantified RIIs
reveal tenuous differences between the effects of causes associated with the ‘contractor’
group, and those linked to other groups, both separately and cumulatively, suggesting,
therefore, reasonable impartiality, objectivity, and credibility of the results obtained.

5 Conclusions and recommendations

Despite the improvements in construction project management accomplished over the

years (Arcila, 2012), the inability to complete projects within budgets continues to be a
chronic problem in the industry, and thus, it appears that there is always a need for debate
and further research at both levels; academia, and industry.
This study, therefore, has indentified, explored and, according to the determined RIIs,
established the ranks of 45 causative factors perceived to instigate construction cost
overruns in Kuwait. The factors examined were, furthermore, classified under the
following four major groups:

1 client

2 consultant

3 contractor

4 external.

Based on the overall perceived importance of the factors surveyed, the findings reveal
that the most significant contributors to construction cost overruns in the state, in a
descending order, are the following:

1 frequent change orders issued by client during construction

2 errors and omissions in design drawings

3 incomplete design details at the tendering stage

4 design changes during construction

5 slow decision-making process by client

 Significant contributors to construction cost overruns 215

6 discrepancy in contract documents

7 unavailability or shortage of specified materials

8 clarity of technical specifications

9 delay in payment process by client

10 contractual clauses and specifications interpretation.

Additionally, the quantified average RIIs of the four major groups, under which the
causes explored are categorised, recognise the factors associated with the ‘consultant’
group as most influential, followed by the ‘client’, ‘contractor’, and ‘external’
group-factors, respectively. Nonetheless, the modicum differences among the perceived
relative importance of the major groups, and the causes investigated, suggest that the
collective impact of each group factors, in addition to most of the individual causes, are
fairly comparable with those belonging to other groups, on the one hand, and among one
another, on the other.
Even though such a pattern renders further validity to the causes shortlisted, and
subsequently surveyed, distinguishing one cause from another is rather impractical.
Consequently, what is suggested to guide the problem solution is to consider most of the
causes surveyed, with special emphasis, however, being placed on the prominent factors
identified.
It is a common objective among clients, consultants, contractors, and policy makers
in Kuwait to enhance the cost performance of construction projects, which can be
augmented if original contracts flow with minimum or controlled variability, the findings
indicate.
The adverse effect of frequent change orders on construction cost overruns can be
moderated by clients’ direct involvement in the design phase of projects through
authorised representatives, who can effectively review, evaluate, scrutinise, and render
timely feedback on the compatibility level of the various options and specifications
proposed by consultants with local traditions and environmental conditions, prior to
commencement of construction activities.
This cause may be further developed by appointing, in the first instance, consultants
who possess sufficient expertise in the local culture, physical environment characteristics,
web of suppliers, and availability of construction materials, so that, with limited
intervention from clients, can largely achieve projects’ objectives. Therefore, minor
changes to drawings or specifications, should they become necessary along the course of
the construction operation, can be implemented with minimum cost impacts.
Clients, moreover, can reasonably restrain cost overruns by devising a ‘modus
operandi’ for efficient decision-making, including timely actions on contractors due
payments, which may be achieved by:

a avoiding the bureaucracy in the approval process by empowering clients’

representatives, as previously suggested, with adequate authorities to make the
technical and financial decisions required
216 A.M. Jarkas and S. Marenjak

b securing the finance required for projects developments, which is particularly

relevant to private sector developers, in accordance with pre-determined cash flow
schemes.
Such practices can encourage ‘head-starts’ in materials procurement, particularly those
related to ‘long-lead’, short in quantities, and locally unavailable items, and hence, can
prove useful in improving cost performance of projects underway.
On the other hand, the results obtained distinctly identify a shortcoming of
constructability practices among the various consultants operating in the state, which may
suggest a lack of cognisance on their part of the importance of this concept to the
construction industry, and thus, reinvigorates the ‘50-year old’ concern of Emmerson
(1962).
In view of this, it would be prudent for clients to encourage contract procurement or
project delivery methods, which allow the involvement of contractors during the design
stage of projects, such as, the design-build (DB), design-build-operate-transfer (DBOT),
or engineering, procurement, and construction (EPC). Such an approach may prove
effective in incorporating the construction experience at the early stage of the projects
development process, so that the associated benefits can be realised during the execution
phase (Iyer and Sagheer, 2012; Alinaitwe et al., 2013). Perhaps, moreover, policy makers
may consider implementing a formal constructability assessment application as a
‘proviso’ for granting construction permits, where minimum requirements of
constructability principles must be satisfied before a permit can be issued.
The outcomes further demonstrate that the notion of exerting pressure on consultants
to cut down design fees and durations – a common local practice – is simply false
economy. Decisions made during the design phase of a project not only have a maximum
impact on its life-cycle expenditures, but would also dictate its constructability level,
even though the consultant’s fee commonly ranges between 3% to 6% of the project’s
construction cost (Jarkas et al., 2012). It would, furthermore, justify, from the
consultant’s perspective, the ‘cutting corner’ approach typically used in such
circumstances, to both, quality and design time, in order to rationalise the cost/benefit
ratio of the contract (Jarkas and Bitar, 2012).
Notwithstanding that several findings and insights have been drawn from this
investigation, which has focused on identifying, exploring, and ranking the causes of cost
overruns, and consequently, distinguishing the significant contributors to this chronic
phenomenon in the construction industry of the state, it is equally important to conclude
by the notion that the incidents of cost overruns within construction projects can be
efficaciously handled when their inimical ‘effects’ are recognised. Subsequently, it is
recommended to explore, and where possible, quantify the ramifications of the causes
explored, especially those perceived as most significant, taking into consideration,
moreover, the perceptions of both, clients and consultants, which may further assist in
corroborating the outcomes of this study.
The impacts of ‘budget deficits’, ‘debts and financing costs incurred’, ‘loss in
productivity and projected profits’, ‘claims, disputes and litigations’, in addition to
possible ‘abandonment’ of projects, should be further examined and determined through
an integrated approach geared toward linking the relationship between the causes of cost
overruns explored and their tangible effects, so that clients and industry practitioners can
be equipped with practical guidance to control, mitigate, or effectively manage such
consequences.
 Significant contributors to construction cost overruns 217

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