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Causes of cost overruns in building Causes of cost

overruns
construction projects in Asian
countries; Iran as a case study
Shima Amini, Alireza Rezvani and Mohsen Tabassi 2739
Department of Architecture, Mashhad Branch, Islamic Azad University,
Mashhad, Iran, and Received 26 May 2021
Revised 2 August 2021
Seyed Saeed Malek Sadati 4 October 2021
16 December 2021
Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran 30 January 2022
7 March 2022
Accepted 28 March 2022
Abstract
Purpose – Cost overruns have been identified as the most significant challenge for construction sector
stakeholders. Like many developing countries, the Iranian construction industry suffers from poor cost
performance. So, the current research aims to investigate the causes of cost overrun in Iranian construction
projects. This paper also reviews the findings of similar studies conducted in several Asian countries.
Design/methodology/approach – This paper includes a literature review and a quantitative method with a
questionnaire survey. The review is limited to the studies investigating the causes of cost overrun in an Asian
country in the last decade. Moreover, the current research was conducted through a questionnaire prepared
based on 43 common factors identified through the literature review. The required data were gathered from the
representatives involved in handling construction activities in Iran. The collected data were analyzed based on
relative importance index (RII), using the SPSS software package.
Findings – The results showed that poor site management, improper planning, fluctuation of prices of
materials, lack of experience, and poor economic condition are the critical reasons for cost overrun in Iranian
construction projects. The findings also indicated that among the studies conducted in Asian countries, the first
three factors have the highest frequency.
Originality/value – This paper highlighted most studies concerning the cost overrun factors in construction
projects in different Asian countries in recent years. Up-to-date knowledge helps to understand the complexity
of this field in various periods and therefore minimizes the risk of cost overrun. This research can also be used
as a benchmark for further studies to clarify similar issues in other developing countries.
Keywords Cost overrun, Building construction project, Causative factors, RII, Iran
Paper type Research paper

1. Introduction
The construction industry contributes positively to the growth of the socio-economic
development of a nation, especially in developing countries. Generally, a project is considered
successful if it is completed within a stated cost or budget, used according to the target date,
and there is a high level of satisfaction concerning the project outcome among the project
participants. However, one of the main problems hampering the successful completion of
most projects in the construction industry is cost overruns that directly affect the progress of
the task, sometimes leading to the abandonment of projects. According to Flyvbjerg (2009),
the average cost overrun for large-scale infrastructure projects ranges from 20.4% to 44.7%;
and nine out of 10 projects have cost overruns worldwide. The literature review shows that
most developing countries suffer from everyday causes of delay and cost overrun because of
economic difficulties, which usually lead to tight financial in construction projects in these
countries.
Engineering, Construction and
Iran is a developing country, and the construction industry is one of its critical economic Architectural Management
sectors. So, it has a significant portion in the formation of the capital city acting as an Vol. 30 No. 7, 2023
pp. 2739-2766
economic stimulus due to its numerous connections with different economic sectors. Iran’s © Emerald Publishing Limited
0969-9988
Central Bank announced that 4.7% of GDP is related to the construction sector in 2020, and DOI 10.1108/ECAM-05-2021-0445
ECAM the share of this part of the entire country’s budget has been increased from 17.5% in 2003 to
30,7 32% in 2016.
Although in Iran, a lot of money has been spent on construction, the industry faces many
challenges, such as delays in on-time completion of the project and expenditure exceeding the
budget. Construction (especially building) projects have problems with construction techniques
and management as well as limitations of funds and time. Indeed, the critical feature of
developing decision support systems specifically designed to facilitate the decision-making
2740 process in the Iranian construction sector has not received sufficient attention (Samarghandi
et al., 2016). According to the results of recent studies (i.e. Dabirian et al., 2020; Balali et al., 2020),
projects’ execution and deliverable performance in Iran decreased dramatically because of the
projects’ poor time and cost performance. Based on a study conducted by Heravi and
Mohammadian (2017), 24% of the projects in Iran have encountered more than 25% of cost
overruns and delays. Also, in a similar study, Samarghandi et al. (2016) interpreted that the
average delay per year in the Iranian construction projects is 5.9 months, and the overall cost
overrun is 15.4%. So, the results of the previous studies show that cost overrun in the
construction industry is one of the problems that many contributors face in Iran.
Among the studies conducted in Iran, to rank the causes of cost overrun in the
construction industry, we found five surveys, three of which have focused on the specific
types of construction buildings (Balali et al., 2020: mega-hospital construction projects,
Mirzaei Matin, 2016: water construction projects, Derakhshanalavijeh and Teixeira, 2017:
Gas-Oil construction industry). Two other studies have been published in Persian. Amini et al.
(2021) investigated the causes of cost overrun only in one of the cities of Iran (Mashhad), and
Dabirian et al. (2020) ranked the causes of cost overrun with a small sample size (36 experts).
Therefore, there is still a need to investigate the issue of cost overrun in Iranian construction
projects in a larger-scale study. To this end, the present paper aims to identify and rank the
leading causes of cost overrun in building construction projects in Iran with a broader
study scale.
Given that no study comprehensively discussed the causes of cost overrun in Asian
countries, the current study intends to clear up the missing gaps of the proposed literature.
In addition, it aids the project managers in developing a comprehensive list of potential
causes that shall be managed to avoid the consequences of cost overruns. Indeed,
understanding common causes among these countries, despite economic, political, and
social differences, could be helpful in future research. The framework of this study is
shown in Figure 1.
Unfortunately, the construction industry operators in Iran have limited resources for
addressing so many contributors to the cost overruns. Due to its strategic importance to the
construction operators, it is essential to identify the fewest number of factors having the most
outstanding contribution to the cost overruns. This knowledge can help the industry
operators focus their efforts and available resources on addressing the most influential
contributor for maximum results, which is, in turn, the study’s primary objective. Also, a
comparison of the results of this paper with those of similar studies conducted in Iran can help
different parties to understand the critical causes of cost overruns for reducing their impacts
on project performance. Furthermore, the identification and ranking of such factors can assist
owners, contractors, and the project management team in the following:
(1) Preparing a more realistic and accurate project cost and schedule.
(2) Completing the project on time with the projected budget.
(3) Taking the necessary steps and actions in advance to avoid cost overrun.
(4) Giving more attention to the most crucial factors.
 Causes of cost
overruns

2741

Figure 1.
Study framework

2. Literature review
2.1 Definition of cost overrun
There are various definitions of cost overrun across the world. For example, Enrica et al.
(2021) described project cost overrun as the difference between the final actual cost of a
construction project at completion and the contract amount agreed by and between the
owner and the contractor during the signing of the contract. Flyvbjerg et al. (2002)
interpreted cost overrun as the difference between forecasted and actual construction costs.
The difference may be measured in absolute or relative terms. In complete terms, cost
overrun is calculated as the actual minus estimated cost. In relative terms, overrun is
measured as (1) actual cost in percent of estimated cost or (2) the ratio of actual divided by
estimated cost. Size, frequency, and distribution of cost overrun should all be measured as
part of measuring cost overrun for a specific investment type (Flyvbjerg et al., 2018). The
budget at the decision to build is used as the reference for determining the overrun that may
be incurred, and actual construction costs are defined as accounted construction costs at the
time of project completion.
Cost overrun is also called cost acceleration, cost increment, cost increase, cost escalation,
or budget overrun.
ECAM 2.2 Effects of cost overrun
30,7 In many countries, attempts have been made to assess the scale of cost overruns in
construction projects. Some studies identified the most critical factors causing cost overrun in
several countries and various project types. In contrast, other studies discussed the influence
of these factors on the success and failure of construction projects.
The World Bank has announced that 30–40% of construction projects face cost overruns
globally (Balali et al., 2020). The study of Prajapati et al. study (2016) was an assessment of the
2742 causes and effects of cost overrun on construction projects in India. The study found that cost
overruns ranged between zero and 120% of contract amounts. Shehu et al. (2014) found that
more than half of Malaysian construction projects (55%) experienced cost overruns, and
public sector projects performed better than private sector projects. Senouci et al. (2016), in
their study on the increase of term and cost in 122 construction contracts in Qatar, showed
that 54% had their prices increased and 72% of their deadlines increased. According to
Samarghandi et al. (2016), the average delay per year in the Iranian construction projects is
5.9 months (one can expect 11.8 months of delay if the original project duration is 24 months),
and the overall cost overrun is 15.4%. The findings of some studies on construction cost
overruns are shown in Table 1 below.

No Author(s) Study area Cost (%) Project type

1 Bentil et al. (2017) Ghana 75% Public projects

34% Private projects
2 Prajapati et al. (2016) India 10–30% Public school building projects
3 Kadiri and Onabanjo (2017) Nigeria 9.5% Public building projects
13% Private building projects
4 Senoucia et al. (2016) Qatar 54% Construction sector projects
5 Yap and Skitmore (2017) Malaysia 5–20% N.A.
6 Kakitahi et al. (2016) Uganda 4.5% Building project
7 Hwang et al. (2014) Singapore 7.1% N.A.
Table 1. 8 Al-Hazim et al. (2017) Jordan An average of 214% 40 public infrastructure projects
Summary of cost 9 Mahmid (2011) Palestine 15% Construction projects
overrun in construction 10 Samarghandi et al. (2016) Iran 15.4% Construction projects
projects Source(s): Authors (2021)

The data in the table shows that the amount of cost overrun varies according to the location.
Only by comparing ten studies, a range of 4.5–214% increase in construction costs is observed.

2.3 Factors influencing the cost overrun during the construction stages
The body of knowledge has attracted myriads of studies on cost overrun. The majority of
which have reported the causes of cost overrun in different construction project types in
various regions and countries.
Ahady et al. (2017) investigated the cost overrun problems for building construction
projects in Afghanistan. For this purpose, a quantitative survey was performed among
clients, contractors, and consultants representatives involved in building construction
projects in Afghanistan. They found that the crucial sources for cost overruns are market
inflation, corruption, shortage of supply of construction material required, and fluctuations in
the cost of building. Abusafiya and Suliman (2017) identified the major causes of cost overrun
in the Bahrain construction sector. A list of the causes was collected through an extensive
literature review, historical construction projects records, and expert opinions—a
questionnaire survey conducted with representatives from local contracting, consulting,
and client firms. The results showed that frequent design changes, mistakes during
construction, and schedule delays were considered the most important causes of cost overrun.
 Ramabhadran (2018) investigated the various factors influencing cost overrun and the Causes of cost
mitigation measures in the UAE construction industry. The most critical causes of cost overruns
overrun are poor productivity, insufficient early planning, delayed completion, and lack of
skilled resources and motivation. He found that the most effective mitigation measures for
cost overrun are detailed estimation, brainstorming sessions for cost control, procurement
planning, mobilizing resources at the right time, and training of workers. In a similar study
conducted in the UAE, Johnson and Babu (2018) used a concurrent mixed-methods approach,
a questionnaire, and an interview with UAE construction professionals, to analyze the 2743
significant causes of time and cost performance. They stated that the top five causes of cost
overrun are design variation, poor cost estimation, delay in client’s decision making, financial
constraints of the client, and inappropriate procurement method.
Rezaei and Jalal (2018) carried out a study to determine the causes of delay and cost-overrun
in the construction industry of Northern Iraq. Sixty-one delay factors and forty-two cost
overrun factors were considered in this study. The three major causes of delays were found as
security measures, the high number of sub-contracts by the same contractor, and poor labor
productivity. Similarly, three major factors causing cost overrun were scarce labor and skill
availability, inappropriate contractor policies, and domination of the construction industry by
foreign firms and aids. Bekr (2015) identified the causes of cost overrun in construction projects
in Jordan. A comprehensive literature review was made to carry out the study. A questionnaire
survey was conducted to find the causes of cost overrun related to client, consultant,
contractor, financial management, resources, and external factors. He found that the most
important causes were: Schedule delay, frequent design changes, additional works, mistakes
in design, inadequate planning and scheduling, and inflation/prices fluctuation.
Among the studies conducted in Iran, Derakhshanalavijeh and Teixeira (2017) evaluated the
relative importance of the significant factors contributing to the Gas-Oil construction industry
of Iran. Their findings revealed that the leading causes of cost overrun include inaccurate cost
estimations, improper planning, frequent design changes, inadequate labor, and inflation of
prices. Balali et al. (2020) ranked cost overrun factors in mega-hospital construction projects of
Iran. The results illustrated that rework, not allocating sufficient budget from the government
during the project and lack of supervisors’ technical knowledge were the most crucial factors in
contractors, employers, and consultant groups, respectively. Mirzai Matin (2016) identified the
practical factors for cost overrun and time delay in water construction projects in Iran. The
results showed that the top issues in cost overrun were: bureaucracy in bidding method,
inflation, governments economic condition, not enough survey and information before design,
difficulties in owners’ monthly payment, and instability of the material prices. Dabirian et al.
(2020) stated that lack of cash flow, lack of technical and specialized personnel, and the reworks
are the most affecting factors on the cost overrun in Iran. In a similar study, Amini et al. (2021)
found that causative factors of cost overrun in construction projects in Iran are poor project
management, improper planning, inflation, and mistakes during construction.
Based on an intensive literature review, the top ten rankings of building construction cost
overrun factors in various Asian countries are summarized in Table A1. This table shows 59
leading causes of cost overrun according to 38 articles conducted in 13 Asian countries,
including Iran, Turkey, Malaysia, Pakistan, India, Bahrain, Jordan, Iraq, Afghanistan,
Vietnam, UAE, Saudi Arabia, and Palestine. Figure 2 shows how many papers were selected
to review from 2011 to 2021.

3. Research methodology
For achieving the aim of the research, the work has been divided into two stages. In the first
iteration, an intensive literature review was conducted based on more than 800 different
sources. In this regard, a wide variety of journals was considered. Some of the papers were
found through resources given by the database, e.g. Scopus and Web of Science. We extended
ECAM our search to the reference lists provided in the previous search results and Google Scholar. In
30,7 the same vein, the most relevant sources were selected using the keywords “construction
projects OR construction industry” AND “cost overrun”.
Since Iran is a developing country in Asia, our review is limited to the studies
investigating the causes of cost overrun in building construction projects in an Asian
country. In recent years, the political and economic conditions of many Asian countries,
including Iran, Afghanistan, Saudi Arabia, Iraq, Turkey, etc., have been changing
2744 significantly. All the studies on the cost overruns of construction projects in Iran have
been conducted during the last ten years, and it shows that this issue has been considered an
essential issue. Indeed, the recent economic problems in Iran, such as inflation, exchange rate
fluctuations, intense price fluctuations, etc., have seriously affected the construction industry
and construction costs. So, the results of studies conducted in the last decade have been
considered and reviewed to analyze the current situation better. One of the objectives of this
study is to compare the results of these studies with each other. To develop a better
comparison and the possibility of presenting a new ranking under the ranking of each study,
we excluded the studies in which there was no ranking of the cost overrun factors or those in
which less than ten causative factors were identified. While extracting the cost overrun factor
in each study, we avoided repetitions in listing the causes. For instance, “delay in preliminary
handing over of project”, “delay in delivery of construction documents”, “delay in delivery of
work by subcontractors”, etc. were merged and expressed as “delay in planned activity”.
Also, similar factors were used to reflect the same meaning between one study and another.
For example, factors such as “fluctuation in money exchange”, “economic instability”,
“inflation”, etc., will be considered in the category “poor economic conditions”.
To identify the “top ten causative cost overrun factors” in the Asian countries, we
considered the frequency of different factors in the selected studies. Based on the actual
ranking, we calculated the new scale. The calculation of the overall ranking index (ORI) for
the selected factors is based on this equation (Zidane and Anderson, 2018):
10  
1 X 10 X Ni
ORI ¼ 3 ðNi Þ 3 (1)
F i¼1 i¼1
i
where ORI: is the overall ranking index; F: is the number of studies (which is equal to 38 in this
study); the number i is the actual ranking (from 1 to 10 since all the rankings are about the top
ten); Ni represents the frequency of each rank in one row.
This study prepared a list of factors affecting the cost overrun in construction projects
through a literature review. The list was then revised through face-to-face interviews with six
university professors who had extensive experience in executing construction projects. In
addition, the experts checked the face and content validity of the instrument and the accuracy
of translation from English to Persian.
In the next stage, a quantitative survey was designed to acquire information from
individuals regarding the importance of identified factors with the Iranian construction

12
10
8
6 11
4
Figure 2. 2 4 4 5
List of paper’s year 3 3 3 2
0 1 1 1
published
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
industry. The impact of each factor on cost performance was measured on an ordinal five- Causes of cost
point Likert scale (where 1 very low, 2 low, 3 medium, 4 high, 5 very high impacts), similar to overruns
what is used by Enshassi’s et al. (2009). According to Ubani et al. (2015), the following
statistical equation was used to calculate the sample size.
z2 3 p 3 ð1  pÞ
n¼ (2)
d2
2745
where n 5 Sample size; Z is the statistical value for the confidence level used, 1.96 for 95%
confidence level; P indicates the value of the population proportion estimated and d denotes
the sampling error of the point estimate. Since the value of P is unknown, Sincich et al. (2002)
suggested a conservative value of 0.50 be used so that a sample size that is, at least as large as
required, be obtained.
To achieve predictably, representative, and robust quantitative data, the questionnaires
were distributed randomly among three groups of clients (active members in Association of
Mass Housing Builders), contractors (working in different contracting companies), and
consultants (architects and civil engineers with the first- and second-grade work permits of
the construction engineering organization) in Tehran and Mashhad as two metropolises of
Iran. The survey was done online through the Porsline website (a Persian professional
networking site). Before distributing the questionnaires, a pilot study was conducted on 15
respondents who met the inclusion criteria, such as being involved in high-rise construction
projects and having at least ten years of experience. Five professional engineers and ten
construction managers participated in the pilot study to evaluate the instrument’s reliability.
Two statistical methods were used to analyze data collected from the questionnaires: the
reliability test using Cronbach’s alpha coefficient and the relative importance index (RII) to
measure the level of importance of factors indicated by respondents.

3.1 Reliability analysis

Reliability analysis is a technique to verify the internal consistency of the data having
multiple scales. Cronbach’s alpha method assesses intrinsic consistency based on the average
correlation between data that were measured in an identical manner (Cronbach, 1951).
Cronbach’s alpha can be calculated as follows:
 P 2
k σ
a¼ 1 2i (3)
k1 σi
P
where: k is the number of items, σ 2i the variance of each item, σ 2i is a total variance (Durdyev
et al., 2012). Typically, Cronbach’s coefficient alpha value range is between 0.0 and þ 1.0.
Table 2 presents the rule interpretation of Cronbach’s alpha.

Cronbach’s alpha Internal consistency

0.9 ≤ α Excellent
0.8 ≤ α < 0.9 Good
0.7 ≤ α < 0.8 Acceptable
0.6 ≤ α < 0.7 Questionable
0.5 ≤ α < 0.6 Poor Table 2.
α < 0.5 Unacceptable Criteria for assessing
Source(s): George (2011) reliability
ECAM 3.2 Relative Importance Index (RII)
30,7 The RII was calculated using the following formula to analyze the returned questionnaires. It is a
known practice among scholars to use RII to identify factors influencing cost overrun (i.e.
Durdyev et al., 2012; Kamaruddeen et al., 2020). The value of RII ranges from 0 to 1 where the
highest value indicates the high significance of the item as a cause of cost overrun in construction
projects. The RII for each component was calculated according to Eq. 4 (Enshassi et al., 2009).
P5
2746 Wi $Xi
RII ¼ i¼1 (4)
A3N
W 5 Weight given to each factor by the respondents, ranging from 1 to 5
(1) Frequency of ith response given for each cause
(2) A 5 Highest weight (i.e. 5 in this case)
(3) N 5 Total number of respondents

4. Survey results and discussion

Fifty-nine (59) cost overrun factors were initially extracted based on the conducted intensive
literature review. The expert panel reviewed and rated the instrument for the relevance and
representativeness of each item to assess the face and content validity of the instrument. By
doing so, the number of factors was reduced to 48 ones. Then a pilot study was conducted to
evaluate the reliability of the instrument. The Cronbach’s alpha value for 15 questionnaires was
0.614, which is hardly acceptable. Hence, the consistency of the factors was evaluated by
“Cronbach’s alpha if item deleted” to see which item is inconsistent with others. It was
determined that by removing five factors, the consistency among the factors resulted in an
increase in Cronbach’s alpha up to 0.8, which is good enough in terms of the internal consistency
of the items. Finally, the instrument was designed and prepared in a questionnaire consisting of
43 factors. Table 3 illustrates the factors and sources from which they are extracted.
The sample size “n” of the target population was determined using Eq. (2) as shown below:
ð1:96Þ2 3 0:5 3 ð1  0:5Þ
n¼ ≈ 384
0:052
We received completed questionnaires from 395 respondents out of 456 potential participants
that indicated a return rate of approximately 87%. The proportion of returned questionnaires
to distributed questionnaires is 88%, 88.5%, and 83.5% for owners, consultants, and
contractors, respectively (see Table 4).
Regarding working experience, 76% of respondents had at least ten years of experience in
the construction industry (Figure 3). It means that the respondents’ extensive experience
contributes to the quality of the responses received and the reliability of the conclusions
drawn from the research findings. As for academic qualification level, 16.86% of the
respondents held Ph.D. degrees, 42.32% had master’s degrees, 31.13% had bachelor’s
degrees, and 9.69% were diploma holders. It shows that the surveyed participants have had
enough working experience and academic qualifications.
The Cronbach’s alpha value for all wholly filled and valid questionnaires was found to be
0.731, which is acceptable (According to Table 2). Therefore, the data gathered from the
questionnaire survey is reliable, and the scale has internal consistency.
Before ranking the factors causing cost overrun in construction projects, it should be
assessed whether cost overrun in the Iranian construction industry is essentially a problem or
a serious concern among those involved in construction. Therefore, the last two questions in
 Factors of cost
No overrun References
1 Improper Durdyev et al. (2012),
planning and Derakhshanalavijeh and
scheduling Teixeira (2017), Amini
et al. (2021), Johnson and
Babu (2018), Ullah et al.
(2018), Vu et al. (2020)
2 Fluctuations in Derakhshanalavijeh and
the cost of Teixeira (2017), Amini
materials et al. (2021), Memon et al.
(2019), Nazeer and Uddin
Shah (2020)
3 Poor site Amini et al. (2021),
management and Memon et al. (2019),
supervision Nazeer and Uddin Shah
(2020), Rezaei and Jalal
(2018)
4 Lack of Amini et al. (2021),
communication Alhammadi and Memon
between parties (2020), Memon et al.
(2019), Rezaei and Jalal
(2018), Keng et al. (2018)
5 Shortage of Amini et al. (2021),
labour and Memon et al. (2019),
technical Rezaei and Jalal (2018),
personnel Keng et al. (2018),
Durdyev et al. (2012),
Memon et al. (2014)
6 Delay in planned Amini et al. (2021), Nazeer
activity and Uddin Shah (2020),
Memon et al. (2020), Keng
et al. (2018), Wanjari and
Dobariya (2016)
7 Poor contract Mirzai Matin (2016),
management Ahady et al. (2017),
Memon et al. (2011),
Rezaei and Jalal (2018),
Vu et al. (2020), Jadhav
et al. (2020)
8 Rework/mistakes Dabirian et al. (2020),
during Derakhshanalavijeh and
construction Teixeira (2017), Mirzai
Matin (2016), Amini et al.
(2021)
9 Inaccurate project Derakhshanalavijeh and
cost estimation Teixeira (2017), Johnson
and Babu (2018), Akhund
et al. (2019), Sohu et al.
(2020), Durdyev et al.
(2012)
Factors of cost
Causes of cost
No overrun References overruns
23 Inappropriate Derakhshanalavijeh and
procurement Teixeira (2017), Johnson
method/poor and Babu (2018), Memon
resource et al. (2020), Keng et al.
management (2018), Ullah et al. (2018) 2747
24 Financial Memon et al. (2014), Keng
difficulties faced et al. (2018), Tejale and
by contractors Khandekar (2015), Balaji
and Venugopal (2020)
25 Bid award for Derakhshanalavijeh and
lowest price/ Teixeira (2017), Memon
bidding condition et al. (2020),
Kamaruddeen et al.
(2020), Allahaim and Liu
(2015)
26 Low productivity Dabirian et al. (2020),
level of labour Balaji and Venugopal
(2020), Tejale and
Khandekar (2015)
27 Change in material Balaji and Venugopal
specification (2020), Kamaruddeen
et al. (2020), Patil and
Bhangale (2016)
28 Unpredictable Dabirian et al. (2020),
weather conditions Amini et al. (2021),
Johnson and Babu (2018),
Jadhav et al. (2020)
29 Unexpected site or Balali et al. (2020), Keng
soil conditions et al. (2018), Memon et al.
(2014), Allahaim and Liu
(2015)
30 Frequent Dabirian et al. (2020),
breakdown of the Naveenkumar and
construction plant Prabhu (2016), Balaji and
and equipment Venugopal (2020), Patil
and Bhangale (2016)
31 Late delivery of Amini et al. (2021), Tejale
materials and and Khandekar (2015),
equipment Memon et al. (2011),
Akhund et al. (2019) Table 3.
Causative factors of
cost overrun for
construction industry
(continued ) of Iran
ECAM Factors of cost Factors of cost
30,7 No overrun References No overrun References

10 Frequent design Derakhshanalavijeh and 32 Lack of Akhund et al. (2019),

changes Teixeira (2017), Amini
et al. (2021), Allahaim and
Liu (2015), Mahamid
2748 (2014), Keng et al. (2018)
11 Poor economic Dabirian et al. (2020),
condition Mirzai Matin (2016),
(currency, Amini et al. (2021),
inflation rate) Naveenkumar and
Prabhu (2016), Mahamid
(2014), Patil and
Bhangale (2016)
12 Poor design Amini et al. (2021), Gupta
and Kumar (2020),
Memon et al. (2011),
Allahaim and Liu (2015),
Subramani et al. (2014)
13 Delay in decision Mirzai Matin (2016),
making Memon et al. (2019); Sohu
et al. (2020)), Memon et al.
(2011), Naveenkumar and
Prabhu (2016)
14 Payments delay Memon et al. (2019), Sohu
et al. (2020), Memon et al.
(2020), Allahaim and Liu
(2015), Balaji and
Venugopal (2020)
15 Material Amini et al. (2021),
shortage/ Kamaruddeen et al.
resources (2020), Ahady et al. (2017),
constraint Tejale and Khandekar
(2015), Patil and
Bhangale (2016)
16 High cost of Mirzai Matin (2016),
machineries and Amini et al. (2021),
its maintenance Memon et al. (2020),
Nazeer and Uddin Shah
(2020), Durdyev et al.
(2012), Rezaei and Jalal
(2018)
17 Lack of Amini et al. (2021),
experience of Memon et al. (2019),
contractors Johnson and Babu (2018),
Memon et al. (2020), Keng
et al. (2018), Mahamid
(2014)
18 Poor financial Amini et al. (2021),
condition of the Dabirian et al. (2020),
owner Johnson and Babu (2018),
Sohu et al. (2020),
Allahaim and Liu (2015)
constructability/ Amini et al. (2021), Gupta
construction and Kumar (2020),
method Memon et al. (2020)
33 Fraudulent Balali et al. (2020),
practices and Derakhshanalavijeh and
kickbacks/ Teixeira (2017), Amini
corruption et al. (2021), Ahady et al.
(2017)
34 Incomplete Ahady et al. (2017),
drawings Wanjari and Dobariya
(2016), Patil and
Bhangale (2016), Sohu
et al. (2020)
35 High cost of labour Dabirian et al. (2020),
Mirzai Matin (2016),
Amini et al. (2021), Vu
et al. (2020), Durdyev et al.
(2012)
36 Quality of Tejale and Khandekar
equipment and (2015), Ahady et al. (2017),
raw material Rezaei and Jalal (2018),
Memon et al. (2020)
37 Omissions and Abusafiya and Suliman
errors in the bills of (2017), Wanjari and
quantities Dobariya (2016), Jadhav
et al. (2020)
38 Weak regulation Amini et al. (2021), Mirzai
and control Matin (2016), Vu et al.
(2020), Jadhav et al. (2020)
39 Low skilled Naveenkumar and
manpower Prabhu (2016),
Kamaruddeen et al.
(2020), Ahady et al. (2017)
40 Waste on site Mirzai Matin (2016),
Amini et al. (2021),
Memon et al. (2019),
Memon et al. (2020)

Table 3. (continued )
 Factors of cost Factors of cost
Causes of cost
No overrun References No overrun References overruns
19 Additional works Dabirian et al. (2020), 41 Land acquisition Subramani et al. (2014),
Derakhshanalavijeh and problems Memon et al. (2019)
Teixeira (2017), Nazeer
and Uddin Shah (2020),
Allahaim and Liu (2015), 2749
Wanjari and Dobariya
(2016)
20 Change of project Derakhshanalavijeh and 42 Owner Amini et al. (2021),
scope Teixeira (2017), Akhund interference/Lack Johnson and Babu (2018),
et al. (2019), Allahaim and of client’s Sohu et al. (2020), Memon
Liu (2015), Kamaruddeen experience et al. (2020)
et al. (2020), Balali et al.
(2020)
21 Poor financial Derakhshanalavijeh and 43 Complexity of Rezaei and Jalal (2018),
control on site Teixeira (2017), Memon construction Keng et al. (2018)
et al. (2019), Rezaei and works
Jalal (2018), Nazeer and
Uddin Shah (2020),
Kamaruddeen et al. (2020)
22 Changes in client Amini et al. (2021),
requirements Kamaruddeen et al.
(2020), Akhund et al.
(2019), Jadhav et al.
(2020), Gupta and Kumar
(2020)
Source(s): Authors (2021) Table 3.

Respondents Questionnaire distributed Responses return Percentage of responses

Table 4.
Owners/clients 134 (29.4%) 118 88% Percentage of
Consultants 165 (36.1%) 146 88.5% questionnaire
Contractors 157 (34.5%) 131 83.5% distributed and
Total 456 (100%) 395 86.6% responses received

10%
5 years and less
14%
41% 6-10 years

11-15 years Figure 3.

Distribution of
respondents’ work
more than 15 years experience
35%
ECAM the first part of the questionnaire (after the public sector) are designed to measure the
30,7 percentage of cost overrun and its importance in Iranian construction projects. In response to
the question of what percentage of construction projects in Iran faces cost overrun, 6/4% of
respondents selected the choice “less than 5%”, 18/8% of respondents selected “6–15%”, 25/
5% of respondents selected “16–25%” and 49/3% of respondents chose the choice “more than
25%”; meanwhile, all respondents considered the cost overrun as a significant problem in the
Iranian construction industry. These results indicate that a high percentage of construction
2750 projects in Iran had overrun problems. In the next stage, the causes of cost overrun in Iranian
building projects were analyzed and ranked based on their RII, as shown in Table 5.

Overall Client Consultant Contractor

Factors of cost overrun Rank RII Rank RII Rank RII Rank RII

Poor site management and supervision 1 0/893 3 0/925 1 0/933 1 0/893

Improper planning and scheduling 2 0/869 2 0/919 2 0/928 2 0/893
Fluctuations in the cost of materials 3 0/861 4 0/900 4 0/919 3 0/874
Lack of experience of contractors 4 0/844 7 0/893 5 0/898 5 0/860
Poor economic condition (currency, inflation rate) 5 0/838 1 0/908 3 0/911 4 0/872
Rework/mistakes during construction 6 0/831 10 0/891 6 0/887 6 0/843
Delay in planned activity 7 0/822 8 0/871 8 0/870 7 0/831
Inaccurate project cost estimation 8 0/819 9 0/860 10 0/843 9 0/820
Lack of communication between parties 9 0/812 16 0/867 9 0/862 8 0/822
Frequent design changes 10 0/809 11 0/851 12 0/831 10 0/816
Poor contract management 11 0/800 6 0/836 14 0/792 18 0/714
Poor financial condition of the owner 12 0/793 5 0/885 7 0/820 12 0/796
Changes in client requirements 13 0/784 12 0/787 21 0/770 27 0/754
Delay in decision making 14 0/773 17 0/808 18 0/792 19 0/709
Additional works 15 0/773 14 0/832 15 0/785 20 0/696
Poor financial control on site 16 0/769 19 0/818 17 0/792 16 0/732
Financial difficulties faced by contractors 17 0/769 18 0/832 16 0/802 14 0/765
Incomplete drawings 18 0/767 28 0/698 19 0/683 33 0/701
Change of project scope 19 0/762 22 0/768 24 0/792 17 0/732
Shortage of labour and technical personnel 20 0/762 13 0/845 13 0/831 11 0/800
Owner interference/Lack of client’s experience 21 0/756 26 0/690 30 0/775 13 0/796
Payments delay 22 0/753 20 0/754 26 0/796 15 0/744
Poor design 23 0/749 25 0/766 25 0/715 31 0/710
High cost of labour 24 0/740 21 0/854 11 0/764 26 0/788
Low skilled manpower 25 0/733 27 0/777 22 0/784 24 0/680
Low productivity level of labour 26 0/729 33 0/678 32 0/763 29 0/732
Inappropriate procurement method/Poor resource 27 0/718 23 0/643 35 0/640 36 0/671
management
Weak regulation and control 28 0/707 15 0/796 28 0/780 21 0/696
Bid award for lowest price 29 0/696 29 0/663 33 0/590 42 0/584
Unpredictable weather conditions 30 0/687 40 0/510 43 0/775 23 0/680
Quality of equipment and raw material 31 0/680 32 0/525 42 0/811 25 0/792
Material shortage/resources constraint 32 0/678 30 0/680 31 0/654 35 0/698
Unexpected site or soil conditions 33 0/676 24 0/792 20 0/702 32 0/710
High cost of machineries 34 0/667 34 0/587 39 0/633 38 0/643
Change in material specification 35 0/664 36 0/544 41 0/578 43 0/571
Fraudulent practices and kickbacks/Corruption 36 0/647 41 0/663 34 0/654 34 0/698
Lack of constructability/construction method 37 0/633 31 0/622 36 0/775 22 0/687
Omissions and errors in the bills of quantities 38 0/622 38 0/610 37 0/763 28 0/754
Land acquisition problems 39 0/610 42 0/544 40 0/640 37 0/650
Waste on site 40 0/603 35 0/732 27 0/595 41 0/592
Project complexity 41 0/592 43 0/698 29 0/733 30 0/710
Frequent breakdown of the construction plant and 42 0/586 37 0/772 23 0/611 40 0/611
Table 5. equipment
Ranking of causes of Late delivery of materials and equipment 43 0/584 39 0/599 38 0/620 39 0/631
cost overrun Source(s): Authors (2021)
 The following discusses the top ten cost overrun factors for construction projects Causes of cost
identified in the research results. overruns
(1) Poor site management and supervision: The overall ranking revealed that poor site
management and supervision is the most significant factor that causes cost overrun
in projects. Whereas both consultants and contractors share a common view, clients
ranked this factor in the third position. Indeed, poor management is always a risk for
any project. Unfortunately, in Iran, training contractors and using new management 2751
methods and techniques are not taken seriously. This problem can affect the project
schedule by not managing the critical activities, assigning the required resources on
time, reporting progress, and taking timely corrective action. Furthermore, the
project cost can also be impacted if the cash flow is not managed and the resources
are not utilized effectively to avoid idle time (Alhajri and Alshibani, 2018).
(2) Improper planning and scheduling: Improper planning and scheduling was the
second most significant factor across all three categories. It shows that project
planning as a pre-construction activity has a significant impact on controlling
construction costs. Indeed, any poorly planned project will face various
consequences, such as project delays and poor cost performance and productivity
(Durdyev, 2021), and will ultimately affect the client’s and contractor’s profits (due to
cost overrun) or increase in asset price (Yang et al., 2013). Also, poor planning can
cause severe problems in many areas later in the project, including lack of business
support and poor estimates (Jadhav et al., 2020).
(3) Fluctuation in the cost of materials: The third position, fluctuations in the cost of
materials, was equally important for both client and consultant groups at their
fourth position. The contractor group ranked this factor in the third position. Cost
escalation in construction projects is reflected in the increased cost of raw materials,
labor, machinery, other ancillary materials, and services. Fluctuation in the price of
materials is usually beyond the control of the project’s stakeholders because it is
related to aspects such as the law of supply and demand, economic volatility,
variations in exchange rates, inflation, and others (Herrera et al., 2020). Given that
most of Iran’s income is through oil exchanges, fluctuations in oil prices certainly
have an enormous impact on both fluctuations in material prices and the cost of
construction of buildings.
(4) Lack of experience of contractors: Lack of contractors’ experience indicates the
contractor’s inability to handle construction projects and, hence, deliver projects on
the planned budget. The contractor group has acknowledged it as a significant factor
by assigning it as fifth ranking. The agreement of the significance level by both
consultants and clients has been found at the fourth and seventh levels, respectively.
In Iran, many contractors undertake projects that do not have enough experience in
terms of type, method of construction, project size, location, etc. A lack of contractor
experience (and expertise) in these fields might lead to a rework component or delay,
which increases the cost of implementing a project (Aljohani et al., 2017).
(5) Poor economic condition: The poor economic condition was perceived to be the most
significant factor from the client’s point of view, which was ranked fifth overall. The
contractors and consultants ranked this factor in the 4th and 3rd positions.
According to the Islamic Republic News Agency (IRNA), a study of the impact of
sanctions on Iran’s economy shows that the construction industry has suffered the
most after the oil industry. Indeed, the existence of economic problems such as
sanctions on Iranian external trade, high inflation (about 38/9% in March 2021,
ECAM according to the Central Bank of Iran), and fluctuations in exchange rates assert the
30,7 underlying challenges faced by all three groups in the successful delivery of
projects. Inflation has a severe impact on employment; when the inflation rate is
high, companies have to reduce the number of their workers and thus the quality of
their work (Armesh et al., 2010).
(6) Rework/mistakes during construction: Similar to the overall ranking, both consultants
2752 and contractors groups ranked rework/mistakes during construction in the sixth
position highlighting a significant concern on contractors’ qualification and technical
competency required to achieve successful outcomes in a project. In contrast, this
factor was ranked in the tenth position from the client’s point of view. Most
respondents agreed that a mistake during construction would result in cost overrun.
If the contractor fails to execute the work per the contract or install unapproved
material, it may demolish the work and then be reworked. Rework occurrences
adversely impact project performance, e.g. costs, time, and stakeholder satisfaction.
The direct impacts of rework on project management transactions include additional
time to rework, additional costs for covering rework occurrences, supplemental
materials for rework and subsequent wastage handling, additional labor for rework,
and related extensions of supervision workforce (Palaneeswaran, 2006).
(7) Delay in planned activity: The overall ranking revealed that delay in planned activity
is one of the causative cost overrun factors. Whereas consultants and clients share
similar points of view, contractors ranked this factor in the seventh position. A
construction delay is anything that obstructs the ability of a contractor to maintain a
schedule. Any schedule delay makes the initial cost estimates outdated as price
escalation of material is bound to happen. Thus, it resulted in cost overruns.
Significant factors affecting delay are non-timely payment to contractor, design
revision, not providing the drawings on time, poor site management and
supervision, etc (Wanjari and Dobariya, 2016).
(8) Inaccurate project cost estimation: The eighth factor, inaccurate project cost
estimation, was equally important for both client and contractor groups at their
ninth positions, and consultants ranked it in the tenth position. Cost estimation is
affected by the project’s complexity, the scope of construction, unpredictable market
conditions, material price fluctuations, construction methodology, site limitations,
client financial issues, buildability, and project locality (Idrees and Shafiq, 2021).
Many construction companies suffer from a lack of engineers’ understanding of cost
and value and the subsequent cost implications of what is included in the design and
the estimators who are inexperienced with the estimating process or Iran market.
On the other hand, bidders ignore the inflation rate and construction costs
throughout the project’s life cycle when estimating the project costs. Lack of
attention to the actual inflation rate may lead to inaccurate bidding, frustration, and
delay during the project’s lifespan (Samarghandi et al., 2016).
(9) Lack of communication between parties: Similarly, lack of communication between
parties at the ninth ranking significantly impacts construction cost performance.
This factor was equally important for both contractor and consultant groups at their
eighth and ninth positions, respectively. In contrast, the clients’ ranking of this
factor in 16th place shows that it is less critical for this group. Any lack of
coordination between the parties significantly impacts construction cost
performance and may have destructive consequences for the project. According
to Chinda (2020), a lack of communication between the designer and the client leads
 to design errors. Lack of coordination between stakeholders may cause several Causes of cost
changes in bidding conditions and customer requirements, resulting in no accuracy overruns
in cost data and pressure for the design team. No coordination between the designer
team and the client may also lead to unclear specifications, resulting in design
changes and inappropriate time spent in the design phase.
(10) Frequent design changes: The tenth position, frequent design changes, was almost
equally important for all groups. Due to design changes, the cost overrun 2753
phenomena are universal, and nearly every country is experiencing the unfavorable
effect of design changes on the cost performances of projects. The five most common
causes of change orders can be identified as the change of plans by owners, change
of project scope by owners, problems on-site, errors and omission in design, poor
design, and poor working drawing details (Alaryan et al., 2014). Design changes can
significantly affect the costs associated with the project. They could lead to delays in
activities, rework, labor occupation instability, additional payments by machinery
and wages, additional works not quantified in the budget, contract extensions,
charges by consultants, and designers, among others (Herrera et al., 2020).
To overcome cost overrun in construction projects, some researchers developed various
strategies. Based on the literature review, the following mitigation measures are presented for
significant causes of cost overrun in the Iranian construction industry (Table 6).

4.1 Comparison of the survey results with previous studies

This section compares the most important causes of cost overrun of construction projects in
13 Asian countries. The top ten causative factors of cost overrun obtained through the survey
were compared with the factors mapped from the previous studies (Table 7).
According to both this table and Table A1, material price fluctuation has been recognized
as one of the leading causes of cost overrun in 25 studies. Iran, Turkey, Malaysia, Pakistan,
India, Afghanistan, UAE, Saudi Arabia, and Palestine are among the countries that suffer
from this problem. In the previous studies, the fluctuation in construction materials prices
appeared due to the inflation rate and the relation between supply and demand in the
construction market. Also, in the Persian Gulf countries, variations in oil prices affect the
price of construction materials. This factor was ranked 1 in Saudi Arabia (Allahaim and Liu,
2015), Malaysia (Rahman et al., 2013; Memon et al., 2014), India (Wanjari and Dobariya, 2016;
Gupta and Kumar, 2020) and Pakistan (Nazeer and Shah, 2020).
Poor site management and supervision, and improper planning and scheduling were
reported by more than half of the reviewed studies as one of the significant causes of cost
overrun, which indicated the weakness of contractors in the management and planning of
construction projects. The first rank of poor site management and supervision in this study
and Amini et al. (2021), and the third rank in the survey of Balali et al. (2020) show the effect of
this factor on the increase of construction costs in Iran. Moreover, poor planning and
scheduling caused expenditure increase, not only in Iran (Amini et al., 2021;
Derakhshanalavijeh and Teixeira, 2017) but also in several other Asian countries such as
Turkey (Durdyev et al., 2012), Vietnam (Vu et al., 2020), and Malaysia (Ullah et al., 2018).
Lack of communication between parties is observed within the top ten causative cost
overrun factors of the previous studies, which were ranked 1 in UAE (Alhammadi and
Memon, 2020) and Pakistan (Memon et al., 2019).
Comparing the results of studies conducted in Iran shows that in 4 cases, economic
problems were known as one of the top ten factors of cost overrun. In addition, the poor
economic condition has been considered a vital factor of cost overrun in Afghanistan (Ahady
et al., 2017) and Palestine (Mahamid, 2014). Certainly, the sanctions and high inflation rate in
 30,7

2754

Table 6.
ECAM

of cost overrun
Mitigation measures
for significant causes
Causes Mitigation measures

1st problem: Poor site - Focus on new methods and techniques such as value management and risk management (Ramabhadran, 2018)
management and - Improve managerial skills by conducting continuous training programs (Mahamid, 2014)
supervision - Employ integrated monitoring system (Ullah et al., 2018)
2nd: problem: - Use the computerized latest planning and monitoring techniques (Ramabhadran, 2018)
Improper planning and - Schedule the project considering the seasonal weather and special times such as Ramadan (Ramabhadran, 2018)
scheduling - Allocate sufficient time for planning (Mahamid, 2014)
- Consider true constraints of market and logistics during planning (Ullah et al., 2018)
3rd problem: - Conduct continuous updating on material prices (Mahamid, 2014)
Fluctuations in the - Acquiring Bulk of materials (Ullah et al., 2018)
cost of materials - Establish an effective contract system with raw material suppliers (Ullah et al., 2018)
- Utilize local materials as much as possible (Ullah et al., 2018)
4th problem: Lack of - Acquire project professionals with similar project experience (Ramabhadran, 2018)
experience of
contractors
5th problem: Poor - Use expert opinion and advice for estimating inflation rates (Derakhshanalavijeh and Teixeira, 2017)
economic condition - Expedite orders of long delivery items to reduce the impact of inflation (Derakhshanalavijeh and Teixeira, 2017)
(currency, inflation) - Hedge exchange rates by use of money transfer tools (Ramabhadran, 2018)
rate) - Obtain guarantees of exchange rates and convertibility (Ramabhadran, 2018)
6th problem: Rework/ - Employ experienced and qualified technical staff (Derakhshanalavijeh and Teixeira, 2017)
mistakes during - Train fresh staff to increase their technical knowledge (Derakhshanalavijeh and Teixeira, 2017)
construction - Plan quality management (Ramabhadran, 2018)
- Proper understanding of site drawings and specifications (Ullah et al., 2018)
- Employ a proper mentoring system (Ullah et al., 2018)
7th problem: Delay in - Review and approve design documents, shop drawings, and time schedules by consultants (Bekr, 2015)
planned activity - Plan the proper sequence for all construction activities (Keng et al., 2018)
- Arrange regular meetings (Ullah et al., 2018)
8th problem: - Select qualified cost estimators (Derakhshanalavijeh and Teixeira, 2017)
Inaccurate project cost - Regular training for cost estimators through meetings (Derakhshanalavijeh and Teixeiram, 2017; Asrilhant et al., 2004)
estimation - Use of models for relationships among project construction time, project cumulative sales, and cost (Derakhshanalavijeh and Teixeiram, 2017; Chen, 2011)
- Employ integrated software for estimation (Ramabhadran, 2018)
- Ensure a clear understanding of the scope and sufficient time to cross-check the estimate (Ramabhadran, 2018)
- Improve the accuracy of cost estimating by direct market price inquiry (Keng et al., 2018)

(continued )
Causes Mitigation measures

9th problem: Lack of - Prepare a communication management plan (Ramabhadran, 2018)

communication - Ensure openness in communication and coordination during planning, design, and execution phases (Ramabhadran, 2018; Mahamid, 2014)
between parties - Establishment of protocol for clear communication (Ullah et al., 2018)
- Arrange regular meetings (Ullah et al., 2018)
10th problem: - Select reputable and experienced consultants (Derakhshanalavijeh and Teixeira, 2017)
Frequent design - Frequent cross-check of design documents (Derakhshanalavijeh and Teixeira, 2017)
changes - Well integrate design and construction phase to minimize design changes (Ramabhadran, 2018)
- Ensure the design change are with authorization of relevant project party (Keng et al., 2018)
- Involve the clients actively in the design stage (Ullah et al., 2018)
- Provide adequate time to the design stage (Ullah et al., 2018)
Source(s): Authors (2021)
overruns
Causes of cost

2755

Table 6.
ECAM Survey results (based on Previous study results in Asian countries
30,7 Rank questionnaire survey) RII (based on 38 studies) ORI

1 Poor site management and 0/893 Fluctuations in the cost of materials 6/977
supervision
2 Improper planning and scheduling 0/869 Improper planning and scheduling 3/977
3 Fluctuations in the cost of materials 0/861 Poor site management and supervision 3/76
2756 4 Lack of experience of contractors 0/844 Delay in planned activity 2/337
5 Poor economic condition (currency, 0/838 Poor economic condition (currency, inflation 2/027
inflation rate) rate)
6 Rework/mistakes during 0/831 Lack of communication between parties 2/00
construction
7 Delay in planned activity 0/822 Shortage of labour and technical personnel 1/906
8 Inaccurate project cost estimation 0/819 Inaccurate project cost estimation 1/757
Table 7.
Comparison of Survey 9 Lack of communication between 0/812 Frequent design changes 1/698
Results and Literature parties
Review of causes of 10 Frequent design changes 0/809 Rework/mistakes during construction 1/424
cost overrun Source(s): Authors (2021)

Iran and the wars, civil unrest, and political conditions in Afghanistan and Palestine have
been the reasons for economic instability and construction cost overruns. On the contrary, the
economic situation ranked as an insignificant factor for Malaysia, and the UAE, which
reflects relative stability in the currency exchange in these countries.
Table 6 shows that inaccurate cost estimation is the next significant factor of cost overrun
in the previous studies. Derakhshanalavijeh and Teixeira (2017) concluded that inaccurate
cost estimation was the most severe cause of cost overrun in the gas-oil industry of Iran. Also,
the comparison shows that in most research conducted in Pakistan, this factor was ranked as
one of the top ten causative factors.
Shortage of labor and technical personnel was identified as another factor influencing cost
overrun among the previous studies. This factor has been considered the main reason for
overruns in construction costs in Iraq. This country depends on foreign labor, so a shortage of
labor occurs at specific periods during the year that are reflected in the delays in
subcontractor works. Also, training methods and not using up-to-date new procedures and
techniques are another reason for this country’s inadequate labor/skill availability.
Frequent design changes have affected the construction costs in Iran and some other
Asian countries, including Malaysia (Keng et al., 2018), UAE (Johnson and Babu, 2018), and
Bahrain (Abusafiya and Suliman, 2017). Less involvement of the owners in the early phases of
the projects, design mistakes, and lack of clearly defined project objectives and scope were
mainly the causes of frequent change orders in construction projects in these countries. Other
causes of cost overrun were ranked for Asian countries, and most of them are related to the
lack of technology, management, skills, and competencies of project participants.

5. Conclusions
This study was conducted in three parts, and the results are presented separately. In the first
part, through a comprehensive literature review, recent studies on cost overruns in
construction projects in Asian countries were reviewed. The output of this investigation was
a list of 59 common causes of cost overruns in the construction industry, and the authors
provided a new ranking based on the frequency of each factor in a total of 38 studies (see
Table A1). This investigation revealed that “materials cost fluctuations, improper planning
and scheduling, and poor site management and supervision” are the top three causes of cost
overrun in Asian countries.
 In the second part, 43 causative factors of construction cost overrun were analyzed with Causes of cost
experienced personnel involved in the Iranian construction industry to validate the contents overruns
of addressing the issue of construction cost overrun in Iran. Approximately half of the
respondents stated that construction projects in Iran face a cost overrun of more than 25%.
Also, the survey shows that the leading causes of cost overrun in the Iranian construction
projects are “poor site management and supervision, improper planning and scheduling,
materials cost fluctuations, lack of contractors’ experience, poor economic condition, rework,
delay in planned activities, inaccurate cost estimation, lack of communication between 2757
parties, and frequent design changes.”
In the final part, a comparative study was conducted to match the top ten causative factors
of cost overrun in Iran with other Asian countries, including Turkey, Malaysia, Pakistan,
India, Bahrain, Iraq, Afghanistan, Vietnam, UAE, Jordan, Saudi Arabia, and Palestine. The
comparison demonstrates that Iran’s main factors causing cost overrun agree with the
countries mentioned above, except for some individual cases. The summary of the results is
shown in Figure 4.
The findings of this study indicate that:
(1) Approximately 50% of respondents stated that construction projects in Iran face a
cost overrun of more than 25%.
(2) According to the survey result, cost overrun is considered a significant problem in the
Iranian construction industry.
(3) The main problems identified in past research in Iran, such as poor economic
condition, improper planning and scheduling, inaccurate project cost estimation, and
rework, still have remained the chief obstacles in the path of increasing productivity.
(4) Material price fluctuation has been recognized as one of the leading causes of cost
overrun in Asian countries.
(5) In some Asian countries with specific geopolitical situations such as Afghanistan,
Pakistan, Palestine, and Iraq, economic instability, variation in the exchange rate, and
fluctuations in the cost of materials have led to cost overrun in construction projects.
It should be noted that “corruption” is one of the causes of cost overrun cited only in
the study conducted in Afghanistan.
(6) Rework, frequent changes in design, project scope, and requirements are the leading
causes of cost overrun in Jordan and Bahrain.
(7) Improper planning and poor management and supervision in Iran, Malaysia, UAE,
India, Vietnam, and Turkey have been cited as one of the main reasons for the cost
overrun.
(8) In the Persian Gulf countries such as Iran, Saudi Arabia, and the UAE, changes in oil
prices affect fluctuations in the price of raw materials and thus the deviation of
construction project costs.
(9) In the UAE, as an immigrant country, the lack of experienced local specialists has led
to a low productivity level of labor and improper management and supervision of
projects.
Based on the ranking of the main factors behind cost overrun in producing buildings, for
effective and efficient cost control of construction projects, the authors recommend that the
project management section should be especially considered and modified. Also, the planning
in different stages, material management, resource planning and management, and proper
ECAM
30,7

2758

Figure 4.
Summary of research
results
financial management should be emphasized. In addition, all stakeholders should work Causes of cost
together to achieve successful projects within the stipulated budget and exceed the overruns
anticipated quality standard. In the meantime, the scholars can concentrate on more specific
and detailed studies on the causes of cost overrun and its effects on the Iranian construction
industry.
In conclusion, the current study results can be considered valuable for international
academics and researchers since it identifies the most significant causes of cost overrun and
provide adequate knowledge about the common causes of cost overrun and its impact on the 2759
Iranian construction industry. It also fills the gap in the current body of knowledge in
construction project cost overrun in general and with specific regard to the construction
industry of Iran.

5.1 Recommendation and limitation

Overall, the present investigation has three significant limitations. The first limitation is
related to the accuracy of the information in the previous studies. The foundations of the
current research are supported by the assumption that earlier studies in each country have
been elaborated upon following the proper process.
The second limitation is the sample size selected for the distribution of questionnaires. Due
to the extent of a statistical population in all the clients, consultants, and contractors groups,
the questionnaires were distributed only in Tehran and Mashhad as two metropolises of Iran.
Finally, the last limitation is the quarantine conditions related to the Coronavirus disease,
which forced authors to distribute questionnaires online.
Given the limitations of this paper, the authors suggest that future researchers examine
the causes of cost overrun in other Iranian metropolises and compare the results together.
Also, investigating and rating solutions and mitigation measures on the significant causes of
cost overrun in the Iranian construction projects will help improve the construction process
and overcome the overruns.

References
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project in Bahrain: part I (ranking of cost overrun factors and risk mapping)”, Modern Applied
Science, Vol. 11 No. 7, p. 20, doi: 10.5539/mas.v11n7p20.
Ahady, S., Gupta, S. and Malik, R.K. (2017), “A study of the causes of cost overrun in construction
industry in Afghanistan”, International Journal of Engineering Development and Research,
Vol. 5 No. 3, pp. 978-985.
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Corresponding author
Alireza Rezvani can be contacted at: Rezvani0112@mshdiau.ac.ir
 30,7

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Table A1.

literature review
overrun in construction
projects identified from
Common factors of cost
Iran
Iraq

UAE
India

Jordan
Appendix

Turkey

Bahrain
Pakistan
Vietnam
Palestine

Malaysia

Saudi Arabia

Afghanistan
Causes of Cost Overrun
ORI

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38

Fluctuations in the cost of materials 9 9 4 4 7 4 7 1 1 4 1 1 2 3 5 7 2 3 3 3 9 1 6 1 7 6/977

Improper planning and scheduling 4 5 7 2 3 5 7 5 7 4 6 1 4 1 1 7 10 2 10 9 2 3/977

Poor site management and supervision 3 1 6 1 4 3 9 7 3 2 4 8 4 3 3 6 4 10 2 8 5 3/76

Delay in planned activity 7 5 3 8 1 4 3 1 4 6 5 2 5 4 10 2 2/337

Poor economic condition (currency, inflation rate) 8 7 3 2 1 6 5 5 6 1 3 1 6 6 2/027

Lack of communication between parties 6 1 1 9 5 3 4 3 7 9 5 5 10 3 7 8 2/00

Shortage of labour and technical personnel 2 5 7 5 7 2 9 1 9 10 5 3 8 9 4 2 1/906

Inaccurate Project Cost Estimation 6 1 2 9 9 6 4 2 2 10 10 6 2 9 6 1/757

Frequent design changes 2 1 10 1 2 2 9 5 1 6 5 10 1/698

Rework/ Mistakes during construction 8 3 4 8 2 4 10 7 3 9 7 8 4 7 4 5 1/424

Poor contract management 3 6 3 6 2 3 9 3 5 5 10 1 1/193

Lack of experience of contractors 10 5 10 8 10 6 5 2 3 8 4 6 4 10 8 1/122

Delay in decision making 3 6 4 1 4 8 6 8 10 3 1 1/114

Poor financial condition of the owner/ government 4 1 8 4 7 9 9 1 9 2 8 1/079

Poor design 6 9 1 8 4 5 1 8 6 5 0/88

financial difficulties faced by contractors 3 2 2 2 10 7 1 0/567

Material shortage/ resources constraint 3 10 1 8 8 1 3 0/556

Change of project scope 1 3 8 7 9 3 9 0/475

(continued )
Payments delay 7 4 5 6 8 8 8 6 2 0/427

High cost of machineries and its maintenance 3 6 6 3 7 4 7 7 10 0/421

Low skilled manpower/ Unacceptable quality of 2 2 10 4 10 5 5 10 10 0/411

work
Poor financial control on site 4 3 4 6 10 6 9 9 7 0/386

Low productivity level of labour 9 5 1 10 7 5 8 0/346

Additional works 4 9 7 7 7 4 9 3 0/312

Bid award for lowest price/ Bureaucracy in 1 10 8 3 7 10 0/284

tendering method
10 5 3 2 2 9 0/275
Changes in client requirements
Inappropriate procurement method/ Poor resource 5 3 3 5 9 7 6 0/274
management
level and number of competitors / Lack of 6 7 9 7 4 4 4 0/242
Training
Incomplete drawings/ Faults in documents 8 7 9 3 8 10 10 9 0/242

Change in material specification and type 3 10 2 2 4 0/221

High transportation cost 1 1 3 0/184

Late delivery of materials and equipment 8 4 4 10 3 10 0/183

Frequent breakdown of the construction plant and 7 8 3 3 4 0/156

equipment
10 2 1 0/126
Inappropriate government policies
Unexpected site or soil conditions 9 6 7 8 9 0/086

High cost of labour 6 2 3 0/079

Lack of constructability/construction method 8 7 6 8 0/059

Weak regulation and control 4 7 4 0/051

Fraudulent practices and kickbacks/ Corruption 5 2 0/037

Delay in obtaining permits from governmental 2 6 0/035

agencies/ Bureaucracy
Relationship between managers and labours 5 9 10 0/032

Mode of financing, bonds and payments 6 5 0/019

Omissions and errors in the bills of quantities 5 8 0/017

Owner interference/ Lack of client’s experience 8 5 0/017

(continued )
overruns
Causes of cost

2765

Table A1.
 30,7

2766
ECAM

Table A1.
Project complexity/ 9 5 0/016

land acquisition problems/ High land prices 6 8 0/015

Litigation/ Conflict 7 0/013

Not enough information collected 3 0/009

Domination of construction industry by foreign 3 0/009

firms and aids
Unpredictable weather conditions 5 0/005

Quality of equipment and raw material 5 0/005

Lack of motivation 5 0/005

Cost of materials 5 0/005

Wastage on site 6 0/004

manipulation of suppliers 8 0/003

Inadequate cost estimating approach 8 0/003

Labour unrest 9 0/003

Natural Disaster 10 0/003

Number of projects going at the same time 10 0/003

Note(s): 1, Balali et al ., 2020; 2, Dabirian et al ., 2020; 3, Derakhshanalavijeh and Teixeira, 2017; 4, Amini et al ., 2021; 5, Mirzai Matin, 2016; 6, Ahady et al ., 2017;
7. Johnson and Babu, 2018; 8, Alhammadi and Memon, 2020; 9, Ramabhadran, 2018; 10, Abusafiya and Suliman, 2017; 11, Memon et al ., 2020; 12, Memon et al .,
2019; 13, Akhund et al ., 2019; 14, Sohu et al ., 2020; 15, Nazeer and Uddin Shah, 2020; 16, Akram et al ., 2017; 17, Rezaei and Jalal, 2018; 18, Bekr, 2015;
19, Allahaim and Liu, 2015; 20, Kamaruddeen et al ., 2020; 21, Memon et al ., 2011; 22, Memon et al ., 2014; 23, Rahman et al ., 2013; 24, Ullah et al ., 2018;
25, Keng et al ., 2018; 26, Vu et al ., 2020; 27, Durdyev et al ., 2012; 28, Mahamid, 2014; 29, Mahamid and Dmaidi, 2013; 30, Naveenkumar and Prabhu, 2016;
31, Patil and Bhangale, 2016; 32, Subramani et al ., 2014; 33, Shanmugapriya and Subramanian, 2013; 34, Tejale and Khandekar, 2015; 35, Wanjari and Dobariya, 2016;
36, Balaji and Venugopal, 2020; 37, Gupta and Kumar, 2020; 38, Jadhav et al ., 2020
Source(s): Authors, (2021)