EVALUATION OF FACTORS DECLINING COST VARIATION FOR CONSTRUCTION OF ENDOWMENT BUILDINGS

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1 International Journal of Civil Engineering and Technology (IJCIET) Volume 9, Issue 6, June 2018, pp , Article ID: IJCIET_09_06_027 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed EVALUATION OF FACTORS DECLINING COST VARIATION FOR CONSTRUCTION OF ENDOWMENT BUILDINGS B. Nagarjuna Kumar P.G Student, Department of Civil Engineering, Koneru Lakshmaiah Education Foundation, Vaddeswaram, Guntur, Andhra Pradesh, India Sesha Sai Ratnamala Bommareddy Assistant Professor, Department of Civil Engineering, Koneru Lakshmaiah Education Foundation, Vaddeswaram, Guntur, Andhra Pradesh, India SS. Asadi Associate Dean Academics & Professor, Department of Civil Engineering, Koneru Lakshmaiah Education Foundation, Vaddeswaram, Guntur, Andhra Pradesh, India ABSTRACT Cost is one of significant concerns all over the project management life cycle and can be considered as one of the most important constraints of a project and the motivating force to success the project achievement. Despite its proven importance, it is common to see a construction project failing to achieve its objectives with in the specific cost. Cost variation is an identical common occurrence and is almost associated with nearly constructing all projects and especially endowment projects. Maintaining stable cost forecast on Construction projects had been in recent times and a dispute of serious concern, both to the project contractors and client. However, minute or no effort has been made to restrain the occurrence, this study work attempts to identify, investigate and rank factors supposed to affect cost variation in the endowment projects with regard to their relative importance so as to proffer possible ways of deal with this occurrence. To achieve this objective, we invited practitioners and experts, including a statistically representative sample, to participate in a structured questionnaire survey. Totally 27 factors were recognized and short-listed to be part of the survey and the questionnaire was accompanied with professionals and agents from public, private, and local construction companies. The data was analysed by via relative importance index and ranking them. By using Pareto analysis major factors are considered to minimise editor@iaeme.com

2 B. Nagarjuna Kumar, Sesha Sai Ratnamala Bommareddy and SS. Asadi the effects of cost variation. The study determined that cost estimators have to be aware of the complications, but must not let to deflect them from their primary tasks and should allot sufficient time and fund at the design phase only. Also, this paper aids as a guide and orientation for construction managers and contractors for more efficient management in constructing endowment projects to accomplish a competitive level of quality and a cost effective project. Key words: Project Management Life Cycle; Project Achievement; Endowment Projects; Questionnaire Survey; Primary Tasks. Cite this Article: Neelam S. Sharma and Namrata D. Jariwala, Effect of Preliminary Treatment On Dark Greywater Characteristics, International Journal of Civil Engineering and Technology, 9(6), 2018, pp INTRODUCTION In most of the countries, experience and collected works shown that construction of endowment projects would account for 25-45% total project cost. Therefore, affects of cost variation of serious importance to the profitability of most endowment projects. Many researchers, in the literature have acknowledged these difficulties as factors that cause the cost variation for constructing the endowment projects, and will affect company s performance. The cost variation for constructing endowment projects by various factors are usually connected to the performance of cost, time and quality. Meanwhile, identifying and evaluating factors effecting cost variation for constructing endowment projects have been done in the previous era; still, an abysmal understanding is essential to improve that. Therefore, the key theme of this research is to identify and rank the relative importance of factors perceived by contractors, consultants, engineers, managers and to cause cost variation for constructing endowment projects. The cost variations results can be utilised by local and also international industry practitioners, who may be further, fascinated in venturing into potential mega scale projects, but possess no prior practical knowledge of the construction industry especially in endowment firms. The results can be help all practitioners to improve an extensive and deeper perspective of the factors causing cost variance for constructing endowment projects, and provide guidance to projects and construction managers for providing efficient solutions. The literature has recognized several factors affecting cost variance for constructing endowment projects that we have explored in this study. A lack of steady metrics makes it problematic to compare results to studies that investigate factors affecting cost variance. This research investigates factors perceived to cause cost variance in endowment projects of Andhra Pradesh with respect to identifying and ranking their relative importance. Collecting data of factors from the literature and with input from professionals and previous researches, this research develops a schematic model of factors causing cost variance for constructing endowment projects and explores them by using weightage methods. Cost overrun is well-defined as when the ending cost of project goes beyond the original estimates (Avots 1983).Basically, variations will cause difficulties for everyone involved in the project. Variations can be organised from plentiful factors relevant to the construction projects (Arian et al 2005).A project then completed may not be observed a successful make an effort until and unless it satisfies the cost limitations applied to it (Rizwan et al 2008). It is agreed that construction projects experience an increase in cost of about 30-35% on average (Hartley et al 1997).According to inclusive research made on cost overrun in worldwide construction, it was found that 9/10 projects overrun, overruns of % were common, and overrun had been constant from 70 years for which information were available (Flyvbjerg et al 2002). Fayez Aziz stated that main parameter of a project throughout its lifecycle. Construction projects are failing editor@iaeme.com

3 Evaluation of Factors Declining Cost Variation for Construction of Endowment Buildings to get its objectives with specific planed costs. Cost variance is common occurrence in almost all projects. To improve controlling of cost variation for constructing projects; one must identify and recognize the influence of the main factors affecting it. Angelo and Reina stated that the difficult of cost overrun is critical and needs to be study more to relieve this in the future. They also pointed out that cost overruns are majorproblem in both developing and developed countries. The trend is more severe in developing countries where this overrun sometimes exceeds about 100% of the anticipated cost of the project.the following sections present methodology, results with discussions and conclusions. 2. OBJECTIVES Identify and investigate Cost variation factors which effect the construction of endowment projects by conducting survey through experts and project managers. Calculate factors efficiency and rank them by using relative importance index and ranking method. 3. METHODOLOGY From the literature review and also opinions from industry experts were taken, through which a number of cost variation factors were identified in the construction of endowment projects situation. Totally 27 factors were decided to be part of the survey questionnaire. Figure 1 Flowchart proposed for research methodology 3.1. Questionnaire survey A questionnaire survey was conducted with certain factors from different aspects which affect the cost variation in construction projects they are owner related, contractor related, Designer related, other factors and survey conducted with opinions from industrial experience persons. Factors are rated in the scale of editor@iaeme.com

4 B. Nagarjuna Kumar, Sesha Sai Ratnamala Bommareddy and SS. Asadi 1=Never, 2=Rarely, 3=Sometimes, 4=Mostly, 5=Always. Table 1 Factors in questionnaire survey S.no. Factors affecting cost variance By selecting least bidding procurement method 2 Due to additional work 3 Unpredictable ground conditions 4 Rise and fall in prices of materials 5 Work postponements due to conflicts 6 Due to modifications in project design 7 Fluctuations in project maintenance costs 8 Due to inadequate quality 9 Unclear about client needs/contract documents 10 Inadequate planning 11 Sudden amendment in weather conditions 12 Change in variation of orders 13 Fraudulent practices, kickbacks and corruption 14 Mode of financing and payment for completed work 15 High interest rates charged by bankers on loans sanctioned to contractors 16 Lack of synchronization between design team and general contractor 17 High wages of skilled labour 18 Supremacy of construction foreign firms 19 Inadequate manufacturing of raw materials in country 20 Inappropriate government policies 21 Poor relation between managers and labours 22 Thieving and waste on site 23 Disputes on site 24 High cost of machines and maintaining them 25 Deviation of quality materials purchased and ordered. 26 Frequent out-of-sequence 27 Due to equipment damage and stealing 3.2. Ranking method The relative importance index method RII was used to conclude that industrial person s opinion of the relative importance to recognise the factor which may affect the cost of the project. Using this formula the major significant factors was identified. The RII was calculate as, RII= Where, RII - Relative importance index, W Weighting given to each factor by the respondents A Highest weight N Total number of respondents. eq Pareto analysis Pareto analysis is a convenient technique in the area where factors are acting in as complex nature. It estimates the benefits which are going to get on action which is to taken on factors and selects those factors which would maximum benefit if action is taken on those factors in getting the benefit in maximum closely range. Pareto analysis is a best way of analysing the problems, because it aids in improving thinking and structuring the thoughts in getting results. However, it is limited by its prohibiting of possibly important problems which may be small editor@iaeme.com

5 Evaluation of Factors Declining Cost Variation for Construction of Endowment Buildings primarily, but will improve with time. This technique helps to identify the top factors which are needed to be considered to minimize the maximum of problems. Once the major causes are identified, then the tools are used to identify the problems whichcauses from root onwards. Pareto says that 80/20 rule, in all circumstances that under the assumption, 20% of causes determine 80% of problems Demographic analysis Survey was conducted with preferred questionnaire consisting of 27 factors from different cost elements which affecting cost variance. Totally 57 valid responces are taken into consideration out of 61 are received through mails and about 97 are sent. Responders Others GES Engineer Assistant Professor Professor Contractors AEE SITE Manager Manager Project Manager ASST.AE Junior Engineer Entrepreneur SE Responses Figure 2 Bar chart representation of Respondents Demographic analysis 4. RESULTS & DISCUSSIONS 4.1. Data analysis The factors causing cost variation for constructing endowment projects will be looked at different perspectives. It will examine the data provided by respondents and that will be the basis for case selection. The relative importance index will be calculated as final outlined results. These factors will be ranked and categorized based on their relative importance index report. Table lists the total results of responses per factor causing cost variation for constructing endowment projects Ranking method Factors affecting cost variation are shown in table 2, totally holding with 27 factors and to rank these factors RII was used and computed in Microsoft excel which are considered to be critical in ranking the factors which are causes for declination of cost variation. ( 1, 2,3,4,5 ) editor@iaeme.com

6 B. Nagarjuna Kumar, Sesha Sai Ratnamala Bommareddy and SS. Asadi As mentioned in table 2 By selecting least bidding procurement method is major factor in declination of cost variation with RII value 0.75 which are driven from efficiency related factors, reason is price variation due to the market value, 2 nd position was Rise and fall in prices of materials with RII value So, budget allocate for materials will either rise or falls due to the market value, 3 rd position was Deviation of quality materials purchased and ordered with RII value 0.70 which to which material requirement for certain activity get high or low price of material due to sudden change in market price, Due to the sudden scarcity of materials involved in activity and resource allocated to concern activity can be wasted and budgeted cost may increase due to cost variation in purchasing materials and rest are shown in table 2. Table 2 Ranking of factors which are affecting cost variance Rank Factors affecting cost variance Weight RII 1 By selecting least bidding procurement method Rise and fall in prices of materials Deviation of quality materials purchased and ordered Lack of synchronization between design team and general contractor 5 Due to additional work Mode of financing and payment for completed work Unclear about client needs/contract documents Work postponements due to conflicts Sudden amendment in weather conditions High cost of machines and maintaining them Unpredictable ground conditions Inadequate manufacturing of raw materials in country Change in variation of orders Fluctuations in project maintenance costs Inappropriate government policies Inadequate planning High wages of skilled labour Due to inadequate quality High interest rates charged by bankers on loans sanctioned to contractors 20 Poor relation between managers and labours Due to equipment damage and stealing Frequent out-of-sequence Disputes on site Supremacy of construction foreign firms Fraudulent practices, kickbacks and corruption Due to modifications in project design Thieving and waste on site Pareto analysis In order to regroup the disintegrated pattern of the factors obtained, Pareto analysis was applied. The data collected through survey and ranking is provided to them earlier which was shown in table 2 by taking those score in to consideration score percentage and cumulative percentage of data are calculated which was shown in table 2.Pareto Analysis are shown in Table 3 and illustrated in Figure 3. The results of Pareto Analysis show that the first 20 factors contribute to about 80% of the weight of all the factors. These 20 factors can be considered as the most important factors affecting Cost variation. By selecting least bidding procurement method about 4.78%, Rise and fall in prices of materials with 4.71%, Deviation of quality materials purchased and orderedin total contribution of 100% as shown in figure 3.So to minimize the 80% of declination of cost variation the primarily the editor@iaeme.com

7 Evaluation of Factors Declining Cost Variation for Construction of Endowment Buildings 20 factors should be considered important and they should be nullified first to minimize cost variation. Table 3 Details regarding to Pareto analysis for factors affecting cost variation Rank Factors affecting cost variance Weight Weight% Cumulative weight% 1 By selecting least bidding procurement method Rise and fall in prices of materials Deviation of quality materials purchased and ordered Lack of synchronization between design team and general contractor 5 Due to additional work Mode of financing and payment for completed work Unclear about client needs/contract documents Work postponements due to conflicts Sudden amendment in weather conditions High cost of machines and maintaining them Unpredictable ground conditions Inadequate manufacturing of raw materials in country Change in variation of orders Fluctuations in project maintenance costs Inappropriate government policies Inadequate planning High wages of skilled labour Due to inadequate quality High interest rates charged by bankers on loans sanctioned to contractors 20 Poor relation between managers and labours Due to equipment damage and stealing Frequent out-of-sequence Disputes on site Supremacy of construction foreign firms Fraudulent practices, kickbacks and corruption Due to modifications in project design Thieving and waste on site editor@iaeme.com

8 B. Nagarjuna Kumar, Sesha Sai Ratnamala Bommareddy and SS. Asadi Weight Cumulative weight% By selecting least bidding procurement method Rise and fall in prices of materials Deviation of quality materials purchased and Lack of synchronization between design team Due to additional work Mode of financing and payment for completed Unclear about client needs/contract documents Work postponements due to conflicts Sudden amendment in weather conditions High cost of machines and maintaining them Unpredictable ground conditions Inadequate manufacturing of raw materials in Change in variation of orders Fluctuations in project maintenance costs Inappropriate government policies Inadequate planning High wages of skilled labour Due to inadequate quality High interest rates charged by bankers on Poor relation between managers and labours Due to equipment damage and stealing Frequent out-of-sequence Disputes on site Supremacy of construction foreign firms Fraudulent practices, kickbacks and corruption Due to modifications in project design Thieving and waste on site 0 Figure 3 Details of Pareto analysis for factors affecting cost variation 4.4. Experimental analysis a. Basic information A case study will be carried out to illustrate and declare data analysis causing cost variance for constructing endowment project in Mylavaram (Andhra Pradesh); implemented company was R.Gangaiah & Co.; starting date was and end date was ; project budget cost was INR; project actual cost after completion was INR. b. Reasons for cost variation Professionals were asked for their openions about reasons of cost variation and the percentage of each category impact to enable forecast of actual cost of such project before completion as shown in the following: (1) Due to additional work; (2) Due to modifications in project design; (3) Material prices fluctuations; (4) Fluctuations in project maintenance costs; (5) Funding problems; (6) Work postponements due to conflicts; (7) Labour costs editor@iaeme.com

9 Evaluation of Factors Declining Cost Variation for Construction of Endowment Buildings Percentages of each category impact are: (1) Contractor related category equals to 39%; (2) Other Category equals to 29.9%; (3) Owner related category equals to 16.6%; (4) Designer Category equals to 14.4%. Owner related factors S.no Rank Factor affecting cost variation RII 1 1 By selecting least bidding procurement method Due to additional work Mode of financing and payment for completed work Inadequate planning Contractor related factors S.no Rank Factor affecting cost variation RII 1 3 Deviation of quality materials purchased and ordered Unclear about client needs/contract documents Work postponements due to conflicts High cost of machines and maintaining them Unpredictable ground conditions High interest rates charged by bankers on loans sanctioned to 0.53 contractors 7 20 Poor relation between managers and labours Due to equipment damage and stealing Disputes on site Fraudulent practices, kickbacks and corruption Thieving and waste on site 0.42 Designer related factors S.no Rank Factor affecting cost variation RII 1 4 Lack of synchronization between design team and general 0.69 contractor 2 13 Change in variation of orders Due to inadequate quality Due to modifications in project design 0.45 Other factors S.no Rank Factors affecting cost variation RII 1 2 Rise and fall in prices of materials Sudden amendment in weather conditions Unpredictable ground conditions Inadequate manufacturing of raw materials in country Fluctuations in project maintenance costs Inappropriate government policies Frequent out-of-sequence Supremacy of construction foreign firms Ranking categories S.no Rank Category RII 1 1 Contractor related factors Other factors Owner related factors Designer related factors editor@iaeme.com

10 B. Nagarjuna Kumar, Sesha Sai Ratnamala Bommareddy and SS. Asadi Comparison between Budgeted cost and Actual cost Below bar chart shows about the cost variation between Estimated cost and present actual cost after completion of project. Figure 4 Bar chart to compare the Budgeted cost and Actual cost From the studying and analysing the previous project, it was found that there is a variation in cost as actual cost increased from the budgeted cost with 1.22%. The reasons for that increase are the same, which was found from analyzing the data received from the construction company and by questionnaire forms. From above information we conclude thatto improve controlling of cost variation for constructing endowment projects in India; one must identify and recognize the influence of the main factors affecting it. This research has identified and, based on the quantified relative importance indices, determined the influence ranks of 27 factors causing cost variation for constructing endowment projects in India. To study the result of participants experience on the attained results, the results were collected under experience-based group of participants and professional cadre of respondents. In this regard, it was found that the results are consistent. The results were compared by studying all participants to cope up with all the factors that cause cost variation for constructing endowment projects in India. The most predictable and significant factor identified by the obtained results is Least bidding procurement method with Relative importance index RII equals to 0.75; the results showed that the most cost variation can also be made by Contractor and owner due to additional work and Rise and fall in material prices; while the less effect factor identified by the obtained results is Thieving and waste on-site with Relative importance index RII equals to Pareto analysis is done among the 27 factors from 4 categories and results reveals that 20 factors shown in figure 3 are critical in minimising the damage of cost variation about 80%. REFERENCES [1] Remonfayekaziz, (2013), Factors causing cost variation for constructing wastewater projects in Egypt, Alexandria Engineering journal (2013) [2] I. Avots, Cost-relevance analysis for overrun control, International Journal of Project Management 1 (3) (1983) editor@iaeme.com

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