Factors Causing Time and Cost Overruns of Construction Projects in

Malaysia

ABDELNASER OMRAN1, MOHAMED SAAD HAMAD SALEH2, ABDELWAHAB OMRAN

GEBRIL3

1Faculty of Engineering Sciences, Bright Star University, El-Brega city, LIBYA

2Faculty of Management, Bright Star University, El-Brega city, LIBYA

3Department of Occupational Safety and Health, Higher Institute of Sciences and Technology,

Alabyar city, LIBYA

Abstract: - Cost overrun is a problem that the construction industry faces in many countries, including

Malaysia. It is a significant problem in Malaysia because most Malaysian construction projects have seen cost

overruns of between 5 and 10% of the overall contract sum. This study aims to look at the factors that could

lead to time and cost overruns in Malaysian construction projects. This study's objective was accomplished by

using a quantitative approach to gather data which involved the use of questionnaire surveys. The study

employed a stratified random selection method for the collection of information from the contractors working

in the Ipoh region who have a current registration with the Pusat Khidmat Kontraktor (PKK) and the

Construction Industry Development Board (CIDB) and are mainly based in the city of Ipoh. The results showed

that “lack of experiences of project type”, “delays in issuing information to the contractor during projects”,

“improvements to standard drawings during construction”, “omissions and errors in the bills of quantities”, and

“inaccurate quantity take-off” are the top 5 factors causing time and cost overrun in the city of Ipoh, Malaysia.

Key-Words: - Cost Overrun, Construction Industry, Construction Projects, Ipoh, Malaysia

Received: April 27, 2022. Revised: August 25, 2023. Accepted: September 26, 2023. Published: October 18, 2023.

1 Introduction

Like in other nations, Malaysia's construction sector

is a vital contributor to the expansion of socio-

economic development. The primary criterion for

project success is meeting the project's deadlines

and budget while maintaining the required level of

quality. Even though Malaysia has committed so

much finances to construction, the sector still faces

many difficulties, including expenditures that go

over budget, delays in finishing projects on time,

construction problems, and an overreliance on

foreign labor. Since the 1970s, Malaysia, a nation in

the Asian area, has experienced significant

economic growth. The construction sector has

regularly contributed between 3% and 5% of the

country's Gross Domestic Product (GDP), which has

been crucial to Malaysia's economic prosperity

[1,2]. From the 1970s through the middle of the

1990s, the growth in construction climbed from 6%

to 15% [1,3]. In Malaysia, there are 2 major

sectors for construction projects which are

the public and private sectors, with the Public

Works Department (PWD) being in charge of the

majority of public sector initiatives. The

Construction Industry Development Board (CIDB)

is an organization in Malaysia with the primary

responsibility for growing the country's construction

industry. It is also involved in project development

in both the public and private sectors [2]. Ipoh, a

city along the Kinta River, is the capital city of

Perak, one of the states in Malaysia; it is almost

180 km north of Kuala Lumpur and 123 km

southeast of George Town in neighbouring Penang.

Back 20 years ago, most of the projects in Ipoh have

never been completed, especially big projects. There

aremany projects planned and developed before, but

many have failed to be completed on time and

within cost estimation. For this reason, this study

has been initiated to identify the factors causing

time and cost overruns of projects that leads to

numerous abandoned projects in Ipoh city.

2 Problem Statement

Memon et al. [4] estimated that 89% of Malaysian

construction projects have problems with cost

overruns. It was shown that the Malaysian

construction industry frequently has cost overruns of

5–10%. However, the dearth of prior research on the

factors that contribute to cost and time overruns in

the Malaysian construction sector necessitates

the study of time and cost overruns of building

projects in Malaysia. The study by Chan [5] used

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Abdelnaser Omran, Mohamed Saad Hamad Saleh,

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E-ISSN: 2732-9984

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Bromilow's model to evaluate the relationship

between the times and costs of construction projects

within Malaysia. The study concluded that it takes

approximately 269 days to complete a RM1 million

public sector project contract in Malaysia, with

the best predictor of average construction time of

T=269C 0.32. Other studies conducted

by [6,7,8,9,10&11] separately investigated the

variables that affect construction labor, construction

safety, and constructability implementation,

respectively. Furthermore, the success factors in the

Malaysian building sector have been studied by [5,

9,10&12]. Being that the construction sector

contributes significantly to the Malaysian GDP, it

has become important to identify the factors that

cause time and cost overruns during major projects

in Malaysia, as well as the parameters driving these

overruns. These influencing factors may originate

from any project stakeholder, including owners,

contractors, consultants, financial institutions, and

governmental bodies. This study relies on a

questionnaire survey to provide an evidence-based

evaluation of the facts causing cost and time

overruns in the Malaysian construction sector (both

public and private). When a construction project is

completed on schedule, within budget, and with

acceptable quality or technical performance, it can

be deemed successful [13]. In contrast to instances

of projects with a cost overrun, Chimwaso [14]

asserts that projects completed within budget are

uncommon. In project development, cost and

time overruns are important issues that have almost

become common occurrences, especially in the

building sector among developing nations. Due to

this, construction projects become expensive for all

parties involved, particularly for clients and

contractors. The same is true of time overrun. For

contractors, project delays or schedule overruns can

have negative effects on costs, profit margins, and

reputation. Clients are also impacted by increased

costs, professional fees, and diminished incomes

caused by late occupancy. According to Ng et al.

[15], one of the factors contributing to construction

delays is that a good number of project contractors

base their bid preparation on the assumption that the

client-set duration is reasonable. Hence, this study

aims to identify the variables affecting time and cost

overruns on construction projects in Ipoh, a city

in Malaysia.

3 Literature Review

In a construction project, a time overrun is an

extension of the time beyond the time originally

agreed during the tender, while a cost overrun is an

additional expense above the contractual expense

agreed upon at the tender. Both time and cost

overruns have been identified as widespread issues

in the global construction sector by numerous earlier

studies [16, 17, 18, 19, 20, 21, 22, 23 &24]. Time

overruns have been described as delays beyond

the anticipated completion dates that can be linked

to the contractors [25]; it has been described by

Choudry [26] and Chan [5] as the discrepancy

between the actual and projected completion

times calculated over days. Previous studies have

shown that time overruns are common in most of

the major civil engineering projects and have

become a common problem [27, 17, 28 & 29].

Project completion on schedule is a sign of a

successful construction sector [30]. According

to Chan & Kumaraswamy [32], the intuition, skill,

and experience of the planning engineer are

typically what determines how well they can predict

the completion time. Mezher & Tawil [32] further

stated that time overruns in the building sector in

Lebanon are costing the nation money, and there is a

need to find more practical solutions to the issue.

Regarding the causes of cost overruns, it is well

acknowledged by specialists in this field that this

issue affects the majority of building projects and is

a fairly typical occurrence. Cost overrun, according

to Avots [33], is when a project's actual cost or

expenditure exceeds its initial budget. Cost overrun

is one of the major issues in the construction sector

that affects both emerging and industrialized

nations, according to Angelo and Reina [34].

Because of how critical this situation is, more

research is required to find solutions. The factors

that have been identified to contribute to this

problem include incorrect or inadequate estimates of

the initial costs, increases in project costs,

poor planning, fluctuations in the price of raw

materials, poor project management, outdated or

inappropriate construction tools and techniques, a

lack of experience, unforeseen site conditions, errors

in design, inadequate funding, poor contract

management, measures to control construction

costs, high equipment costs, and proper project

costing. Flyvberg et al. [35] observed that the cost

of 9 out of 10 transportation infrastructure

projects is understated, and for all project types, the

actual costs are typically 28 % higher than

the projected costs. In a study by Elinwa and Joshua

[18] on the construction sector in Nigeria, 44% of

the participants believed that time overruns mostly

happened. Odeck [36] observed that in Norway, cost

overruns range from 59 to 183% for the Norwegian

Public Roads Administration, and are mostly found

on mini projects. According to Aibinu & Jogboro

[37], the average cost overrun percentage in

DESIGN, CONSTRUCTION, MAINTENANCE

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Abdelnaser Omran, Mohamed Saad Hamad Saleh,

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E-ISSN: 2732-9984

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Nigeria's construction industry was

17.34%.Furthermore, Kaming et al. [25] found that

cost overruns on high-rise projects in Indonesia

were more frequent than time overruns, and as a

result, they recommended the need for method

studies and the dissemination of the research

findings to both large and small firms so that all

employees could adopt the most productive working

practices. They viewed this as a way to boost

workers' productivity without necessarily putting in

greater physical effort. Jackson [38] quoted another

study by Barrick on the construction industry in the

United Kingdom and discovered that over 33% of

the clients complained that their projects typically

ran over budget. According to Creedy [39], the

determination of the presence and impact of the risk

factors of cost overrun in a project can assist

in controlling costs more effectively; it can also be

used to suggest strategies to prevent overruns in the

future. The study by Rahman et al. [40] investigated

the root causes of cost overruns in large construction

projects and discovered that material price

fluctuations, cash flow and financial challenges

faced by contractors, and poor supervision and site

management were the top 3 most important causes

of cost overruns. Research by Ali & Kamaruzzaman

[41] on residential building projects completed

between 2000 and 2009 in Kalang valley with

contract values of > RM 5 million revealed that the

most significant factor that causes cost overruns was

project design errors even though poor or

inaccurate original cost estimation contributes to

cost overrun. According to Jamaludin et al. [42], the

main reasons for cost overruns during the

construction stage of building projects were

incomplete design drawings and specifications at the

tendering stage, fluctuations in material prices,

financial challenges faced by the contractors,

changes in client requirements, scheduling and

monitoring, fluctuations in the cost of plants and

machinery, rising labor costs, poor planning, a lack

of coordination between the parties, and scrape and

rework.

From the aforementioned studies, it can be inferred

that more research is still needed to control cost

overrun in Malaysian construction projects; such

studies must be aimed at identifying the mitigation

methods for each important cause of cost overrun.

According to Memon et al. [43], cost overruns are

mostly caused by several factors which

include inexperience, poor design and design delays,

unrealistic contract duration and requirements, the

relationship between labor and management, late

delivery of materials and equipment, insufficient

planning and scheduling, poor site

supervision/management, a delay in the preparation

and approval of drawings, and mistakes made

during construction. According to Azis et al. [44],

71.5% of respondents ranked the material and

equipment issue as the main factor that contributes

to cost overruns in the construction industry. This is

significant because these resources are crucial for

boosting the study's efficiency by saving a

significant amount of money and time. According to

Ismail et al. [45], poor site supervision/management,

insufficient planning and scheduling, inexperience,

frequent design changes, inaccurate cost and time

estimates, cash availability and financial problems

faced by contractors, slow flow of information

between parties, financial difficulties of the owner,

inadequate number of site workers, poor supply of

materials, late availability of equipment and

materials, poor management, and a change in the

scope of the project were all factors that contributed

to the failure of projects.

4 Research Method

This study employed a quantitative method through

questionnaire surveys for data collection. The

questionnaires were distributed to the contractors in

the state of Ipoh. The population of this research is

made up of building contractors operating in the

Ipoh area who have a valid registration with the

CIDB and PKK (Pusat Khidmat Kontraktor). PKK

divided the construction companies into 6 Classes

(A to F) based on their size, executed projects,

equipment values, and qualifications of technical

staff; Class A designates the largest contractors

while Class F designates the smallest. The

population of this research includes the construction

companies that have valid registration in buildings,

roads, water and sewage, electro-mechanics, and

public works. The samples were selected randomly

from Class A to F construction companies in the

Ipoh area. There are 45 questionnairesdistributed,

but only 30 questionnaireswere returned and

analyzed. Ipoh city was considered as the study area

and the participated contractors’ companies in this

area participated in the survey as

follows:12contractors from the middle area of Ipoh

city; 10 contractors from the east; 5 contractors from

north of Ipoh, and3 contractors from the south. The

questionnaire was designed based on factors that

contribute to time and cost overruns in construction

projects in various countries globally and at time

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Volume 3, 2023

intervals. There are two sections of the

questionnaire that related to the factors contributing

to time and cost overruns in construction projects in

Ipoh. These parts also included the (company’s

profile and factors that contribute to cost and time

overruns. The survey questions were presented as

multiple-choice questions that must be answered

using a four-point Likert Scale (1= strongly

disagree, 2=disagree, 3=agree, 4=strongly agree) for

the factors that contribute to time and cost overruns

in the chosen city.

5 Results

5.1 Descriptive analysis

The types of projects handled by the participating

companies include building (43%), mechanical &

electrical (23%), and water sewage, and roads

(17%). The designation of the respondents was

mainly site engineering (37%), whereas only 33% of

the respondents were the project manager.

Regarding the working experiences, 40% of the

participants are having working experience between

5-10 years at construction works, and 36% of them

had working experience of more than 10 years. The

largest number of respondents was received from

the middle area (40%) of the city of Ipoh city. In

terms of the cost of projects executed by the

organizations, 50% of the participants are involved

in project costs ranging from one to two million

ringgit per year. The obtained data also showed that

50% of the approached contractors’ companies are

having 10 to 15 employees, followed by 20% of

them with less than 10 employees.

Table 1. Respondents’ Background

Details

Percentages (%)

Type of work executed by the respondent’s

organization

Buildings

43%

Mechanical and electrical

23%

Roads

17%

Water and sewage

17%

Respondents’ designation

Project manager

33%

Quantity surveyor

17%

Site engineer

37%

Owner of organization

13%

Experience of respondents

1-3 years

3.3%

3-5 years

20%

5-10 years

40%

More than 10 years

36%

Location of organization

North of Ipoh

15%

Ipoh City

35%

Middle area

40%

South of Ipoh

Cost of Projects executed by the organization

Less than one million

ringgit

1-2 million ringgit

2-3 million ringgit

Three million ringgit and

above

Number of constant employees

Less than 10 employees

20%

From 10 to 15 employees

50%

From 15 to 20 employees

16%

More than 20 employees

13%

5.2 Factors causing time and cost overruns

Table (2) presents the results of the relative

importance index of the factors causing time and

cost overrun of construction projects in Ipoh,

Malaysia from the contractors’ perspective. There

are 41 factors considered as the cause of time and

cost overruns which have been presented in Table 2

in descending order; the rank is based on the mean

value.

Table 2. Factors causing time and cost overruns

Factors

Mean

Rank

Lack of experiences of project

type

1.61

Delays in issuing information to

the contractor during

construction

1.61

Contractual claims

1.63

Improvements to standard

drawings during construction

1.66

Omissions and errors in the bills

of quantities

1.73

Inaccurate quantity take-off

1.77

Delays in costing variations and

additional works

1.82

Lack of experiences of local

regulations

1.84

Design changes

1.90

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Unpredictable weather

conditions

1.90

Lack of cost planning/monitoring

during pre & post contract

1.90

Delay in preliminary handing

over of project

2.00

Change in the scope of the

project

2.01

Lack of experience of technical

consultants, collaboration &

technology

2.03

Changes in owner brief

2.04

Re-measurement of provisional

works

2.04

Delay in construction, supply of

raw materials & equipment

2.04

Lack of cost reports during

construction

2.04

Inability of the contractor to be

adopted with project

environmental

2.05

Low communication of donors to

compensate any bad results

2.06

Donor policy in bidding tender to

the lowest price one

2.06

Fluctuations in the cost of

building materials

2.07

Indecision by the supervising

team in dealing

2.10

Some tendering maneuvers -

loading of rates

2.11

Inadequate review for drawings

and contract documents

2.12

Incomplete design at the time of

tender

2.13

Resources constraint

2.14

Delays in decision making

2.14

Lack of coordination at design

phase

2.16

Wrong/inappropriate choice of

site

2.19

Technical incompetence, poor

organizational structure a failure

2.20

Over time work hours of

supervising engineer

2.21

Unsettlement of the local

currency in relation to dollar

value

2.23

Inadequate project preparation,

planning and implementation

2.24

Increment of material prices due

to continuous closures

2.33

Long period of the project

maintenance period

2.43

Bad allocation of workers inside

the site

2.47

Project materials monopoly by

some suppliers

2.49

Attracting skillful technicians for

work

2.50

Labors unrest

2.56

Additional work at owner’s

request

2.81

The table showed that the contractors ranked “lack

of experience of project type” and “delays in issuing

information to the contractor during construction” as

the forth with mean value of 1.61. A contractor with

less experience in the project cannot manage and

plan such projects well. The planning phase of

construction projects (work program) must be

detailed to avoid cost and time overruns. The

contractors with less experience also have no basis

and guideline to perform such projects; the project

proceeds without proper planning; resources may

not be delivered on time, the number of workers

may not be enough or there may be unskilled

workers on site; most times, the project has to be

extended and extra cost may be needed to hire more

workers; sometimes, the material might damage

even before use. Concerning the factor of delays in

issuing information to the contractor during

construction, it can be stated that the contractor is

tied to the contract duration. The duration has been

agreed upon between all parties before awarding the

contract. The contractors must prepare the work

program to plan the activity on site on daily basis.

Each activity might relate to another activity such

that the first activity must be completed before the

next one can be started. To ensure all the activities

can be executed smoothly, contractors need all the

documentation, such as drawings, specifications,

and bills of quantities as a reference. If any

document is not completed or has discrepancies

between it, the contractor needs confirmation from

the party involved. This information or issue needs

to be distributed or solved as soon as possible to

avoid delays in site progress as scheduled. This is

because the contractor must prepare the resources in

time and estimate the actual quantity needed.

Contractual claims were ranked the second that can

cause cost overruns by the contractors. A claim is

prepared by the contractor and payment is prepared

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Abdelnaser Omran, Mohamed Saad Hamad Saleh,

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E-ISSN: 2732-9984

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Volume 3, 2023

by the quantity surveyor consultant and approved by

the client. The contractual claim prepared by the

contractor is based on bill quantities and additional

work on-site (variation order). The contractor has to

prepare all the related documents to approve the

claims.

“Improvements to standard drawings during

construction” was ranked the third factor causing

cost and time overrun. This case might happen if

during the design stage and the contract has to be

prepared and it is time-consuming. The consultant

might not have enough time to prepare all the

drawings in detail. This drawing must be improved

and provided before executing the project. The bill

of quantities for this kind of drawing will be

prepared in a lump sum and under provisional item.

Because of this problem, might burst the budget and

cause cost overruns to the project. The fourth factor

that causes time and cost overruns was identified as

“omissions and errors in the bills of quantities”; the

missing quantity can cause time and cost overruns to

the project. The bigger the number of missing items

in the quantities, the more the cost added to the

project. The consultant and quantity surveyors must

be aware of this kind of problem because the

contractor may not proceed with the work or claim

more than their entitled claim. “Inaccurate quantity

take-off” was ranked the fifth factor that cause time

and cost overruns. Other factors identified as the

cause of time and cost overrun are the delays in

costing variations and additional works, lack of

experiences of local regulations, design changes,

unpredictable weather conditions and lack of cost

planning/monitoring during pre & post contract.

4 Conclusion

The most and top ten significant factors causing cost

overruns as perceived by the sampled contractors

were “Lack of experience of project type” and

“Delays in issuing information to the contractor

during construction” (1stposition), “Contractual

claims” (2nd position), “Improvements to standard

drawings during construction” (3rd position),

“Omission and errors in the bills of quantities” (4th

position), “Inaccurate quantity take-off” (5th

position), This study adds to the body of knowledge

already available regarding the causes of cost

overruns in the Malaysian construction sector.

Clients, project managers, quantity surveyors,

contractors, and other project participants will thus

be informed about the considerations taken into

account when planning a project. The outcome of

the data analysis showed that 41factors contribute

significantly to cost and time overruns

during infrastructure projects.

Time and cost overrun will continue to be

happening during the construction process for

various known and unknown reasons and they may

not be prevented entirely. Therefore, this study

recommends that by evolving new technology like

Building Information Modelling (BIM) or

developing new methods could help in reducing the

impact of time and cost overrun factors. Finally, the

obtained results of this study provide theoretical

support to supplement the time and cost overrun

factors within the construction projects and offer

some insights into the practice of cost overrun

management in the construction industry.

Acknowledgement:

Authors would like to express their sincere thanks

and appreciation to Mrs Juridah Darani for her

assistance in collecting the data.

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Abdelwahab Omran Gebril

E-ISSN: 2732-9984

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Abdelwahab Omran Gebril

E-ISSN: 2732-9984

185

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Contribution of Individual Authors

All authors have contributed equally.

Sources of Funding

This study was not received any funding.

Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.

DESIGN, CONSTRUCTION, MAINTENANCE

DOI: 10.37394/232022.2023.3.15

Abdelnaser Omran, Mohamed Saad Hamad Saleh,

Abdelwahab Omran Gebril

E-ISSN: 2732-9984

186

Volume 3, 2023

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

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Creative Commons Attribution License 4.0

https://creativecommons.org/licenses/by/4.0/deed.en

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