Causes and effects of delays in Malaysian construction industry

Transcription

1 International Journal of Project Management 25 (2007) INTERNATIONAL JOURNAL OF PROJECT MANAGEMENT Causes and effects of delays in Malaysian construction industry Murali Sambasivan *, Yau Wen Soon Graduate School of Management, Universiti Putra Malaysia, UPM, Serdang Selangor, Malaysia Received 21 April 2006; received in revised form 27 June 2006; accepted 21 November 2006 Abstract The problem of delays in the construction industry is a global phenomenon and the construction industry in Malaysia is no exception. The main purpose of this study is to identify the delay factors and their impact (effect) on project completion. Earlier studies either considered the causes or the effects of project delays, separately. This study takes an integrated approach and attempts to analyze the impact of specific causes on specific effects. A questionnaire survey was conducted to solicit the causes and effects of delay from clients, consultants, and contractors. About 150 respondents participated in the survey. This study identified 10 most important causes of delay from a list of 28 different causes and 6 different effects of delay. Ten most important causes were: (1) contractor s improper planning, (2) contractor s poor site management, (3) inadequate contractor experience, (4) inadequate client s finance and payments for completed work, (5) problems with subcontractors, (6) shortage in material, (7) labor supply, (8) equipment availability and failure, (9) lack of communication between parties, and (10) mistakes during the construction stage. Six main effects of delay were: (1) time overrun, (2) cost overrun, (3) disputes, (4) arbitration, (5) litigation, and (6) total abandonment. This study has also established an empirical relationship between each cause and effect. Ó 2006 Elsevier Ltd and IPMA. All rights reserved. Keywords: Delay causes; Delay effects; Construction industry; Malaysia; Correlational analysis 1. Introduction * Corresponding author. Tel.: ; fax: address: [email protected] (M. Sambasivan). The problem of delays in the construction industry is a global phenomenon. In Saudi Arabia, Assaf and Al-Hejji [6] found that only 30% of construction projects were completed within the scheduled completion dates and that the average time overrun was between 10% and 30%. In Nigeria, Ajanlekoko [2] observed that the performance of the construction industry in terms of time was poor. Odeyinka and Yusif [16] have shown that seven out of ten projects surveyed in Nigeria suffered delays in their execution. Ogunlana and Promkuntong [17] conducted a study on construction delays in Thailand. Al-Momani [5] carried out a quantitative analysis on construction delays in Jordan. Frimpong et al. [10] conducted a survey to identify and evaluate the relative importance of the significant factors contributing to delay and cost overruns in Ghana groundwater construction projects. Chan and Kumaraswamy [8] studied delays in Hong Kong construction industry. They emphasized that timely delivery of projects within budget and to the level of quality standard specified by the client is an index of successful project delivery. Failure to achieve targeted time, budgeted cost and specified quality result in various unexpected negative effects on the projects. Normally, when the projects are delayed, they are either extended or accelerated and therefore, incur additional cost. The normal practices usually allow a percentage of the project cost as a contingency allowance in the contract price and this allowance is usually based on judgment [3]. Although the contract parties agreed upon the extra time and cost associated with delay, in many cases there were problems between the owner and contractor as to whether the contractor was entitled to claim the extra cost. Such situations, usually involved questioning the facts, causal factors and contract interpretation [4]. Therefore, delays in /$30.00 Ó 2006 Elsevier Ltd and IPMA. All rights reserved. doi: /j.ijproman

2 518 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) construction projects give rise to dissatisfaction to all the parties involved and the main role of the project manager is to make sure that the projects are completed within the budgeted time and cost. The construction sector in Malaysia, a fast developing country in South-East Asia has not escaped the problem of delays. In 2005, about 17.3% (of 417 government contract projects in Malaysia) were considered sick (more than 3 months of delay or abandoned). The Construction Sector is one of the important sectors that contribute to Malaysia s economic growth. The sector accounted for nearly 3.3% of GDP in the year 2005 and employed about 600,000 workers including 109,000 foreign workers (MALBEX [12]). The huge volume and complexity of projects in Malaysia s construction sector pose a great challenge and provide a wealth of opportunities to various companies in the construction industry. The construction sector in Malaysia can be divided into four broad categories: office, retail, residential and infrastructure. This sector suffered a temporary crisis between 1997 and 2000 (ASEAN crisis) and now it has started to improve. However, the delays in the projects continue to occur. The main purpose of this study is to identify the delay factors and their impact (effect) on project completion. Earlier studies either considered the causes or the effects of project delays, separately. This study takes an integrated approach and attempts to analyze the impact of specific causes on specific effects. Some causes and effects of delays in construction projects can be country-specific. The logical question at this point is: Why is it necessary to link the causes and effects of delays and how can the link help the practitioners to prevent or remedy future delays? In this research, we identified major causes of delay and categorized them as client-related, contractor-related, consultant-related, material-related, laborrelated, contract-related, contract relationship-related, and external factors. We have also identified major effects of delay as: time overrun, cost overrun, dispute, arbitration, litigation, and total abandonment. Identification of causes and effects alone does not help the project managers to take appropriate remedial or preventive steps. The project managers need to understand, for example, what causes or factors result in time overrun or cost overrun. Once these factors become clear, the managers can take proactive steps to avoid such situations. For example, if it is known that time overruns are predominantly caused by client-related factors, the project manager can: (1) make sure that payments for the completed work are paid on time, (2) reduce owner interference, (3) speed up the decision-making process, and (4) avoid unrealistic contract duration and requirements. Therefore, the link between causes and effects of delays need to be established. This paper is organized as follows. Section 2 deals with the previous studies on causes and effects of delays in projects. Section 3 explains the methodology of research. Section 4 discusses the analysis the data using statistical procedures. Section 5 discusses the results. Section 6 presents the strategies for reducing delays in construction projects and Section 7 presents the conclusions. 2. Previous studies Many researchers have studied the causes and few researchers have studied the effects of project delays in the construction industry. We have broken the studies into two parts: (1) Studies on causes of delay and (2) Studies on effects of delay Studies on causes of delay Mansfield [14] identified 16 major factors that caused delays and cost overruns in Nigeria. A questionnaire survey was carried out with contractors, consultants and client organizations in Nigeria. They presented that the causes of delay and cost overruns in Nigerian construction projects were attributed to finance and payment arrangements, poor contract management, shortages in materials, inaccurate estimation, and overall price fluctuations. Assaf et al. [7] identified 56 main causes of delay in Saudi large building construction projects and their relative importance. Based on the contractors surveyed the most important delay factors were: preparation and approval of shop drawings, delays in contractor s progress, payment by owners and design changes. From the view of the architects and engineers the cash problems during construction, the relationship between subcontractors and the slow decision making process of the owner were the main causes of delay. However, the owners agreed that the design errors, labor shortages and inadequate labor skills were important delay factors. Ogunlana and Promkuntong [17] conducted a study on construction delays in Thailand. They found that the problems faced by the construction industry in developing economies like Thailand could be: (a) shortages or inadequacies in industry infrastructure (mainly supply of resources); (b) caused by clients and consultants and (c) caused by contractor s incompetence/inadequacies. They recommended that there should be concerted effort by economy managers and construction industry associations to provide the necessary infrastructure for efficient project management. Chan and Kumaraswamy [8] conducted a survey to determine and evaluate the relative importance of the significant factors causing delays in Hong Kong construction projects. They analyzed and ranked main reasons for delays and classified them into two groups: (a) the role of the parties in the local construction industry (i.e. whether client, consultants or contractors) and (b) the type of projects. Results indicated that five major causes of delays were: poor site management and supervision, unforeseen ground conditions, low speed of decision making involving all project teams, client initiated variations and necessary variations of works. Odeyinka and Yusif [16] have addressed the causes of delays in building projects in Nigeria. They classified the causes of delay as project participants and extraneous factors. Client-related delays included variation in orders, slow decision-making and cash flow problems. Contrac-

3 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) tor-related delays identified were: financial difficulties, material management problems, planning and scheduling problems, inadequate site inspection, equipment management problems and shortage of manpower. Extraneous causes of delay identified were: inclement weather, acts of nature, labor disputes and strikes. Al-Momani [5] carried out a quantitative analysis on construction delays in Jordan. The result of his study indicated that the main causes of delay in construction of public projects were related to designers, user changes, weather, site conditions, late deliveries, economic conditions and increase in quantity. Similarly, Odeh and Battaineh [15] also conducted a survey aimed at identifying the most important causes of delays in construction projects with traditional type of contracts from the viewpoint of construction contractors and consultants. Results of the survey indicated that contractors and consultants agreed that owner interference, inadequate contractor experience, financing and payments, labor productivity, slow decision making, improper planning, and subcontractors were among the top ten most important factors. Frimpong et. al., [10] conducted a survey to identify and evaluate the relative importance of significant factors contributing to delay and cost overruns in Ghana groundwater construction projects. A questionnaire with 26 factors was carefully designed from preliminary investigations conducted in groundwater drilling projects between 1970 and 1999 in Ghana. The questionnaire was directed towards three groups in both public and private organizations: owners of the groundwater projects, consulting offices, and contractors working in the groundwater works. The questionnaire was distributed to a random sample of 55 owners, 40 contractors and 30 consultants. The result of the study revealed the main causes of delay and cost overruns in construction of groundwater projects: monthly payment difficulties from agencies; poor contractor management; material procurement; poor technical performance; and escalation of material prices. Assaf and Al-Hejji [6] conducted a survey on time performance of large construction projects in Saudi Arabia. The survey had 73 different causes of delay. He studied the importance of various causes from the viewpoint of contractors, consultants, and owners. The most common cause of delay identified by all the parties was change order. He also found that about 70% of the projects experienced time overruns Studies on effects of delay Aibinu and Jagboro [1] studied and evaluated the effects of construction delays on project delivery in Nigerian construction industry. They found that the six effects of construction delay were: time overrun, cost overrun, dispute, arbitration and litigation and total abandonment. The questionnaires were sent to three groups of construction practitioners: quantity surveyors, architects and engineers, and contractors. Manavazhia and Adhikarib [13] conducted a survey to investigate material and equipment procurement delays in highway projects in Nepal. Delay in the delivery of materials and equipment to construction sites is often a contributory cause to cost overruns in construction projects in developing countries. An assessment of the causes of the delays and the magnitude of their impact on project costs were also made. The survey method was used in conducting this research involving 22 highway projects. The main causes of material and equipment procurement delays were found to be (in rank order) organizational weaknesses, suppliers defaults, governmental regulations and transportation delays. However, the actual impact of these delays on project costs was found to be on average, only about 0.5% of the total budgeted cost of the projects. Among materials, delays in the supply of aggregates and equipment were found to occur most frequently. Chan and Kumaraswamy [9] explored strategies of compressing construction durations of various types of building projects on the basis of the lessons learned from Hong Kong based surveys and other research findings. The literature from different countries on the factors affecting construction durations, reasons for project delays and existing statistical models for duration forecasts were reviewed. A regression-based model developed from Hong Kong public housing construction project data was used for predicting the durations of the primary work packages in the building process and the overall completion period. And finally, a survey was conducted by the researchers to explore the construction time performance of projects in three building sub-sectors (i.e. public housing, public non-residential and private sector). Based on the factors identified as significant from the above research, specific technological and managerial strategies for reducing construction periods in particular building sub-sectors were formulated in order to improve the construction time performance of Hong Kong building projects. Terry Williams [19] studied the standard methods currently available for assessing extension of time delays on major projects, and issues around such assessment. He used network causal mapping and system dynamics approach to study the impact of delays on a project. Based on the above studies, it can be inferred that the earlier studies concentrated on either the causes or the effects. However, some studies have alluded to the probable link between the causes and effects of delays without a systematic analysis. Manavizha and Adhikarib [13] linked the material-related causes to the probable cost overruns in construction projects in Nepal. Assaf and Al-Hejji [6] linked the contractor-related and labor-related causes to the probable time overruns in construction projects in Saudi Arabia. Odeh and Battaineh [15] linked the contract-linked causes to the probable disputes occurring in construction projects in Jordan. Chan and Kumaraswamy [8] linked the consultant-related and client-related causes to the probable time overruns in construction projects in Hong Kong. Mansfield et al. [14] and Frimpong et al. [10] linked the client-related,

4 520 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) consultant-related, and material-related factors to the probable cost and time overruns. In this research, we take an integrated approach and attempt to link the causes and the effects of delays in Malaysian construction industry through a systematic analysis. 3. Methodology A questionnaire was developed to assess the perceptions of clients, consultants, and contractors on the relative importance of causes and effects of delay in Malaysian construction industry. The questionnaire was divided into three parts. The first part requested background information about the respondents. The second part of the questionnaire focused on causes of construction delay. The respondents were asked to indicate their response category on 28 well-recognized construction delay factors identified by Odeh and Battaineh [15]. These causes were categorized into the following eight major groups: 1. Client related factors: finance and payments of completed work, owner interference, slow decision making and unrealistic contract duration imposed by owners. 2. Contractor related factors: delays caused by subcontractor, site management, improper construction methods, improper planning and errors during construction, and inadequate contractor experience. 3. Consultant related factors: contract management, preparation and approval of drawings, quality assurance and waiting time for approval of test and inspection. 4. Material related factors: quality of material and shortage in material. 5. Labor and equipment related factors: labor supply, labor productivity and equipment availability and failure. 6. Contract related factors: change orders and mistakes or discrepancies in contract document. 7. Contract relationship related factors: major disputes and negotiations, inappropriate overall organizational structure linking to the project and lack of communication between the parties. 8. External factors: weather condition, regulatory changes, problem with neighbors and unforeseen site condition. The respondents were asked to highlight their recommendations to improve the performance of Malaysian construction industry through an open-ended question at the end of second part of the questionnaire. Third part of the questionnaire focused on the effects of construction delay in Malaysian construction industry. The six effects of construction delay identified were: time overrun, cost overrun, dispute, arbitration, litigation, and total abandonment [1]. Similar to the second part of the questionnaire, the respondents were asked to highlight their recommendation to minimize the effects of construction delays through an open-ended question. A five-point Likert scale ranging from 1 (not important) to 5 (extremely important) was adopted to capture the importance of causes and effects of delays. Before distributing the questionnaire, a small pilot study was conducted using 10 consultants, 10 clients, and 10 contractors. The basic purpose of the pilot study was to verify the completeness of the questionnaire in capturing the factors relevant for Malaysia. All the respondents agreed that the questionnaire was sufficient to capture the causes and effects of delays. Therefore, we did not make any modification to the causes of delay identified by Odeh and Battaineh [15] and effects of delay identified by Aibinu and Jagboro [1]. The sampling method used in this study was convenience and snowball sampling. This sampling comes under the class of non-probability sampling techniques. As the name implies, sample elements are identified by convenience (friends) and through referral networks. This method of sampling is preferred when it is difficult to get response from sample elements selected at random [18]. We distributed the questionnaires through our friends working in Public Works Department of Malaysia, developers, consultants and construction firms. Our friends in turn distributed to their friends. This sampling method enabled us to obtain a large number of completed questionnaires quickly and economically. Two hundred sets of questionnaires were distributed to the potential respondents at all levels in the organizations within the construction industry. One hundred sets were distributed to clients (50 sets to Public Works Department of Malaysia and 50 sets to private developers), 50 sets to consultants and 50 sets to the contractors. Of the 200 questionnaires, 150 sets (75%) were returned and there were 67 sets (67%) from clients, 48 sets (96%) from consultants and 35 sets (70%) from contractors Calculation of relative importance of factors Kometa et al. [11] used the relative importance index method to determine the relative importance of the various causes and effects of delays. The same method was adopted in this study within various groups (i.e. clients, consultants or contractors). The five-point scale ranged from 1 (not important) to 5 (extremely important) was adopted and transformed to relative importance indices (RII) for each factor as follows: P W RII ¼ ð1þ A N where W is the weighting given to each factor by the respondents (ranging from 1 to 5), A is the highest weight (i.e. 5 in this case), and N is the total number of respondents. The RII value had a range from 0 to 1 (0 not inclusive), higher the value of RII, more important was the cause or effect of delays. The RII was used to rank (R) the different causes. These rankings made it possible to cross-compare the relative

5 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) importance of the factors as perceived by the three groups of respondents (i.e. clients, consultants and contractors). Each individual cause s RII perceived by all respondents were used to assess the general and overall rankings in order to give an overall picture of the causes of construction delays in Malaysian construction industry. The same procedure was adopted for ranking the effects. The indices (RII) were then used to determine the rank of each item (effect). These rankings made it possible to cross compare the relative importance of the items as perceived by the three groups of respondents. The weighted average for each item for the three groups of respondents was determined and ranks (R) were assigned to each item representing the perception of the three groups. 4. Analysis of data The demographic characteristics of the respondents are given in Table Causes of delay The primary data collected from the second part of the questionnaire was analyzed from the perspective of clients, consultants and contractors. Each individual cause s RII perceived by all respondents was computed for overall analysis. The relative importance index, RII, was computed for each cause to identify the most significant causes. The causes were ranked based on RII values. From the ranking assigned to each cause of delays, we were able to identify the most important factors or causes of delays in Malaysian construction industry. Based on the ranking, the five most important causes of construction delays as perceived by clients were: (1) contractor s improper planning (RII = 0.821); (2) contractor s site management (RII = 0.779); (3) inadequate contractor experience (RII = 0.770); (4) labor supply problems (RII = 0.770) and (5) subcontractor problems (RII = 0.758). The five most important causes of construction delays as perceived by consultants were: (1) contractor s improper planning (RII = 0.842); (2) contractor s site management (RII = 0.821); (3) shortage in material (RII = 0.804); (4) inadequate contractor experience (RII = 0.770), and (5) inadequate client s finance and payments of completed work (RII = 0.792). The five most important causes of construction delays as perceived by contractor were: (1) contractor s poor site management (RII = 0.869); (2) inadequate client s finance and payments of completed work (RII = 0.823); (3) subcontractors (RII = 0.789); (4) inadequate contractor experience (RII = 0.783), and (5) equipment availability and failures (RII = 0.777). From the above list, it is interesting to compare the causes as perceived by clients and contractors. Most of the disputes that arise in the construction industry in Malaysia are between clients and contractors, most often, one party blaming the other. Three of the causes perceived common between Table 1 Demographic characteristics of respondents Demographic characteristic Frequency Percent Age Less than and above Sex Male Female Education Lower secondary (Form 1 3) Upper secondary (Form 4 5) Pre-university (Form 6) University Post graduate Type of organization Clients (government or developer) Consultants Contractors Occupational level Non-executive Executive Managerial Number of years working experience Less than 2 years years years More than 10 years Fields of specializations Building Infrastructure Mechanical and electrical Others Largest project involved based on contract sum Less than RM 10 millions RM 10 millions RM 50 millions More than RM 50 millions clients and contractors are: contractor s site management, inadequate contractor experience, and subcontractors. The clients blame contractor s improper planning and labor supply as other important causes of delay. The contractors inability to plan can be attributed to contractor s inexperience. A significant portion of the labor force in the construction industry is from neighboring countries like Indonesia. It is quite difficult to prevent the movement of these laborers from one construction company to another causing disruption of work. The contractors blame client s inability to pay for the completed work and equipment availability and failures as other important causes of delay. These causes can be attributed to the client s financial position and contractor s improper planning. In government related projects, payments to the contractors take relatively longer time. It is the responsibility of the contractors to factor in this time during the planning process. Table 2 gives

6 522 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) Table 2 Ranking of causes (based on overall) Causes of delays Percentage of respondents scoring RII Rank Client related causes Finance and payments of completed work Owner Interference Slow decision making Unrealistic contract duration and requirements imposed Contractor related causes Subcontractors Site management Construction methods Improper planning Mistakes during construction stage Inadequate contractor experience Consultant related causes Contract management Preparation and approval of drawings Quality assurance/control Waiting time for approval of tests and inspection Material related causes Quality of material Shortage in material Labor and equipment category causes Labor supply Labor productivity Equipment availability and failure Contract related causes Change orders Mistakes and discrepancies in contract document Contract relationships related causes Major disputes and negotiations Inappropriate overall organizational structure linking to the project Lack of communication between the parties External causes Weather condition Regulatory changes Problem with neighbors Unforeseen site condition the ranking of causes based on response of all respondents (clients, contractors and consultants). Table 3 summarizes RII and ranking of the categories of causes of delay as perceived by all respondents. In order to test the degree of agreement between the three groups of respondents as to the causes of delays, a correlation analysis using Spearmen s rank correlation coefficient was done [6]. Table 4 gives the results of the analysis. High correlation indicates that there is a high degree of agreement between the respondents Effects of delay The primary data collected from the third part of the questionnaire was analyzed from the perspective of clients, consultants and contractors. The calculation of RII and ranking were done as explained in the previous section. Based on the ranking, the important effects of construction delays as perceived by clients were: time overrun (RII = 0.821), cost overrun (RII = 0.782), dispute (RII = 0.687), arbitration (RII = 0.621), litigation (RII = 0.591), and total abandonment (RII = 0.585). The important effects of construction delays as perceived by contractors and consultants were exactly the same as those of clients and therefore, a separate analysis using Spearmen s Rank correlation was not done to test the agreement between the three groups of respondents. Table 5 gives the ranking of effects based on response of all respondents (clients, contractors and consultants). The next step in the analysis was to identify the empirical relationships between the causes and the effects. Empirical relationships are based on observations and propositions that are based on sense experience and are derived from methods of inductive logic, including mathematics and statistics [18]. In short, empirical relationships

7 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) Table 3 RII and ranking of categories of causes of delay Category Clients Consultants Contractors Overall RII Rank RII Rank RII Rank RII Rank Client-related Contractor-related Consultant-related Material-related Labor and equipment-related Contract-related Contract relationships-related External-related Table 4 Spearman s rank correlation coefficients of the ranking of clients, consultants and contractors for causes of delay (28 causes) Ranking Client Consultant Contractor Client q a a Significance probability N (number of causes) Consultant q a a Significance probability N (number of causes) Contractor q a a Significance probability N (number of causes) a Correlation is significant at the 0.01 level of significance if significance probability is lesser than the level of significance, correlation is significant. Table 5 Ranking of effects (based on overall) Effects of delays Percentage of respondents scoring RII Rank Time overrun Cost overrun Dispute Arbitration Litigation Total abandonment Table 6 Correlation between the categories of causes and effects of delays Effects Causes of delay Client Contractor Consultant Material Labor Contract related Contract relationship External Time overrun Cost overrun Dispute Arbitration Litigation Total abandonment Highlighted coefficients are significant at 0.05 significance level. attempt to describe, explain, and make predictions through observation. In this research, we attempt to establish relationship between causes and effects through observable data. Since the data we have collected through survey is based on Likert-scale, it can be considered as interval data. Correlation analysis is a powerful method to study the relationship between variables that have interval data [18]. Therefore, a correlation analysis was done to study the empirical relationships between the categories of causes and effects. Table 6 gives the results of the analysis.

8 524 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) Discussion of results This section discusses the results obtained in the earlier section. First, we discuss the results obtained by analyzing the causes of delays. Second, we discuss the results obtained by analyzing the effects of the delays. Third, we link each of the effect with the causes of delay. The ten most important causes of delays (based on all respondents) as shown in the Table 2 were: (1) contractor s improper planning (RII = 0.815), (2) contractor s poor site management (RII = 0.813), (3) inadequate contractor experience (RII = 0.783), (4) inadequate client s finance and payments for completed work (RII = 0.792), (5) problems with subcontractors (RII = 0.771), (6) shortage in material (RII = 0.771), (7) labor supply (RII = 0.757), (8) equipment availability and failure (RII = 0.755), (9) lack of communication between parties (RII = 0.755), and (10) mistakes during the construction stage (RII = 0.753) Contractor s improper planning Local contractors often fail to come out with a practical and workable work program at the initial planning stage. This failure is interrelated with lack of systematic site management and inadequate contractor s experience towards the projects. The consultant only checks and reviews the work program submitted by the contractors based on experience and intuitive judgment. Improper planning at the initial stages of a project manifests throughout the project and causes delays at various stages. Only a project that is well planned can be well executed Contractor s poor site management Contractor s poor site management is one of the most significant causes in causing the construction delays. The results of this research indicate that local contractors face deficiency in site planning, implementation and controls. A poor site management results in delays in responding to the issues that arise at the site and causes negative impact on the overall work progress Inadequate contractor experience Odeh and Battaineh [15] indicated that inadequate contractor experience was an important factor and this could be linked to the contract awarding procedure where most projects were awarded to the lowest bidder. A contractor with inadequate experience cannot plan and manage the projects properly and this can lead to disastrous consequences Client s finance and payments for completed work Construction works involve huge amounts of money and most of the contractors find it very difficult to bear the heavy daily construction expenses when the payments are delayed. Work progress can be delayed due to the late payments from the clients because there is inadequate cash flow to support construction expenses especially for those contractors who are not financially sound Problems with subcontractors Typically in huge projects, there are many subcontractors working under main contractors. If the subcontractor is capable, the project can be completed on time as planned. The project can be delayed if the subcontractor under performs because of inadequate experience or capability. High degree of subcontracting in Malaysia leads to high risk of delays and this leads to inefficiencies in the Malaysian construction industry Shortage in material Shortages in basic materials like sand, cement, stones, bricks, and iron can cause major delays in projects. Since Malaysia is a country that is developing very fast, often times demand exceeds the supply and this causes prices to increase. The contractors postpone the purchase activities until the prices decrease. Manavazhia and Adhikarib [13] investigated material and equipment procurement delays in highway projects in Nepal and found these delays to cause cost overrun Labor supply The quality and quantity of labor supply can have major impact on the projects. About 20% of the workers in the Malaysian construction industry are foreign workers, mainly from Indonesia and Vietnam (MALBEX [12]). A few of them are illegal workers and their work quality is relatively low when compared to local laborers. The low quality and productivity of the foreign workers have impact on the project progress and efficiency. The illegal workers are frequently caught by the Malaysian immigrant officials and deported and this causes shortage of labor pool in the construction industry Equipment availability and failure Many of the contractors do not own equipments that are required for the construction work. They rent the equipments when required. During the season when there are many construction projects, the equipments are in short supply and are poorly maintained. This leads to failure of the equipments causing the progress to be hampered Lack of communication between parties Since there are many parties involved in a project (client, consultant, contractor, sub-contractors), the communication between the parties is very crucial for the success of the project. Proper communication channels between the

9 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) various parties must be established during the planning stage. Any problem with communication can lead to severe misunderstanding and therefore, delays in the execution of the project Mistakes during the construction stage The mistakes during the construction stage can be due to accidents, inadequate planning, or miscommunication between the parties. Whatever the reason, the mistakes can have impact on the progress of the project. While analyzing the effects of delays, all respondents were unanimous in ranking the effects. The time and cost overruns were ranked highly by the respondents. Any delay in a project can lead to cost and time overruns and these two are linked. Whenever there are delays, there are disputes as to who should bear the responsibility and the cost. These disputes often lead to an arbitration process by third parties and failure in this process leads to litigation where the disputes are settled by the court. In extreme cases, some projects might be totally abandoned. About 17% of the projects in Malaysia are abandoned (MALBEX [12]). In the following paragraphs, we analyze the impact of causes on each effect of delay. Correlation analysis results given in Table 6 establish the link between them. From the table, we can identify the causes for each of the effects of delay Time overrun Client-related and contractor-related factors have impact on the time overrun. Out of the ten most important causes of delay discussed earlier, six causes belong to clientrelated and contractor-related factors. Factors such as inadequate planning by the contractors, improper site management by the contractors, inadequate project handling experience of contractors, and delay in the payments for the work completed directly affect the completion of the project and cause time overrun Cost overrun Contract-related factors such as change orders (changes in the deliverables and requirements) and mistakes and discrepancies in the contract document result in cost overrun. Mistakes and discrepancies in the contract document can be in scope, deliverables, resources available and allocated, payment terms, achievement of various milestones, and the project duration. In most of the instances, time overrun leads to cost overrun. Correlation analysis between cost and time overruns indicated a strong linkage (correlation coefficient = 0.487, significant at 0.01 level of significance) Disputes Client-related, contract-related, contract relationshiprelated, and external factors have impact on the disputes that arise during the course of the project. Factors such as delay in the payments for completed work, frequent owner interference, changing requirements, lack of communication between the various parties, problems with neighbors, and unforeseen site conditions give rise to disputes between the various parties. The disputes, if not resolved amicably, can lead to arbitration or litigation Arbitration Client-related and contract relationship-related factors escalate disputes to be settled by arbitration process. A competent third-party can settle the disputes amicably without going to the court Litigation Client-related, labor-related, contract-related, contract relationship-related, and external factors escalate disputes to be settled by the litigation process. The parties involved in the projects use litigation as a last resort to settle disputes Total abandonment Client-related, consultant-related, labor-related, contract-related, and external factors contribute to the total abandonment of the projects. In Malaysia, many projects were temporarily abandoned during the financial crisis between 1997 and Promoters of various projects backed out because of poor cash flow and economic conditions. Many of these projects have now become so prohibitive that they have been abandoned permanently (MALBEX [12]). Based on the discussions above, the next step is to provide suggestions to clients, contractors, and consultants to reduce delays. These suggestions, we hope, will alleviate the problems faced by the construction industry in Malaysia. 6. Prescriptions to reduce delays We divide the prescriptions to adopted into three groups: (1) prescriptions for the clients, (2) prescriptions for the consultants, and (3) prescriptions for the contractors Prescriptions for the clients (1) While selecting the contractors, clients have to make sure that the contractors are not selected based only on the lowest bid. The selected contractor must have sufficient experience, technical capability, financial capability, and sufficient manpower to execute the project, (2) clients should not interfere frequently during the execution and keep making major changes to the requirements. This can cause inordinate delays in the project, (3) clients should have the finances in time to pay the contractors after com-

10 526 M. Sambasivan, Y.W. Soon / International Journal of Project Management 25 (2007) pletion of a work. Therefore, clients should work closely with the financing bodies and institutions to release the payment on schedule, and (4) clients must make quick decisions to solve any problem that arise during the execution Prescriptions for the consultants (1) While drawing the contract between the client and contractor, the consultant must include items such as duration of contract, mechanism to solve disputes, mechanism to assess the causes of delay, if there are any and risk management plans, (2) consultants should prepare and approve drawings on time, and (3) consultants should monitor the work closely by making inspections at appropriate times Prescriptions for the contractors (1) Contractors should not take up the job in which they do not have sufficient expertise, (2) contractors should have able site-managers for the smooth execution of work, (3) contractors must plan their work properly and provide the entire schedule to the clients, and (4) contractors must make sure they have a sound financial backing. 7. Conclusions We investigated the causes and effects of delays facing in the Malaysian construction industry. A questionnaire was designed and distributed among the three major groups of participants (clients, consultants and contractors). We identified main causes of delay and ten most important causes were: (1) contractor s improper planning, (2) contractor s poor site management, (3) inadequate contractor experience, (4) inadequate client s finance and payments for completed work, (5) problems with subcontractors, (6) shortage in material, (7) labor supply, (8) equipment availability and failure, (9) lack of communication between parties, and (10) mistakes during the construction stage. We identified main effects of delay and they were: (1) time overrun, (2) cost overrun, (3) disputes, (4) arbitration, (5) litigation, and (6) total abandonment. As an important contribution, we also studied the empirical relationships between the causes and effects of delays. We isolated the causes of delay for each of the six effects. We believe that the results of this study can be of immense help to the practitioners (clients, contractors and consultants) and academicians. The practitioners can better understand the dynamics of project management and make efforts to reduce the incidences of delays. The academicians can conduct similar studies in other parts of world and identify causes and effects of delays. As mentioned earlier, some causes and effects may be unique to certain countries. References [1] Aibinu AA, Jagboro GO. The effects of construction delays on project delivery in Nigerian construction industry. Int J Project Manage 2002;20: [2] Ajanlekoko JO. Controlling cost in the construction industry. Lagos QS Digest, Lagos 1987;1(1):8 12. [3] Akinsola AO. Neural network model for predicting building projects contingency. In: Conference: proceedings of association of researchers in construction management, ARCOM 96, Sheffield Hallam University, England, September p [4] Alkass S, Mazerolle M, Harris F. Construction delay analysis techniques. Construction Manage Econ 1996;14(5): [5] Al-Momani A. Construction delay: a quantitative analysis. Int J Project Manage 2000;20:51 9. [6] Assaf SA, Al-Hejji S. Causes of delay in large construction projects. Int J Project Manage 2006;24(4): [7] Assaf SA, Alkhalil M, Al-Hazmi M. Causes of delay in large building construction projects. J Manage Eng, ASCE 1995;11(2): [8] Chan DWM, Kumaraswamy MM. A comparative study of causes of time overruns in Hong Kong construction projects. Int J Project Manage 1997;15(1): [9] Chan DWM, Kumaraswamy MM. Compressing construction durations: lessons learned from Hong Kong building projects. Int J Project Manage 2002;20: [10] Frimpong Y, Oluwoye J, Crawford L. Causes of delay and cost overruns in construction of groundwater projects in a developing countries; Ghana as a case study. Int J Project Manage 2003;21: [11] Kometa ST, Olomolaiye PO, Harris FC. Attributes of UK construction clients influencing project consultants performance. Construction Manage Econ 1994;12: [12] MALBEX, Market watch construction industry, Kuala Lumpur Exhibition Center Report. p [13] Manavazhia MR, Adhikarib DK. Material and equipment procurement delays in highway projects in Nepal. Int J Project Manage 2002;20: [14] Mansfield NR. Causes of delay and cost overruns in Nigerian construction projects. Int J Project Manage 1994;12(4): [15] Odeh AM, Battaineh HT. Causes of construction delay: traditional contracts. Int J Project Manage 2002;20: [16] Odeyinka HA, Yusif A. The causes and effects of construction delays on completion cost of housing project in Nigeria. J Financial Manage Property Construction 1997;2(3): [17] Ogunlana SO, Promkuntong K. Construction delays in a fast growing economy: comparing Thailand with other economies. Int J Project Manage 1996;14(1): [18] Sekaran Uma. Research methods for business: a skill building approach. 3rd ed. New York: John Wiley; [19] Terry Williams. Assessing extension of time delays on major projects. Int J Project Manage 2003;21:19 26.