AVOIDING COST OVERRUNS IN CONSTRUCTION PROJECTS IN THE UNITED KINGDOM

AVOIDING COST OVERRUNS IN CONSTRUCTION PROJECTS IN THE UNITED KINGDOM By Susana Gomez Arcila Supervisor: Mr Michael Newton Dissertation submitted in partial fulfilment for the of Degree of Master of Science in Programme and Project Management The University of Warwick Warwick Manufacturing Group Submitted August, 2012

Abstract ABSTRACT Over the years, there have been improvements in the management of construction projects; however, the problem of cost overruns is still a critical issue in the construction industry. For this reason, this paper attempts to identify the main causes of cost overruns in construction projects, in the United Kingdom, and the Critical Success Factors [CSFs] that can help prevent these causes. This research carried out a literature review which helped in finding the main causes of cost overruns on construction projects. In addition, the author also reviewed some existing literature regarding CSFs. Most of this literature focuses on the Factors that influence the overall cost performance of projects; however not many studies have been conducted to identify the CSFs that influence the cost performance of construction projects. For this reason, this dissertation aims to fill this gap, attempting to identify factors that can help avoid cost overruns on construction projects. To address this, the author created a list of CSFs, and some hypotheses, that are further investigated in this research. Through a positivist approach, a multi-case study method was performed in this research. The multiple-case method constituted of 6 different projects in the construction industry, constructed by companies from the UK. Hence, two different hypotheses were tested and the conclusion suggested that there are certain Critical Success Factors that can help prevent the occurrence of cost overruns in construction projects in the UK. Therefore, the research identified CSFs that have an influence in the cost performance of projects. This exploratory research has not only filled a gap in the CSFs literature, but it has also suggested a list of CSFs that can be used to improve the cost performance of construction projects. This research can be used as basis for further research along similar lines. BENEFICIARIO COLFUTURO 2012 i

Acknowledgements ACKNOLEDGEMENTS I wish to thank my supervisor Michael Newton for his assistance, support and guidance throughout this research. I really appreciate his comments, suggestion and contributions to this project. My appreciation also goes to the professionals who participated in the interviews because this project would not have been possible without their contributions. I am also grateful to my family: Olga Elena Arcila, Juan Esteban Gomez, Carolina, Melissa and Daniel. Thank you, because you have always believed in me. It would have been doubly difficult to complete this research without your support and love. I want to express my gratitude to my friends Juan Carlos Carpio and Andres Ortiz for their friendship, understanding and support. I really appreciate all the ideas and good advice they gave me all through this period. My appreciation also goes to Johnnatan, Henry, Mario, Andres Boyaco, Juan Pablo and Marco for their friendship that made this year an incredible experience. Finally, special thanks to my friends in Colombia: Manuela, Daniela, Alejandra, Nicolas and Felipe, for supporting and encouraging me during all this period. BENEFICIARIO COLFUTURO 2012 ii

Contents CONTENTS ABSTRACT... i ACKNOLEDGEMENTS... ii DECLARATION... Error! Marcador no definido. LIST OF FIGURES... vi LIST OF TABLES... vii CHAPTER 1... 1 1 Introduction... 1 1.1 Background of the Topic... 1 1.2 Definition of the Problem... 2 1.3 Research Question and Objectives... 4 1.4 Dissertation Structure... 5 CHAPTER 2... 6 2 Literature Review... 6 2.1 Cost Performance in Construction Projects... 6 2.1.1 Cost Overruns as a Rule not an Exception... 7 2.1.2 Causes of Cost Overruns in Construction Projects... 8 2.2 Critical Success Factors... 17 2.2.1 Definition of Project Success... 17 2.2.2 Generic Critical Success Factors... 20 2.2.3 Critical Success Factors in Construction Projects... 25 2.3 What are the Critical Success Factors that can prevent cost overruns?... 29 2.3.1 Theoretical Foundations and Development of Propositions... 30 2.4 Chapter Summary... 35 CHAPTER 3... 36 3 Research Methodology... 36 3.1 Research Philosophy and Paradigm... 36 3.2 Research Approach... 37 3.3 Research Strategy... 38 3.4 Time Frame... 39 3.5 Research Design... 39 BENEFICIARIO COLFUTURO 2012 iii

Contents 3.5.1 Study s Questions... 40 3.5.2 Research Propositions/hypotheses... 41 3.5.3 Unit of Analysis... 42 3.5.4 Linking Data to Propositions and Criteria for Interpreting the Findings... 45 3.6 Data Collection... 45 3.6.1 Data Collection Method... 45 3.6.2 Data Collection Analysis... 48 3.7 Quality of the Research Design... 49 3.7.1 Construct Validity... 49 3.7.2 Internal Validity... 49 3.7.3 External Validity... 50 3.7.4 Reliability... 50 3.8 Chapter Summary... 50 CHAPTER 4... 52 4 Case Studies Results and Analysis... 52 4.1 Introduction... 52 4.2 Quality of Evidence... 52 4.2.1 Source of Evidence... 52 4.2.2 Initial Assumptions and Definitions... 55 4.3 Case Studies Results and Analysis... 56 4.3.1 General Information of Case Studies... 56 4.3.2 Poor Cost Performance Projects... 57 4.3.3 Good Cost Performance Projects... 71 4.3.4 Comparison between Good and Poor Cost Performance Projects... 78 4.4 Chapter Summary... 79 CHAPTER 5... 80 5 Discussion... 80 5.1 Introduction... 80 5.2 Relationship between Findings and Existing Literature... 80 5.2.1 Main Causes of Cost Overruns... 81 5.2.2 Confirmation or Rejection of Hypotheses... 85 5.2.3 Critical Success Factors in construction projects... 90 5.2.4 Conclusion of Discussion... 94 BENEFICIARIO COLFUTURO 2012 iv

Contents 5.3 Critical evaluation of this research... 94 5.3.1 Data Validity and Reliability of research... 95 5.3.2 Limitations of the research... 95 5.4 Chapter Summary... 98 CHAPTER 6... 100 6 Conclusions and Further Research... 100 6.1 Research Objectives... 100 6.2 Key findings of the research... 101 6.3 Recommendation for further research... 104 REFERENCES... 106 APPENDIX A: COVER LETTER OF THE PROJECT... 112 APPENDIX B: INTERVIEW PROTOCOL... 113 APPENDIX C: CONFIDENTIALITY AGREEMENT... 114 APPENDIX D: INTERVIEW QUESTIONS... 117 APPENDIX E: CASE 1-GOOD COST PERFORMANCE PROJECT... 121 APPENDIX F: CASE 2-POOR COST PERFORMANCE PROJECT... 125 APPENDIX G: CASE 3-GOOD COST PERFORMANCE PROJECT... 129 APPENDIX H: CASE 4-POOR COST PERFORMANCE PROJECT... 132 APPENDIX I: CASE 5-GOOD COST PERFORMANCE PROJECT... 136 APPENDIX J: CASE 6-POOR COST PERFORMANCE PROJECT... 140 BENEFICIARIO COLFUTURO 2012 v

List of Figures LIST OF FIGURES Figure 2-1 Main causes of cost overruns... 11 Figure 2-2 Common causes of cost overruns in Megaprojects of construction... 14 Figure 2-3 Ten critical success factors... 22 Figure 2-4 Critical success factors for each stage of the project lifecycle... 22 Figure 2-5 Success factors, cause and effect relationship... 23 Figure 2-6 Framework of factors affecting success of project... 24 Figure 3-1 Elements of research process... 36 Figure 3-2 Components of research design... 40 Figure 3-3 Initial idea of multi-case studies... 42 Figure 3-4 Final multi-case study design... 44 Figure 3-5 Most common data collection methods for case studies... 45 Figure 3-6 Research methodology adopted in this research... 51 Figure 4-1 Multiple case studies... 57 Figure 4-2 Process used to get data about main causes of cost overruns... 59 Figure 4-3 Process used to get data about CSFs that were not present in poor cost performance projects... 64 Figure 4-4 CSFs that could have prevented cost overruns in each of the case studies... 69 Figure 4-5 Process used to get data regarding CSFs that were present in good cost performance projects... 73 Figure 4-6 CSFs that influence cost performance... 78 Figure 5-1 Lacking factors that could have prevented cost overruns in Cases 2, 4 and 6... 86 Figure 5-2 CSFs present in the good cost performance projects... 88 Figure 5-3 Summary of Critical Success Factors... 91 BENEFICIARIO COLFUTURO 2012 vi

List of Tables LIST OF TABLES Table 2-1 Main causes of cost overruns in construction projects in Turkey... 9 Table 2-2 Main causes of cost overruns in Nigeria... 10 Table 2-3 Summary of studies about cost overruns in construction projects... 13 Table 2-4 Role and years of experience of respondents... 15 Table 2-5 Main causes of cost overrun in the UK construction projects... 16 Table 2-6 Critical Success Factors [CSFs] definition... 19 Table 2-7 Critical Success Factors in construction projects... 21 Table 2-8 Critical success factors... 26 Table 2-9 Overall critical success factors for three project objectives: schedule, budget and quality... 27 Table 2-10 Overall performance critical success factors... 28 Table 2-11 Ranking of CSFs for cost performance and overall performance... 31 Table 2-12 Top ten CSFs for budget performance... 32 Table 2-13 Comparison of the CSFs identified by Hwang and Lim and the previous study.. 33 Table 2-14 Critical success factors that influence cost performance in construction projects 34 Table 3-1 Differences between Positivist and phenomenological paradigm by UWE... 37 Table 3-2 Relevant situations for different research strategies... 38 Table 3-3 Critical Success Factors that affect cost performance... 41 Table 4-1 Main causes of cost overrun Case 2... 60 Table 4-2 Main causes of cost overrun Case 4 [... 61 Table 4-3 Main causes of cost overrun Case 6... 61 Table 4-4 Summary of main causes of cost overruns in poor cost performance case studies. 62 Table 4-5 Critical Success factors that could have help to prevent cost overruns in Case 2... 65 Table 4-6 Critical Success factors that could have helped prevent cost overruns in Case 4.. 66 Table 4-7 Critical Success factors that could have helped prevent cost overruns in Case 6.. 66 Table 4-8 Summary of CSFs that could have prevented cost overruns in poor cost performance case studies... 68 Table 4-9 Critical Success factors that influenced cost performance of in Case 1... 74 Table 4-10 Critical Success factors that influenced cost performance of in Case 3... 75 Table 4-11 Critical Success factors that influenced cost performance of in Case 5... 76 BENEFICIARIO COLFUTURO 2012 vii

List of Tables Table 4-12 Summary of CSFs that influenced cost performance in the good cost performance case studies... 77 Table 5-1 Main causes of cost overruns in construction projects in the UK... 83 Table 5-2 Main causes of cost overruns in Cases 2, 4 and 6... 83 Table 5-3 Main causes of cost overruns comparison with existent literature... 84 Table 5-4 Summary of lacking CSFs in poor cost performance projects... 87 Table 5-5 Summary of CSFs that were present in the good cost performance cases... 89 Table 5-6 Summary of Critical Success factors that influence cost performance in Cases 1,2,3,4,5 and 6... 92 Table 5-7 Critical success factors that influence cost performance in construction projects taken from the Theoretical Foundation of this research... 92 Table 5-8 Suggested list of CSFs that influence cost performance in construction projects in the UK... 93 BENEFICIARIO COLFUTURO 2012 viii

Introduction CHAPTER 1 1 Introduction 1.1 Background of the Topic Construction has become an important player in the economy of many countries, especially developed countries (Takim, 2005). As mentioned by Olawale (2010), this industry contributes to the GDP and employment rate of many nations and for this reason it is considered vital for the economic development of any nation. Moreover, the author also affirmed that construction activities have become a significant market due to the fact that this industry procures products and material from other businesses in other sectors. UK Contractors Group (2009) stated that although construction activities have decreased since the beginning of the recession, this sector has played an important role in the United Kingdom, due to the fact that it has helped to stimulate the growth of the economy. Firstly, the construction sector has shown to be dependent on an extended supply chain which contributes to the growth of the other sectors, such as manufacturing sector. Secondly, construction sector has also shown that it has a low rate of imports which indicates that investments and spending stay in the UK economy. Thirdly, construction is employing lower qualified and young workers, which shows that this sector gives job to many people that need this opportunity. Consequently, the employment rate has decreased in this country. Finally, construction has been considered as an investment that will benefit the country in the future. For example, the construction of new schools will contribute to the education of young people. Therefore, the economy of the UK will be improved with the increase of educated people (UK Contractors Group, 2009). Many authors affirmed that construction projects usually present delays and cost overruns. These overruns are considered a critical issue in this business because they represent a loss of money for the contractors and owners (1997). This idea was also suggested by Morris and Hough (1987) who stated that, although the management of projects has been studied for many years, most projects either failed or present cost and time overruns. The author also affirmed that many projects are cancelled due to the lack of proper management which causes BENEFICIARIO COLFUTURO 2012 1

Introduction expenditures of significant amount of money over the original budget. This idea was reinforced by Leeman (2007) who also suggested that the failure of projects has increased in construction projects because the project contractors and owners do not use management methodologies that are useful to distribute resources properly. The failure of construction projects has been discussed by many authors, who have not agreed on a single method to measure success in a project. However, Morris and Hough (1987) suggested three different measures to recognise if a project is successful or not. Firstly, they mentioned the project functionality which means that the project should function technically and financially. Secondly, the authors proposed a second measure about the management of the project, which indicates if the project meets the budget and schedule targets. Finally, the project should be evaluated depending on the performance of the contractors which analyse if they provide services that benefit the project. On the other hand, many other authors measure the success of a construction project assessing the time performance, cost performance and the final quality of the project (Chan, et al., 2004). Therefore, there is not a unique way of determining success in a project; however, cost performance is a critical issue to be considered in the success or failure of project. 1.2 Definition of the Problem Construction can be considered as a dynamic industry which is constantly facing uncertainties. These uncertainties and the many stakeholders in these kinds of projects, make the management of costs difficult which consequently causes cost overruns. Therefore, cost overruns are considered one of the most critical issues during the execution of construction projects (Chan, et al., 2004; Doloi, 2011). As mentioned by Van Der Westhuizen and Fitzgerald (2005), the presence of cost overruns can be a reason for project failure. However this idea has been refuted by many authors who considered that project success depends on many other factors that should be assessed to conclude the success or failure of a project (Chan, et al., 2004). Moreover, there have been many studies that suggest that the success of a project depends on the presence of certain critical factors which can also change depending on the objective to be met (Iyer and Jha, 2005). In other words, some authors ascertained that there are some critical success factors that help to improve cost performance and prevent cost overruns. BENEFICIARIO COLFUTURO 2012 2

Introduction There have been many studies focused on Critical Success Factors [CSF s] that improve the overall performance of projects, such as the projects carried out by Baker, et al. (1983), Morris and Hough (1987), Belassi and Tukel (1996), among others. However, much of the existing research is not focused on the construction industry and more specifically on those critical success factors that influence the cost performance of construction projects. For this reason, an attempt will be made in this study to identify if certain CSFs can help to avoid cost overruns. According to the ideas mentioned above, this research aims to identify some critical success factors that can help to improve cost performance in construction projects in the UK. In order to meet this objective, some areas of study will be covered in the literature review. In the first place, this project tries to understand the main causes of cost overruns in construction projects in the United Kingdom. In the same way, this project also tries to identify existing studies that have researched critical success factors in construction projects. Finally, with the use of some studies that have researched about the CSFs that have an impact on the cost performance of construction projects, this research will create a theoretical foundation and propose some propositions to be confirmed or rejected with the help of some case studies of construction projects in the UK. A positivist paradigm and a deductive approach are adopted in this research for the purpose of testing the propositions suggested in the theoretical foundation. In addition, a multi-case study strategy has been chosen to test the hypotheses. The case studies will be six construction projects in the UK with two different characteristics: good and poor cost performance. Moreover, three of these projects are similar in terms of cost performance, due to the fact that they present good cost performance during their execution. On the other hand, the other three projects had poor cost performance and they presented cost overruns after their execution. For this reason, it was essential to identify the meaning of good and poor cost performance in this dissertation. The key definitions of concepts in this project are: Cost overrun: occurs when the final cost of the project exceeds the original contract value at the time of completion. Critical Success Factors: are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule. BENEFICIARIO COLFUTURO 2012 3

Introduction Good cost performance project: Project in which the cost overrun of the project does not exceed 10 percent of the initial budget. Poor cost performance project: Project in which the cost overrun of the project exceeds 10 percent of the initial budget. The case studies evidence was collected using two different sources: interviews of the project or senior managers in contractor companies in the UK and documentation, such as internet articles and news paper articles. Furthermore, the main idea of carrying out a multi-case study research is to confirm or reject the propositions developed after the review of literature. Therefore, the anticipated contribution of this project is to identify the main causes of cost overruns in the UK and the Critical Success Factors that can help to avoid these cost overruns. 1.3 Research Question and Objectives Based on the definition of the problem, the objectives of the research were established. These objectives were: 1. To identify the main causes of cost overruns in construction projects, in the United Kingdom. 2. To understand the existing literature on Critical Success Factors and identify the most recent studies regarding CSFs in construction. 3. To identify the Critical Success Factors that can help improve the possibility of avoiding, or preventing, cost overruns in construction projects, in the UK These objectives guided the process of the research and created the research boundaries. However, a research question was also designed to scope the project. The research question is: 1. What are the Critical Success Factors that can help prevent cost overruns in construction projects in the UK? Some secondary questions were also used to guide the research process and meet the objectives. These questions are: 2. What are the main causes of cost overruns in construction projects, in the UK? 3. What are the critical success factors for a construction projects? BENEFICIARIO COLFUTURO 2012 4

Introduction 1.4 Dissertation Structure As mentioned before, CSFs are those factors that help achieve the project objectives and increase the possibility of success on a project. The main objective of this research is to identify the CSFs that help avoid cost overruns in construction projects. For this reason, this dissertation is divided in different chapters, as follows: Chapter 1, Introduction: This section provides a background of the topic that is being researched in this dissertation. The main idea of this chapter is to explain the background of the problem, the objectives and the contribution made by this project. Chapter 2, Literature Review: This chapter provides information about the main subjects of this dissertation; cost overruns in construction projects, generic Critical Success Factors for projects and Critical Success Factors for construction projects. The review of these topics helps to meet some of the objectives of this dissertation. In addition, this chapter provides a theoretical foundation with the formulation of some propositions, which are the basis for the methodology research. Chapter 3, Methodology Research: This chapter provides the plan of the research. In other words, this section explains the research paradigm, approaches, strategies and data collection methods. In this project, a case study strategy is used to confirm or reject the propositions. In addition, this chapter provides some quality tests that help assess the validity and reliability of the research strategy being used. Chapter 4, Case study results and Analysis: this section provides the results from the case studies. After being reported, each case study is analysed independently and then some comparisons and cross-case analysis is carried out between projects. These results are essential for the research as they are used to confirm or reject the hypothesis. This chapter is the basis for the discussion section. Chapter 5, Discussion: This chapter uses the results and analysis from the previous chapter and makes a comparison with the existing literature. In addition, these results are used in this section to see the way in which they help confirm or reject the hypotheses. On the other hand, this chapter also provides a critical evaluation of this work including the limitations of the research. Chapter 6, Conclusions and Further Research: This section summarises the main issues of this dissertation and it provides an overview of the main findings. It also concludes if the project met the proposed objectives and the way in which this dissertation was useful to confirm or reject the hypothesis. BENEFICIARIO COLFUTURO 2012 5

Literature Review CHAPTER 2 2 Literature Review This chapter provides a literature review, which is divided in three different sections. Section 2.1 discusses how cost overruns are critical in construction projects and the way in which this problem is perceived as business-as-usual and not an exception. This section will also review some studies that have been carried out in the last few years, which aimed to find the main causes of cost overruns. This review is important for the purpose of this research as one of the main objectives of this research is to identify the main causes of cost overruns in construction projects, in the UK. Next, Section 2.2 presents a review of some studies about critical success factors for projects. In addition, this section aims not only to find the generic critical success factors, but also those factors that are considered critical for a successful construction project. Finally, Section 2.3 will use the previous sections to review some studies that focused on critical success factors that have an impact on cost performance, and can prevent cost overruns in construction projects. For this reason, this section will review three studies that are concentrated on this subject. Finally, these studies will be used to develop some hypotheses on which the research methodology and strategy will be based. 2.1 Cost Performance in Construction Projects Construction has been considered as a dynamic industry which is constantly facing uncertainties in its budgets, processes and technology (Chan, et al., 2004). These uncertainties, the complexity of projects and the increase of stakeholders make the management of costs difficult in a construction project. These facts result in many of the time and cost overruns in the project (Doloi, 2011). Even though there have been improvements in the management of construction projects, the problems of cost and time overruns are still a critical issue in the construction industry (Reichelt and Lyneis, 1999). Due to the excessive cost and time overruns, construction projects usually have poor reputation (Raftery, 1994). Cost overruns occur when the final cost of the project exceeds the initial estimate or budget (Avotos, 1983, p. 142). Nevertheless, the estimate or initial budget is constantly changing during the execution of the project. For this reason, it is important to be careful with the BENEFICIARIO COLFUTURO 2012 6

Literature Review budget that is going to be taken into account to calculate the overrun of the project (Avotos, 1983). Some authors consider that the initial budget is created when the decision of commencing building is made (Flyvbjerg, et al., 2002; Odeck, 2004). On the other hand, some other authors uphold the idea that cost overrun should be found comparing the original contract value with the final cost of the project at the time of completion. The difference between cost overrun definitions may cause a difference in the magnitude of cost overruns that have been reported over the years (Love, et al., 2012). Le-Hoai, et al. (2008) also considered that the magnitude of cost overruns may or may not vary depending on the size of the project, the location of the project and the type of project. For example, Eden et al. (2005) pointed out that although there is more information about cost overruns in public projects, this does not mean that there are no cost overruns in the private industry. In fact, the authors uphold the idea that projects of private sector tend to have larger cost overruns. On the other hand, Koushki, et al. (2005) expressed that cost and time overruns are common not only in large projects, but also in small and simple projects. This issue was also discussed by Frimpong, et al. (2003) who stated that overruns are more frequent and significant in large projects than small projects. Gkritza and Labi (2008) supported this idea and they also added that cost overruns are also more common in long duration projects. Nevertheless, Odeck (2004) contradicted this statement. He considered that large projects have fewer cost overruns because managers pay more attention to the management of these types of projects than the attention they usually pay to small projects. 2.1.1 Cost Overruns as a Rule not an Exception Cost overruns are common in different type of projects and locations. In addition, cost overruns have become a norm, rather than an exception in the construction industry (Baloi and Price, 2003). As stated by Avotos (1983), it is normal to expect that the final cost of a project exceed the initial budget by 10-20 percent. However, Morris and Hough (1987) summarised 40 reports about cost overruns in different types of projects and they concluded that approximately 50 percent of construction projects presents cost overruns. These overrun values are usually between 40 and 200 percent. Nevan Wright (1997, p.185) agreed with the author and he suggested that a good way to deal with these overruns is adding 50 percent to every estimate and 50 percent to the first estimate of the project. Additionally, Olawale and BENEFICIARIO COLFUTURO 2012 7

Literature Review Sun (2010) pointed out that the idea of cost overruns being a rule in the construction industry is applicable in the UK. Some examples of important projects which were carried out in UK and presented cost overruns were mentioned by Jackson (2002). For instance, the construction of the British Library was finished in 1998 and its final cost exceeded the initial budget by more than three times, due to constantly changes in the personnel and its responsibilities. Another project that encountered cost overruns was the new parliamentary office located near the House of Parliament, which has been considered one of the most expensive buildings constructed in the UK. The main reasons for cost overruns were: the changes in inflation, problems of one of the underground stations under this place, delay in designs and approval of costs. Another example given by Jackson (2002) was the Guy's House which doubled the initial budget. This cost overrun was due to many reasons, such as significant design changes, delays in construction and changes in the construction requirements. Finally, it has been highlighted by the press that the Olympic Games 2012 is one recent project in the UK with a significant cost overrun (Syal and Gibson, 2012). King (2012) also added that the cost overrun of this project is approximately 2 billion pounds, which has been caused by many reasons, such as wrong estimation of resources and budget and problems with price negotiation with the main contractor. 2.1.2 Causes of Cost Overruns in Construction Projects This section aims to understand the main causes of cost overrun. For this reason, it presents some results of different studies over the years of cost overruns in different types of construction projects in many different countries. Generally, the factors that have an impact on cost performance of the project and cause cost overruns are present from the estimating stage to the completion stage of the project (Baloi and Price, 2003). Therefore, understanding the main factors that cause cost overruns is important due to the fact that it helps to minimise the impact and create a strategic plan to face uncertainties in all stages of the project (Reichelt and Lyneis, 1999). BENEFICIARIO COLFUTURO 2012 8

Literature Review 2.1.2.1 Existing Studies of Cost Overrun in Construction Projects In the past, Arditi, et al. (1985) carried out a survey using questionnaires which were distributed by email to 146 public organisations and 327 contractors in public projects in Turkey. The main idea of the authors was to understand the main reasons for cost overruns in projects that were constructed between the 1970s and the 1980s. They concluded that the main reason for cost overruns was the increase in materials prices, mainly caused by the fast growth of Turkish inflation in those years. In addition, the increase in inflation also made it difficult for contractors to buy materials at official prices and in the same way, sell their products at its official price. This fact was considered as the second most important reason for cost overruns. Shortages in resources, changes in design specifications and financial problems were some of the factors which caused delays in projects. These delays were considered the fourth reason for cost overruns in public projects in Turkey. Finally, the authors concluded that the fifth reason for cost overruns was the underestimation of cost at the time of creating the budget of the project. Therefore, the summary of the main causes of cost overruns found by Arditi, et al. (1985) can be seen in Table 2-1. Table 2-1 Main causes of cost overruns in construction projects in Turkey (Taken from Arditi, et al., 1985) Main causes of cost overruns in construction projects in Turkey Increase of materials' prices Fast growth of inflation. Inflation increase make difficult for contractors to produce products at its official price. Delays caused by changes in design specification and financial problems. Underestimation of cost at the moment of creating the budget of the project Similarly, some studies were conducted in Nigeria by Okpala and Aniekwu (1988) who aimed to understand the main causes of high costs of construction projects. The study consisted of 450 questionnaires which were given to architects, contractors, engineers and owners in three different cities in the south of Nigeria [Port-Harcourt, Ibadan and Benin City]. The results were analysed taking into account the different professions and the role of each respondent in the project. Therefore, the authors concluded that the three main reasons for cost overruns in

Literature Review Nigerian projects were: shortage of materials, finance and payment for completed works, poor contract management, price fluctuations and fraudulent practices (Okpala and Aniekwu, 1988, p.243). The study carried out by Okpala and Aniekwu (1988) was used in the following years as the basis for other studies in Nigeria. In 1993, Elinwa and Buba created a different questionnaire taking into account the factors highlighted by Okpala and Aniekwu (1988). In this study, 150 questionnaires were sent to professionals in three different cities in the north of Nigeria [Bauchi, Jos and Kano]. Moreover, Elinwa and Buba (1993) considered that the most important cause of cost overruns were the cost of the materials; as the authors mentioned: fraudulent practices, materials prices increment, high cost of machineries and poor planning. The following year, Mansfield, et al. (1994) distributed 80 questionnaires to contractors, and consultants companies in the capital of Nigeria, Lagos. The authors supported the main reasons highlighted before by other authors (Elinwa and Buba, 1993; Okpala and Aniekwu, 1988); nevertheless, the authors added that the lack of geotechnical studies before starting the construction and the delays caused by the involvement of complicated rules to check and approve construction processes, can also be reasons for cost overruns in Nigerian constructions. Although some of the causes resulted from these studies were similar, there were some differences that can be seen in Table 2-2. Table 2-2 Main causes of cost overruns in Nigeria (Adapted from Elinwa and Buba, 1993; Mansfield, et al., Main causes of cost overruns 1994; Okpala and Aniekwu, 1988) Okpala and Aniekwu (1988) Elinwa and Buba (1993) Mansfield, et al. (1994) Shortage of materials Finance and payment for completed works Poor contract management Price Fluctuations Fraudulent practices Cost of materials High cost of machineries Inaccurate estimates leading to delays Lack of geotechnical studies before starting the construction Delays caused by the involvement of complicated rules

Literature Review Flyvbjerg, et al. (2003) stated in their book Megaprojects and Risk: an Anatomy of Ambition that the factors that affect cost performance and caused cost overruns in a developing country can be generalised to all developing countries because they have similar problems in construction projects. Moreover, this statement is reinforced by Kaming, et al. (1997) who interviewed 31 project managers of high-rise construction projects in Indonesia to find the main factors that influence time and cost overruns in this type of projects. The authors concluded that lack of materials due to the inaccurate planning and estimating, increase of materials cost, complexity of works, poor contractor management and unpredictable weather were the main factors that cause cost overruns in Indonesia. Another study that had similar results in a developing country was the research done by Frimpong, et al. (2003), who wanted to find the causes of delay and cost overruns in the construction of groundwater projects in Ghana. For this reason, the authors sent 125 questionnaires to owners, contractors and consultants. The results pointed out that the main factors that caused overruns in Ghana are similar to those in other developing countries. These factors were: the increase of cost of the materials, poor contractor management, problems with agencies payments, poor technical performance and inaccurate estimation of costs (Frimpong, et al., 2003). A summary of the causes mentioned by these authors can be seen in Figure 2-1. Degree of complexity of works Poor contractor management Problems agencies payments Kaming, et al. (1997) Increase of materials cost Frimpong, et al. (2003) Unpredictable weather Inaccurate estimating Poor technical performance Figure 2-1 Main causes of cost overruns (Adapted from Frimpong, et al., 2003; Kaming, et al., 1997) Koushki, et al. (2005) carried out a different study in the State of Kuwait, due to the fact that it was the first research in this country which aimed to find the reasons for delays and cost increases in the construction of private residential projects from the standpoint of the owner; thus, the authors interviewed 450 owners of housing projects, which were chosen in 27 different districts in the country. The results showed that cost and time overruns were less in those projects where owners spend time and money in the pre-planning stage [design phase,

Literature Review contractors and materials selection] before starting the implementation phase. Additionally, the authors mentioned the major reasons for cost and time overrun: the first reason was that owners did not have enough money to spend during the first stage of the project and pay for someone to supervise the construction process. Secondly, the financial difficulties of contractors caused problems because contractors were not meeting the specifications of the job. Finally, the last factor was the delays caused by design changes and change orders. Similar results were obtain by Le-Hoai, et al. (2008) in a study carried out in Vietnam using 285 questionnaires, which were given to professionals of major projects in this country. The results coincided with those from the study in the State of Kuwait due to the fact that the lack of supervision, owners financial resources, financial difficulties of contractors and design changes were also part of the five more frequent factors that caused overruns in Vietnam. In addition, changes in the design and poor project management were also causes of cost overruns. The review of some studies has shown that the main causes of cost overrun in developing countries are similar in the construction industry which reinforced the idea suggested by Flyvbjerg, et al (2003). More recently, Kaliba, et al. (2009) found the major causes of cost overruns in road construction projects in Zambia. The authors based the study on questionnaires, interviews and some case studies of construction projects in the country. Unlike some studies mentioned before, the main reason for cost overruns in Zambia, according to the results, was the inclement weather. However, the other reasons were similar to the studies carried out in other developing countries; for example, inflation, changes in the scope of the project, delays in schedule and lack of managerial and technical knowledge. Another recent study was conducted by Enshassi, et al. (2009) in Gaza Strip who wanted to find the main factors that caused cost overruns in construction projects in the country. With the use of 120 questionnaires, which were distributed among owners, consultants and contractors, the authors concluded that the main factors were the increase of cost of materials, shortages in materials and lack of experience and knowledge of workers. It is important to mention that this study pointed out an interesting factor that causes overspending in a project and was not been mentioned by other authors. This factor is the lack of leadership skills in the managerial positions of the project, which not only cause a poor management performance, but can also have an impact on the relationship with the owner or client. BENEFICIARIO COLFUTURO 2012 12

Literature Review A summary of the main causes of cost overruns of these studies is shown in the table below. Table 2-3 Summary of studies about cost overruns in construction projects [References in table] Author Year [City] Main Reasons Koushki, et al. (2005) The State of Kuwait Owner's financial constraints Financial difficulties of contractors Contractors did not meet the specifications of the job Delays caused by design changes and change orders Le-Hoai, et al. (2008) Vietnam Lack of supervision Owners financialresources Financial difficulties of contractors Changes in the design Poor project management Kaliba, et al. (2009) Zambia Inclement weather Inflation Changes in the scope of the project Delays in schedule Lack of managerial and technical knowledge Enshassi, et al. (2009) Gaza Str Increase of cost of materials Shortages in materials Lack of experience and knowledge of workers Lack of leadership skill in the managerial positions Some studies of cost overruns in megaprojects have been carried out in the past years. Megaprojects have been defined as those construction projects that cost more than one billion dollars (Jergeas and Ruwanpura, 2010). Flyvbjerg, et al. (2003) defined megaprojects in the same way and they also mentioned that the main reason for cost overruns in construction megaprojects is the underestimation of costs and length of delays during the planning stage. Other factors mentioned by the authors were: the absence of a plan that takes into account not only the geological risks, but also the design and specification changes that the project can have in the construction phase, the lack of knowledge about changes in exchange rates between currencies and safety and environmental risks during the execution. These results were reinforced by Jergeas and Ruwanpura (2010) who aimed to find the reasons for cost and scheduled overruns in oil sands megaprojects in Canada. The authors surveyed 87 international senior project managers and the conclusion regarding the main reasons for cost overruns were similar to those expressed by Flyvbjerg, et al. (2003). The main reasons were: the lack of knowledge of the project and its complexity, inaccurate estimation of costs, the absence of a plan that copes with the changes in design and execution requirements and the lack of managerial strategies.

Literature Review The lack of knowledge about changes in exchange rates between currencies Safety and environmental risks The absence of a plan that takes into account geological risks and the design and specification changes Lack of knowledge about the project and its complexity Underestimation of costs and length of delays Common causes of cost overruns in Megaprojects Lack of managerial strategies Figure 2-2 Common causes of cost overruns in Megaprojects of construction (Adapted from Flyvbjerg, et al., 2003; Jergeas and Ruwanpura, 2010) As it can be seen in Table 2-3, many of the studies that have been carried out over the years are concentrated on developing countries, and not many of them have been focused on developed countries. Although the review of those studies is useful to understand some of the main reasons for cost overruns because construction projects worldwide have some characteristics in common, these causes cannot be generalised because there are some specific conditions in each country that can influence these causes of cost overruns (Olawale, 2010). Studies concentrating on construction projects in the United Kingdom will be reviewed in the next section, as this dissertation is focused on finding the main causes of cost overruns in construction projects in the United Kingdom. 2.1.2.2 Studies Concentrated on the United Kingdom Some studies of cost overruns have been carried out in the United Kingdom. A study made by Jackson (2002) attempted to find the reasons why construction projects spend more money than the initial budget. For this reason, the author mailed 500 questionnaires to quantity surveying practices, which are professional practices dedicated to estimate the cost of projects. The author also complemented the study with the analysis of some projects in that year, which were exceeding the initial budget. Moreover, he mentioned that the main reason for cost overruns is the changes in the design, mainly caused by clients. Additionally, the results showed that incomplete designs, lack of availability of information in the planning

Literature Review stage, absence of design details during the execution stage and inaccurate estimations, are severe factors that cause overruns in construction projects in the UK. Nevertheless, this study was complemented by Olawale (2010) in a more recent study. Olawale (2010) not only distributed 250 questionnaires among the top construction and consultancy companies in the UK, but also interviewed 15 practitioners in construction projects. The first stage of the research was conducted using the questionnaires, which were distributed to 150 construction companies and 100 construction consultancies in the UK. These companies were selected according to the list of 150 top construction companies that is published annually by Building Magazine. Moreover, the rate of response was 44 percent [110 questionnaires]. As shown in Table 2-4, the majority of the respondents were working as directors or senior managers [71.82 percent] and project managers [11.80 percent]. In addition, approximately 84 percent of the respondents had more than 16 years of experience. Table 2-4 Role and years of experience of respondents (Taken from Olawale, 2010) Roles of respondents Percentage Years of experience of Percentage Director/senior management 71.82% respondents Commercual manager 2.73% 0-5 4.54% Contracts manager 1.82% 6-10 2.73% Project manager 11.80% 11-15 8.18% Quantity surveyor 1.82% 16-20 18.18% Construction manager 1.82% 21-25 18.18% Others 8.18% >25 48.18% Some interviews were carried out during the second stage of this research, which consisted of a 30 minute interview with each professional. In total, fifteen practitioners accepted to be interviewed. The interviewees were mostly contractors and three of them were working in consultancy companies. All of the interviewees had more than 20 years of experience. Furthermore, the questionnaire and interviews used a list of 20 causes of cost overruns which was created after a review of past literature. The respondents were asked to rank these factors in order of importance. Additionally, the respondents had the opportunity to include extra factors during the questionnaires and interview (Olawale, 2010). To analyse the results, the author (Olawale, 2010) used the Relative Importance Index [RII] which was also used by Chan and Kumaraswamy (1997) and Iyer and Jhan (2005) in later

Literature Review studies. Therefore, the author created a list of 20 factors which he considered were not only the main causes of cost overruns, but also the main factors that inhibit the control of cost in a construction project in the UK (Olawale and Sun, 2010). These factors are shown in Table 2-5 with the RII for each of the factors. This study answers one of the objectives of this research which is to identify the main causes of cost overruns in UK construction projects. It can be considered as correct because it is a recent study in construction projects in the United Kingdom; the results, as mentioned before, are reliable, the rate of response is high and it takes into account the different perceptions of project participants [owners, consultants and contractors]. In addition, this study is a research carried out by a doctorate student in a well known university in the UK, which gives credibility to this study. Table 2-5 Main causes of cost overrun in the UK construction projects (Taken from Olawale, 2010) Main causes of cost overruns Rank RII Design Changes 1 0.94 Risk and uncertainty associated with projects 2 0.89 Inaccurate evaluation of project s time/or duration 3 0.86 Non-performance of subcontractors and nominated suppliers 4 0.82 Complexity of works 5 0.81 Conflict between project parties 6 0.81 Discrepancies in contract documentation 7 0.8 Contract and specification interpretation 8 0.8 Inflation of prices 9 0.79 Financing and payment for completed works 10 0.78 Lack of proper training and experience of PM 11 0.77 Low skilled manpower 12 0.69 Unpredictable weather conditions 13 0.68 Dependency on imported materials 14 0.65 Lack of appropriate planning 15 0.62 Unstable interest rate 16 0.59 Fluctuation of currency/exchange rate 17 0.58 Weak regulation and control 18 0.58 Project fraud and corruption 19 0.55 Unstable government policies 20 0.48 This research is going to use a definition of cost overrun based on the Olawale s study. This definition is:

Literature Review A cost overrun occurs when the final cost of the project exceeds the initial the original contract value at the time of completion Working with a definition of cost overruns is useful because it will help during the execution of the interviews that are going to be carried out in the development of the case studies. This fact will be explained in the methodology research. After reviewing the main causes of cost overruns, the next section will introduce the Critical Success Factors of a project and the specific factors that have an impact on cost performance. The idea is to find which of these factors are important to prevent cost overruns in construction projects. 2.2 Critical Success Factors There have been many studies regarding the factors and issues that have an influence on the success of a project (Pinto and Mantel Jr, 1990). These factors have been called Critical Success Factors [CSFs] which have been defined as those attributes that predict the success of projects (Sanvido, et al., 1992). Many authors have suggested that some of the reasons behind the failure of projects are the lack of critical success factors during the execution of the project (Pinto and Covin, 1989). However, to understand the benefits of the critical success factors, it is important to define project success. The main barrier is that this term has been defined by many people and there has not been a consensus regarding its definition. The purpose of this section is to define project success as a basis to find a definition of Critical Success Factors that is going to be used in this research. In addition, this section will also provide a review of some studies that have been carried out about the specific critical success factors that have an impact on the cost performance of a project and which of those factors can be used to prevent cost overruns. 2.2.1 Definition of Project Success As mentioned before, there does not exist an exclusive definition of project success due to the fact that the meaning is different for each person, project team and company (Chan, et al., 2004). Pinto and Mantel (1990) also support the idea of the lack of a unique definition of BENEFICIARIO COLFUTURO 2012 17

Literature Review project success. In addition, the authors also added that the project success should be assessed based on different criteria, which usually change depending on the eye of the beholder. The most appropriate criteria to measure project success are the project objectives. These objectives are also different depending on the person or the company that is assessing them (De Wit, 1988). Some authors have suggested that time, cost and quality should be the basic criteria to measure project success (Chan, et al., 2004).. However, some others consider that perceived performance should be the right criteria to measure success, instead of time, cost and quality (Baker, et al., 1983). On the other hand, Van Der Westhuizen and Fitzgerald (2005) disagreed with Chan, et al. (2004), due to the fact that they uphold the idea that time, cost and quality are not the criteria to measure project success. The authors suggested that meeting these three objectives helps to have project management success. In addition, the authors defined project success as the combination of project management success and project product success. In other words, the authors conclude that if a project meets the time, cost and quality objectives and at the same time the end-product is considered as a success, it can be said that the project is a success. The definitions above show that there are different ways of defining project success. However, in this research the meaning of project success will be based on Sanvido s definition who stated that success of a project means that the objectives of the project for a given participant were met (Sanvido, et al., 1992). Sanvido (1992) also mentioned that each participant will have a different point of view, however, he also considered that cost, time and quality are an essential part of these objectives. Therefore, this definition was chosen for this dissertation, because this research concentrates on the problems and causes that construction projects face in order to meet the budget objective. For this reason, this definition of project success will help as a basis to find a definition of critical success factors, which is one of the main aims of this research, to find the critical success factors that help to avoid cost overruns in construction projects, which means to meet the budget objective of the project. Having understood the definition of project success that is going to be considered in this dissertation, the next step is to define Critical Success Factors. This is important for this research because it is the basis of the development of this study. In addition, this definition BENEFICIARIO COLFUTURO 2012 18

Literature Review will be used during the development of the case studies because it will help to have a unique definition of CSFs. Critical Success Factors have been defined by many different authors and it has been seen that there is no unique way of defining this term (Hwang and Lim, 2012). For this reason, some of the author s definitions are shown in Table 2-6. Author Rockart (1982) Walker (1994) McCabe (2003) Rowlinson (1999, as cited in Takim, 2005) Sanvido (1992) Belassi and Tukel (1996) Chen (2011) Chua (1999), Kog (2012), Table 2-6 Critical Success Factors [CSFs] definition [References in table] Definition of CSFs "Those few key areas of activities in which favourable results are absolutely necessary for a particular manager to reach his or her goals" "Factors in which success is necessary in order that each of the major participants in a project has the maximum chance of achieving the goals" Specific factors that significantly influence project performance "Fundamental issues inherent in the project which must be maintained in order for team working to take place in an efficient and effective manner. They require day-to-day attention and operate throughout the life of the project" "Factors predicting success on projects" "Factors outside the control of management which could determine the success or failure of a project" "Input factors to the management system that leads directly or indirectly to the success of a project or business" Budget, schedule, and quality are the major goals in construction projects. CSF are those factors that determine the success of the achievement of these objectives As it can be seen in Table 2-6, some definitions have things in common, however it can also be seen that some of them have different perspectives. As mentioned before, this dissertation is focused on the cost performance of construction projects. For this reason, the definition of Chua (1999), which was also used by Kog (2012), can be considered as a pertinent definition in this dissertation. The reason is that the definition considered that CSFs are those factors that have an influence in the achievement of the objectives of the projects. This definition indicates that there are some CSFs that have an influence in the achievement of budget performance, which means that the project does not have cost overruns because it is on budget. Moreover, the definition to be used in this dissertation is: BENEFICIARIO COLFUTURO 2012 19

Literature Review CSFs are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule As mentioned before, working with a unique definition of CSFs is useful because it will help during the execution of the interviews that are going to be carried out in the development of the case studies. This fact will be explained in the research methodology. Having clarified the definition of CSFs in this dissertation, the next section aims to review the generic critical success factors that have been found by different authors. Then, a review of more studies regarding this subject will be carried out; however, these studies will be focused on CSFs in construction projects. The next sections meet some of the objectives of this dissertation. 2.2.2 Generic Critical Success Factors Iyer and Jha (2005) suggested that the identification of critical success factors helps to repeat success in projects. This idea was also considered by De Wit (1988), who also added that identifying the CSF is very useful for the project s stakeholders, such as contractors, owners, clients and designers, due to the fact that after the identification of these factors, the stakeholders can learn some lessons from a project that can be useful in the future. In addition, mistakes in future projects can be reduced if the identified critical success factors are improved in this project (De Wit, 1988). Therefore, this section provides a review of some studies that were carried out in the past associated with CSFs in projects. 2.2.2.1 Baker, et al. (1983) In 1983, one of the first empirical studies about CSFs was conducted by Baker, et al. who sought to identify the main factors affecting project success. The survey was based on successful and unsuccessful projects. Moreover, there were different types of projects, such as construction, services, manufacturing and transportation (Kog and Loh, 2012). Therefore, the CSFs mentioned by Baker, et al. (1983) can be seen in Table 2-7. BENEFICIARIO COLFUTURO 2012 20

Literature Review Table 2-7 Critical Success Factors in construction projects (Adapted from Baker, et al., 1983) Critical Success Factors Clear goals Goal commitment of project team On site project manager Adequate funding to completion Adequate project team capability Accurate initial cost estimates, Minimum start-up difficulties Planning and control techniques Task vs. social orientation and absence of bureaucracy 2.2.2.2 Morris and Hough (1987) The authors studied eight different projects in detail which were located in Europe and the United Kingdom. These projects had poor management and, in consequence, poor performance. For this reason, the authors aimed to find the critical factors that influence the performance of these projects. They mentioned some critical factors for project success, which were: Clear definition of project objectives, political sponsorship, schedule duration urgency, the manner of project finance, community involvement and implementation problems (Morris and Hough, 1987). 2.2.2.3 Pinto (1988-1990) In 1986, Pinto and Slevin developed a tool called the Project Implementation Profile [PIP] with two different aims. Firstly, the authors considered that this instrument is useful to analyse the human elements of a project and their relationship with the management. Secondly, the authors also suggested that this framework might help managers to monitor ten critical success factors, which were identified during its development, in relation to the project (Pinto, 1990). The ten factors can be seen in Figure 2-3.

Literature Review Project Mission Top Management Support Project schedule Client consultation Personnel Technical tasks Client acceptance Monitoring and feedback Communication Trouble-shooting Clarity of goal and direction. Willingness of managers to provide the necessary resources. Detailed schedule with all the actions requited for project implementation Communication, consultation and active listening to all impacted parties Recruitment, selection and training of the necessary personnel for the project team Availability of the required technology and expertise to accomplish the specific technical action steps The act of selling the final project to its ultimate intended users Timely provision of comprehensive control information at each stage in the implementation process The provision of an appropriate network and necessary data to all key actors in the project implementation Ability to handle unexpected crises and deviations from plan. Figure 2-3 Ten critical success factors (Adapted from Slevin and Pinto, 1986) Later, Pinto and Prescott (1988) used the Project Implementation Profile to create a questionnaire to identify the critical success factors and the scores of each of them through the project lifecycle. In this research, the authors mailed 586 questionnaires to the Project Management Institute [PMI] and 69 percent of the questionnaires were returned. All types of projects, such as construction, IT, food and miscellaneous, were included in this research. Therefore, Pinto and Prescott concluded that the ten critical success factors shown in Figure 2-3 vary, depending on the phase of the project. This result can be seen in Figure 2-4. Conceptual Planning Execution Termination Mission Client consultation Mission Top management support Client acceptance Mission Trouble- Shooting Schedule Technical tasks Client consultation Technical tasks Mission Client consultation Figure 2-4 Critical success factors for each stage of the project lifecycle (Adapted from Pinto and Prescott, 1988) As it can be seen in Figure 2-4, the critical success factors are not the same in each of the project s lifecycle. However, the factor called Mission, which is about having clear

Literature Review objectives and goals, is important in all the stages of the project (Pinto and Prescott, 1988). This result suggests that managers should always understand clearly the objectives and goals of the project. Additionally, they should continuously update the team members with any change of the project objectives and goals. 2.2.2.4 Gemuenden and Lechler (1997) Gemuenden and Lechler (1997) carried out a research using questionnaires. These questionnaires were distributed among members of the German Project Management Society. The rate of response was 43 percent, which contained 248 successful and 190 unsuccessful projects. In this study, the authors suggested eight critical success factors and they found the cause and effect relationship between these factors [See Figure 2-5]. This framework has some similar factors with other studies, such as top management involvement, project leader, planning and controlling and project team. Nevertheless, this framework suggests the negative impact that goal changes and conflicts can have in project success. For this reason, these two factors were considered as critical factors because they are barriers that can be removed by other factors to achieve project success (Gemuenden and Lechler, 1997). Top Management Goal Changes Planning/ Controlling Project Leader Participation PROJECT SUCCESS Information/ Communicatio Project Team Conflicts Figure 2-5 Success factors, cause and effect relationship (Gemuenden and Lechler, 1997)

Literature Review 2.2.2.5 Chan, et al. (2004) Chan, et al. (2004) created a framework [see Figure 2-6] after a review of more than 43 articles, which were found in seven major management journals. The authors considered that project success depends on different factors, such as project-related factors, project procedures, project management actions, human-related factors and external environment (Chan, et al., 2004, p.155). Additionally, the authors suggested that these factors were all interrelated. This framework also took into account the research done by Belassi and Tukel (1996) and they complemented the framework with other studies. Chan, et al. (2004) suggested that this framework was useful for many reasons. For instance, the framework would help to select the members of the team identifying the level of development that team members need to have for a good performance in the project. PROJECT SUCCESS Project Management Actions 1. Communication system 2. Control mechanism 3. Feedback capabilities 4. Planning effort 5. Developing and appropriate organization structure 6. Implementing and effective safety program 7. Implementing and effective quality assurance program 8. Control of sub-contractors works 9. Overall managerial action Project-related Factors 1. Type of project 2. Nature of project 3. Number of floors of the project 4. Complexity of project 5. Size of projects External environment 1. Economic environment 2. Social environment 3. Political environment 4. Physical environment 5. Industrial relations environment 6. Technology advanced Project Procedures 1. Procurement method 2. Tendering method Human-related factors 1. Client s experience means whether he is sophisticated or specialized client. 2. Nature of client means whether he is privately or publicly funded 3. Size of client s organization 4. Client s emphasis on low cost 5. Client s emphasis on high quality 6. Client s emphasis on quick process. 7. Client s ability to brief 8. Client s ability to make decision 9. Client s ability to design 10. Client s contribution 11. Project team leaders experience 12. Technical skills of the reject team leaders 13. Planning skills of the project team leaders 14. Organizing skills of the project team leaders 15. Coordinating skills of the project team leaders 16. Motivating skills of the project team leaders 17. Project team leaders commitment to meet cost, time and quality 18. Project team leaders early and continued involvement in the project 19. Project team leaders adaptability to changes in the project plan 20. Project team leaders working relationship with others 21. Support and provision of resources from project team leaders; parent company Figure 2-6 Framework of factors affecting success of project (Taken from Chan, et al., 2004) As mentioned before, there is not a unique list of critical success factors for projects; however, many different lists have been suggested by different authors (Sanvido, et al., 1992). There are some similarities between the researches; nevertheless, the differences can be

Literature Review noticed. Moreover, some authors emphasised in their studies on factors related to the management of the projects or organisation, such as the studies carried out by Pinto, et al. (1988-1990), Baker, et al. (1983) and Gemuenden and Lechler (1997); also, they did not take into account factors related to the external environment. This fact can be considered a risk, because, as mentioned by Belassi and Tukel (1996) external environment factors, such as weather and social environment, are so influential that they can cause failure of the project during the implementation stage. On the other hand, some other studies carried out by Belassi and Tukel (1996) and Chan, et al. (2004) were more robust and showed that these authors took into account not only factors related to the management of the project and organisation, but also external environmental factors. In addition, theses studies gave significant importance to human-related factors. These studies are important because they can be used as a guide for the management of projects to improve project performance taking into account internal and external factors. After understanding the studies about critical success factors in projects, the next section provides a review of some studies that attempted to identify these factors but with focus on construction projects. This section is conducted to clarify the critical success factors for construction projects that have been identified in past studies. This will help to answer one of the research questions of the dissertation and it will help to achieve the objectives of this research. 2.2.3 Critical Success Factors in Construction Projects As expressed in Section 2.2.2, many authors have identified a list of critical factors. However, it is difficult to find a list which agrees with all of them. Although some of the studies mentioned before have studied projects from different industries, including construction, none of them were focused specifically on construction projects. For this reason, this section aims to review some of the most important studies about critical success factors in the construction industry. 2.2.3.1 Sanvido, et al. (1992) The study carried out by Sanvido, et al. (1992) aimed to analyse 16 projects in total, which were grouped in eight pairs. One of the projects of each pair was considered successful and BENEFICIARIO COLFUTURO 2012 25

Literature Review the other unsuccessful. The authors used questionnaires with the idea of determining the main critical success factors in these construction projects. The authors found that four factors were considered to be critical in all the 16 projects. These factors can be seen in Table 2-8. Although this research can be considered as a significant insight into the critical success factors issue, more projects could had been used in this study to generalise the results (Sanvido, et al., 1992). Table 2-8 Critical success factors (Adapted from Sanvido, et al., 1992) Critical success factors A well-organized, cohesive facility team to manage, plan, design, construct, and operate the facility A series of contracts that allows and encourages the various specialists to behave as a team without conflicts of interest and differing goals Experience in the management, planning, design, construction, and operations of similar facilities Timely, valuable optimization information from the owner, user, designer, contractor, and operator in the planning and design phases of the facility 2.2.3.2 Chua, et al. (1999) According to Chua, et al. (1999) the allocation of resources of time, manpower and money in a project, can be facilitated by the identification of critical success factors. For this reason, the authors carried out a study to identify the critical success factors [CSFs] for construction projects and attempted to understand if these CSFs change for three different project objectives. In this case, the authors considered that the three main objectives were: budget, schedule and quality. A significant issue that differentiates this study from others is the fact that the authors adopted the AHP method to determine the CSFs. This method, as the authors stated, was better than the neural network approach because it allowed considering not only the tangible factors, but also the intangible factors. In this method, a problem is divided into a hierarchy with the goal at the top (Chua, et al., 1999). In this research, the main goal was project success and the second level-- which is the criteria to achieve the goal-- was the three objectives; time, cost and quality.

Literature Review Additionally, the research methodology used by Chua, et al. (1999) consisted of a questionnaire that was answered by 20 practitioners, including contractors, consultants, clients and project managers, who had more than 20 years experience in project construction in Singapore. In general, a list of approximately 15 factors was created by the authors and the ranking of these factors not only varied depending on the objective, but also depending on the role of the project participants. However, 10 factors were agreed to be critical by the participants based on the overall project performance. Although each factor had a different ranking for each of the participants, all participants agreed that these factors were the main CSFs [see Table 2-9]. This study took into account two important variables: project objectives and participants. However, the results would be more accurate if the number of practitioners, who answered the questionnaire, was higher. Table 2-9 Overall critical success factors for three project objectives: schedule, budget and quality (Adapted from Chua, et al., 1999) Critical Success Factors Adequacy of plans and specifications Constructability Site inspections Project manager commitment and involvement Realistic obligations/clear objectives PM competency Construction control meetings Formal communication (construction) Contractual motivation/incentives Economic risks 2.2.3.3 Kog and Loh (2012) In 2012, Kog and Loh carried out a research as an extension of Chua et al s study. Moreover, the authors not only studied the CSFs for different project objectives, but also for different components of construction projects, such as architectural works, mechanical and electrical engineering works, civil and structural engineering works and quantity surveyors. In addition, the number of respondents in this study was higher than in the previous research [33 respondents]. The projects for which the respondents answered the questionnaire were carried out in many different countries: United Kingdom, Australia, Singapore, Malaysia, Hong

Literature Review Kong, Vietnam, Indonesia, Myanmar, China, India, Maldives and Seychelles (Kog and Loh, 2012). The ten CSFs for the overall performance, which were mostly agreed on, in all the construction components can be seen in Table 2-10. Nevertheless, for all the components [architectural works, mechanical and electrical engineering works, civil and structural engineering works and Quantity surveyors] four factors were considered to be the most critical. These factors were: constructability, adequacy of plans and specifications, project manager competency and realistic obligations/clear objectives (Kog and Loh, 2012, p.526). Table 2-10 Overall performance critical success factors (Adapted from Kog and Loh, 2012) Critical Success Factors Constructability Adequacy of plans and specifications Project manager competency Realistic obligations Project manager commitment and involvement Contractual motivation/incentives Adequacy of funding Economic risks Construction control meetings Technical approval authorities As it can be seen, the ten CSFs of this study are similar to those suggested by Chua, et al. (1999). However, the adequacies of funding and technological approval were considered in this study as CSFs, which was not the case in the study carried out in 1999. 2.2.3.4 Hwang and Lim (2012) In 2012, Hwang and Lim carried out a survey questionnaire with two main purposes: Determining the CSFs of a construction project in Singapore in terms of the different project participants: client, contractor and consultants. Secondly, the study aimed to extend the Chua et al s study in 1999 and update the conclusions (Hwang and Lim, 2012). For this reason, the authors based this study on Chua et al s research, but they made some changes. For instance, factors that were related with suppliers and subcontractors were not included in this research because it had already been proved by Chua et al. (1999) that they were not part of the CSFs.

Literature Review On the other hand, one factor related with frequent feedback from parent organisations, which was not included in the research in 1999, was added to this recent study. The authors concluded that, despite the fact that the participants ranked the critical success factors differently, the adequacy of plans and specifications, realistic and clear objectives and constructability were considered by all participants as the most important, regardless of project objectives. In addition, in comparison with the past studies, (Hwang and Lim, 2012) it was found that two new important factors were added to the ten critical factors for each of the participants. These factors were the adequate planning and control techniques and participation and feedback from the parent organisation. As it can be seen, some factors were similar in both studies; however, the increase of the participation of the parent organisation through the regular feedback in these years has enlightened the participants about the importance of this factor in project success. The review of these studies has helped to answer one of the research questions of this dissertation and consequently, to meet one of the objectives. As mentioned in the Introduction section, one of the objectives of this project was to understand the existing critical success factors literature and identify the most recent studies about critical success factors in construction. For this reason, this section met this objective because it reviewed the existing literature of CSFs in projects and then it focused on the review of the most significant studies about critical success factors in construction projects. After reviewing the most significant studies about CSFs, the next section aims to review studies about the Critical Success Factors that influence cost performance in construction projects. This review will help to create a theoretical foundation for the research design of this dissertation. 2.3 What are the Critical Success Factors that can prevent cost overruns? Based on the studies reviewed above, it can be seen that most of this research has determined critical success factors for a project in general. In addition, some authors have researched specifically on the critical success factors in the construction projects. However, not many BENEFICIARIO COLFUTURO 2012 29

Literature Review authors have carried out studies related to critical success factors that are specifically related to cost performance in construction projects. This dissertation aims to identify the critical success factors that can improve cost performance in construction projects in the UK. For this reason, this section will review studies on this subject and then these studies will be used to formulate propositions that are going to be the basis of the research process. Therefore, the following subjects will be addressed to develop the theoretical basis of this dissertation: 1. Review of past studies which have researched the critical success factors influencing cost performance of construction projects. 2. Propositions will be formulated, based on the review of the literature, which will be the theoretical foundations for the research design of this work. 2.3.1 Theoretical Foundations and Development of Propositions As mentioned before, some authors stated that there are some factors that have a positive impact on each of the project objectives (Chua, et al., 1999). Although the objectives of a project vary depending on the person that is assessing the project, there are three dimensions that are considered by almost all the participants of a project: quality, budget and schedule (Iyer and Jha, 2005). Therefore, this section aims to review studies to identify the critical factors that have a direct impact on cost performance and can prevent cost overruns. Although there are not many studies that concentrate on the critical success factors that affect cost performance, Chua, et al. (1999) are among those authors who have studied this issue. The authors wanted to confirm that the critical success factors in a project vary for each project objective. For this reason, they surveyed 20 experienced practitioners and found that there are different sets of factors depending on the project objective. The authors found a list of CSFs for budget performance, which is compared with the CSFs for overall project performance in Table 2-11. As it can be seen, some of the CSFs that improve cost performance are similar which those found for the overall performance. However, two factors were found to be in the top ten factors that have a positive impact on budget performance, and BENEFICIARIO COLFUTURO 2012 30

Literature Review help to prevent cost overruns. These factors are: Adequacy of funding and budget updates. However, site inspections, formal communication and construction control and meetings were not part of the most critical factors for cost performance. Table 2-11 Ranking of CSFs for cost performance and overall performance (Adapted from Chua, et al., 1999) Factors Cost performance rank Overall project performance rank Adequacy of plans and specifications 1 1 Constructability 2 2 Economic risks 3 10 Realistic obligations/clear objectives 4 5 Project manager competency 5 6 Adequacy of funding 6 - Budget updates 7 - Project manager commitment and involvement 8 4 Contractual motivation/incentives 9 9 Risk identification and allocation 10 - Site inspections - 3 Construction control and meetings - 7 Formal communication - 9 As mentioned in the previous section, Kog and Loh (2012) carried out a study which was considered an extension of the research of Chua et al (Chua, et al., 1999). Kog and Loh (2012) aimed to find the ten CSFs for each component of construction [architectural works, mechanical and electrical engineering works, civil and structural engineering works and quantity surveyors] for three project objectives: schedule, budget and quality. The authors considered that the presence of these CSFs will help to achieve much better schedule, budget and quality. Therefore, Table 2-12 shows the ten CSFs that were ranked at the top by almost all the professionals who participated in this research. The authors mentioned that the presence of these factors during the planning and execution stages help to successfully achieve the cost performance objective, which is to finish the project on budget and prevent cost overruns.

Literature Review Table 2-12 Top ten CSFs for budget performance (Adapted from Kog and Loh, 2012) Top ten CSFs for Cost Performance Rank Constructability 1 Economic risks 2 Adequacy of plans and specifications 3 Project manager competency 4 Realistic obligations 5 Adequacy of funding 6 Budget updates 7 Pioneering status 8 Risk identification and allocation 9 Project manager commitment and involvement 10 There were similar factors between Chua et al s findings [Table 2-11] and this recent research; however, some differences were found by the authors. One of the similarities of these studies was that the economic risks, adequacy of plans and specifications, project management competency and constructability were considered the most critical factors in both studies. Even though the Kog and Loh (2012) study found that pioneering status was considered as one of the ten critical factors, this factor was not present in the top ten factors of the previous research. Pioneering status was defined by the authors as the factor that deals with the extent of the project team s familiarity with the type of technology used in a project (Kog and Loh, 2012, p. 521). In addition, contractual motivation/incentives, which was one of the top critical factors in the research carried out by Chua et al.(1999), was only considered critical for the mechanical and electrical engineers in this recent study. In 2012, there was an additional study carried out by Hwang and Lim (2012) which was also based on Chua et al s research. The authors also tried to determine the CSFs for key project players [Consultants, contractors and owners] and three project objectives [Budget, quality and schedule]. Moreover, the authors compared their results with the study carried out by Chua, et al. (1999). This comparison can be seen in Table 2-13.

Literature Review Table 2-13 Comparison of the CSFs identified by Hwang and Lim and the previous study [Created by the author] Factors Hwang and Lim (2012) Chua, et al. (1999) Kog and Loh (2012 Adequacy of funding Adequacy of plans and specifications Adequate planning and control techniques Budget updates Constructability Contractual motivation/incentives Economic risks Owner's involvement and frequent feedback Owner's commitment to established schedules and budget PM commitment and involvement PM competency/experience Realistic obligations/clear objectives Risk identification and management Pioneering status There were three new factors that were found in this study: owner s involvement and frequent feedback, adequate planning and control techniques, and owner s commitment to established schedules and budget. On the other hand, three factors that were in the top ten, mentioned by Chua, et al. (1999), were not found in the top ten of this study. These factors were: PM commitment and involvement, PM competency experience and adequate planning and control techniques. The comparison between these three studies can be seen in Table 2-13. From the review of these existing studies, eleven factors were identified to have the potential of improving cost performance in construction projects [Table 2-14]. These factors were chosen because they overlapped in the reviewed studies and because they are factors that specifically influence cost performance in construction projects, which are the type of projects, studied in this research. The list shows the overlapping factors between the three studies reviewed, that of Chua, et al. (1999), Hwang and Lim (2012) and Kog and Loh (2012).

Literature Review Table 2-14 Critical success factors that influence cost performance in construction projects [Created by the author] Crtical Success Factors Adequacy of funding Adequacy of plans and specifications Budget updates Constructability Economic risks Owner's involvement and frequent feedback Owner's commitment to established schedules and budget Project Manager commitment and involvement Project Manager competency/experience Realistic obligations/clear objectives Risk identification and management The list proposed by the authors suggested that there are certain CSFs that influence cost performance. As mentioned by Chua, et al. (1999) the presence of these factors in the planning and execution of the projects improve the cost performance. For this reason, in this dissertation two propositions were proposed to be tested in the research development. These propositions are important because they are going to be used as the basis of the research process. The propositions can be seen below: Proposition 1: The lack of certain Critical Success Factors causes cost overruns in construction projects in the UK. Proposition 2: The presence of certain Critical Success Factors prevents cost overruns in construction projects in the UK. The idea behind these propositions is to analyse two different variables: Critical Success Factors and cost overruns. Although these propositions seem to be similar, they can be confirmed or rejected in a different way. In other words, the result from these propositions is the same because their aim is to confirm or reject the fact that there are some CSFs that can help to prevent cost overruns. However, the first proposition can be confirmed or rejected with the analysis of projects that presented cost overrun and in which can be noticed the lack of certain CSFs. On the other hand, the second proposition can be confirmed or rejected with

Literature Review the analysis of projects that do not present cost overruns and in which can be noticed the presence of certain CSFs. For this reason, the propositions were formulated for this research because the confirmation or rejection of these propositions will help meet one of the research objectives. This objective is to identify the critical success factors that improve the possibility of avoiding, or preventing, cost overruns on construction projects in the UK. These propositions can be considered as two different ways of meeting this objective. These two ideas resulted from the review of four different studies, which identified a list of CSFs that affect cost performance on construction projects. 2.4 Chapter Summary This chapter provides a review of existing studies related to the main causes of cost overruns and critical success factors. This chapter was useful because it helped meet two objectives of this project. Firstly, the review of existing studies about cost overruns provided information about a recent study carried out by Olawale (2010), who explained the main causes of cost overruns in construction projects, in the UK. This study was carried out in 2010 and it was part of a doctorate thesis. These studies helped the researcher meet one of the main objectives of this project, which was to identify the main reasons for cost overruns in construction projects. On the other hand, another objective was met with the review of case studies related to critical success factors in construction projects. Some other studies were reviewed which concentrated on those critical success factors that improved cost performance in construction projects. These studies were used as a theoretical foundation for this research and as a basis for the design of hypothesis that are tested with the use of case studies. BENEFICIARIO COLFUTURO 2012 35

Research Methodology 3 Research Methodology CHAPTER 3 This section explains the research methodology adopted in this dissertation. For this reason, the research philosophy, paradigms, approaches and strategies will be discussed. These elements constitute the research process which can be seen in Figure 3-1 below. Research Philosophy Epistemology Ontology Research paradigm Positivism Phenomenology Research approach Deductive Inductive Research strategy Experiments Case study Grounded theory Survey Action research Ehnography Research timeframe Cross-sectional Longitudinal Data collection strategy Observation Documentation Archival records Interviews Physical artefacts Participant observation Data analysis technique Pattern matching Explanation building Time-series analysis Logic models Cross-case synthesis Figure 3-1 Elements of research process (Adapted from Gray, 2004) 3.1 Research Philosophy and Paradigm The philosophy of the research is influenced by the theoretical paradigm that the researcher chooses for the research (Gray, 2004). Following this idea, the author mentioned that

Research Methodology positivism and the different stands of interpretivism are the most influential paradigms that should be analysed by the researcher. Positivism argues that social world exists externally to the researcher and its properties can be measured through observation (Gray, 2004). The author has compared positivism with phenomenology, which is one of the interpretivism approaches. The author considered the phenomenology arguments that social reality should be understood based on people s experience. Table 3-1 shows the main differences between these two paradigms. Table 3-1 Differences between Positivist and phenomenological paradigm by UWE (2006, as cited in Parng, 2006) Positivist paradigm Phenomenological paradigm Nature of research Objective and empirical Subjective and exploratory Literature review How your research fits into the existing literature Notion of what to explore What is trying to be Define hypothesis Generate knowledge established Research objective Structure research Generate theories Outcome Pre-determining research structure and data Process and data collection are flexible According to the definition of these paradigms and the comparison made in Table 3-1, it can be concluded that this research follows the positivistic paradigm. In other words, the review of existing studies was done to establish the theoretical base of this dissertation. Then, based on that theoretical foundation, some hypotheses were formulated to be either confirmed or rejected with the help of some case studies. Furthermore, the philosophy of this research is epistemology. 3.2 Research Approach There are two different approaches to the research: Deductive or inductive (Bryman, 2008). According to Gray (2004) a deductive approach works based on a hypothesis, which aims to explain the relationship between two or more concepts. This hypothesis is then tested through experimentation or empirical observation. On the other hand, in the inductive approach, the first stage is the creation of a plan to collect data. The idea in this approach is to find a

Research Methodology relationship between concepts after the analysis of the data, for the purpose of creating a theory (Gray, 2004). This research uses a deductive approach. Therefore, the study starts with a review of the existing studies, which is used to formulate some hypotheses that are aimed to explain the relationship between CSFs and cost overruns. In addition, these hypotheses will be confirmed or rejected with the help of case studies. 3.3 Research Strategy There are different research strategies, such as experiments, surveys, action research, grounded theory and case studies, and all of them have advantages and disadvantages (Gray, 2004). Therefore, there are three different conditions that indicate the type of strategy that should be used in a research. These conditions are: the type of research question, the control that the investigator has in the actual behavioural events and the focus on contemporary events (Yin, 2003, p. 1).Table 3-2 shows five research strategies and the way in which these strategies tackle the three conditions mentioned by the author. Table 3-2 Relevant situations for different research strategies (Taken from Yin, 2003) Research Strategy Form of Research Question Requires Control of Behavioural events? Focuses on contemporary Events? Experiment How, why? Yes Yes Survey Who, what, where, how many, how much? No Yes Archival analysis Who, what, where, how many, how much? No Yes/no Histories How, why? No No Case study How, why? no Yes

Research Methodology Following the three conditions suggested by Yin (2003), it is important to analyse the type of research question for this project, which is: What are the most critical success factors that can prevent cost overruns in construction projects in the UK? Yin (2003) mentioned that for this type of question that starts with what, five strategies can be used, due to the fact that this type of question is a justifiable rationale for conducting an exploratory study, which is based on hypotheses/propositions which can be used in all the strategies. According to this idea, the purpose of this research is exploratory, not in the sense of researching into the area of critical success factors, but in terms of identifying the critical success factors related to the cost performance of construction projects, which have been broadly studied in the existing literature. In addition, this study aims to review contemporary projects and the behavioural events cannot be controlled. Therefore, a case study strategy is used for this type of research because it meets the three conditions suggested by Yin (2003). 3.4 Time Frame The time frame is related to the timescales available for the research, a cross-sectional study is a short-term study in which the data is collected at one point in time. On the other hand, a longitudinal study is a research that the time is available be developed over time (Gray, 2004). According to this idea, this research is a cross-sectional study due to the fact that the data will be collected at one point in time when the interviews will be carried out. The details about the interviews are explained in the next section. 3.5 Research Design The design for the research of this project will be based on the process proposed by Yin (2003) which follows five steps [See Figure 3-2]. BENEFICIARIO COLFUTURO 2012 39

Research Methodology A study s question Its propositions Its unit(s) of analysis The logic linking the data to the proposition The criteria for interpreting findings Figure 3-2 Components of research design (Yin, 2003) 3.5.1 Study s Questions This first component suggests that the initial task in a research is to clarify its research question and understand its nature (Yin, 2003). Moreover, the research question of this dissertation is: What are the most critical success factors that can prevent cost overruns in construction projects in the UK? As it was discussed in Section 3.3, the research question of this dissertation is a what type of question, which indicates that an exploratory case study can be conducted in this research with the development of pertinent propositions/hypotheses. As suggested by Yin (2009), a multi-case study is preferred over a single case study because the analytical conclusions of the multi-case studies are more powerful than the results of a single case study, due to the fact that a multi-case study can compare different situations. For this reason, this dissertation uses a multi-case study. Details about the design of these multicases are explained in the next section.

Research Methodology 3.5.2 Research Propositions/hypotheses Yin (2003) considered that propositions/hypotheses are important in a research because they will move the research in the right direction. Following this idea, two different hypotheses were formulated in this research. These hypotheses are based on the information found from existent studies. Hypothesis 1: The lack of certain Critical Success Factors causes cost overruns in construction projects in the UK. Hypothesis 2: The presence of certain Critical Success Factors prevents cost overruns in construction projects in the UK. The formulation of these two hypotheses can be seen in Section 2.3.1. The idea of these hypotheses is to analyse two different variables: Critical Success Factors and cost overruns. The review of existent studies also revealed a list of factors that were critical for the achievement of the budget objective in construction projects. Based on the literature review, the author proposed a list of Critical success factors that improve cost performance in construction projects [See Table 3-3]. This list was created to be compared with the results of the case studies. Table 3-3 Critical Success Factors that affect cost performance [Created by the author] Crtical Success Factors Adequacy of funding Adequacy of plans and specifications Budget updates Constructability Economic risks Owner's involvement and frequent feedback Owner's commitment to established schedules and budget Project Manager commitment and involvement Project Manager competency/experience Realistic obligations/clear objectives Risk identification and management

Research Methodology There has been a concern about case studies because it is believed that case studies do not provide a basis for scientific generalisation (Simons, 2009). However, Yin (2009, p.15) assured that, case studies can be generalised to theoretical propositions and not to populations or universes. For this reason, the hypotheses formulated in this research are important, because their confirmation or rejection, with regards to the case studies, will help to generalise the theory. 3.5.3 Unit of Analysis Defining the unit of analysis is important because it explains what the case to be studied is. In this case, the research is trying to compare the case studies with existent literature. For this reason, the author decided to choose a project as the unit of analysis for this dissertation. However, the unit of analysis in this research has different characteristics which are based on the performance of the project in terms of cost. Initial multi-case study design The initial idea of this research was to analyse four different projects from the same company: two projects with good cost performance and two projects with poor cost performance [See Figure 3-3] Multi-case design Source 1 Source 2 Context Context Unit of analysis: Project with good cost performance Case 1 Case 3 Unit of analysis: Project with poor cost performance Context Case 2 Context Case 4 Company 1 Figure 3-3 Initial idea of multi-case studies [Created by the author]

Research Methodology As mentioned before, these projects have different characteristics which are explained below. Good cost performance project: This dissertation considers a project to have a good cost performance when the cost overrun of the project does not exceed 10 percent of the budget. Poor cost performance project: This dissertation considers a project to have a poor cost performance, when the cost overrun of the project exceeds 10 percent of the budget. One company: The four projects were selected from the same company for the purpose of avoiding some variables, such as culture of the company, strategies used by the company and structure of organisation, which could have influenced the performance of the projects (Parng, 2006). For this reason, the projects were chosen from the same company. The analysis of this research is based on contractor companies in the UK, which are some of the top contractors in the country listed by Building Magazine. Replication logic The design of the research was chosen with these characteristics following the replication logic. According to Yin (2009, p.54), the replication logic indicates that the cases should be selected so that, it either [a] predicts similar results [literal replication] or [b] predicts contrasting results [theoretical replication]. Following this definition, the projects chosen for this research follow both replication logics. In other words, the literal replication can be seen in all the good performance projects [Case 1 and 3], which have the same characteristics and are expected to have similar results. In the same way, the poor cost performance projects [Cases 2 and 4] follow the literal replication logic. On the other hand, the theoretical replication logic can be seen when a good performance project is compared with a poor cost performance project [Case 1 compared with Case 2, Case 3 compared with Case 4], due to the fact that these cases have different characteristics and are expected to portray contrasting results. This replication logic expects to support the theoretical propositions developed during the literature review. In other words, the replication logic will help to confirm or reject these propositions (Yin, 2009).. BENEFICIARIO COLFUTURO 2012 43

Research Methodology Changes to the initial multi-case studies design The initial design changed after the collection of data, due to the fact that the author was able to gain access to more sources. The new design can be seen in Figure 3-4. Multi-case design Source 1 Source 2 Context Context Source 3 Context Unit of analysis: Project with good cost performance Case 1 Case 3 Case 5 Context Context Context Unit of analysis: Project with poor cost performance Case 2 Case 4 Case 6 Company 1 Company 2 Figure 3-4 Final multi-case study design [Created by the author] As it can be seen in the final multi-case study design, which was used in this dissertation, two more projects were added to the initial design. These projects had the same characteristics mentioned before: one project with good cost performance and one project with poor cost performance. However, these were the projects of a different company as compared to the projects from the initial design. The company chosen in these two projects was also a contractor company listed in the top 50 contractors in the UK, by Building Magazine. These new case studies were used in the analysis to compare with the cases 1, 2, 3 and 4 and understand if the difference of companies were a significant variable to take into account. This new design also follows the Replication Logic, due to the fact that the new cases have the same characteristics as the initial cases. Moreover, cases 1, 3 and 5 follow the literal replication logic. In the same way, cases 2, 4 and 6 also follow the literal replication. On the other hand cases 1, 3 and 5 are expected to show contrasting results from cases 2, 4 and 6, which indicates a theoretical replication. Therefore,

Research Methodology the replication logic is also used in the new design; however, the differences between companies of these cases should be taken into account in the analysis of the results. 3.5.4 Linking Data to Propositions and Criteria for Interpreting the Findings To link the data to the propositions, some analytic techniques should be used, such as pattern matching, logic models and cross-case synthesis, which help to analyse the data and create a reflection of the comparison with the propositions (Yin, 2009). For this reason, the techniques used in this dissertation are explained in Section 3.6. 3.6 Data Collection There are many different methods of data collection, such as interviews, questionnaires, observation and documentation. For this reason, this section provides the description of the method used to collect data in this research. 3.6.1 Data Collection Method According to Yin (2009), the researcher should try to use as many methods as possible because it helps to create a good case study report. The most common methods suggested by the author can be seen in Figure 3-5. Documentation Physical artefacts Archival records Data collection methods Participant observation Interviews Direct observations Figure 3-5 Most common data collection methods for case studies (Yin, 2009)

Research Methodology Although case studies can contain qualitative and quantitative data (Yin, 2009), this dissertation aims to collect qualitative data from interviews to create the case study report and make the analysis. For this reason, the semi-structured interviews are used during the data collection process, as this type of interview allows the researcher to collect qualitative data based on certain group of questions created before the interview, while also enabling additions during the interview. This research also uses the documentation method to collect data for the analysis of the different case studies. This method was chosen because as Yin (2009) suggested, documentation has been considered as a relevant method for case studies because it helps to corroborate and increase the evidence from other sources. Therefore, this dissertation uses articles from news papers and different internet articles that help to corroborate the information from the interviews. With the use of documentation and semi-structured interviews, data is collected for each of the case studies. Furthermore, the details about the interviews are explained in the next section. 3.6.1.1 Selection of Interviews A cover letter about the project with all the information about the main objectives of the dissertation and the information that the research requires from the professionals was sent to some contracting companies in the UK. This letter [see APPENDIX A] was directed to either senior managers or professionals at management level working in these companies. As mentioned before, the companies chosen were part of the list of the top 75 contractors in the UK, published by Building Magazine, which are well renowned companies that have been in the market for a significant number of years. The main idea of the letter is to find at least two interviewees who could provide the necessary data for the research. After some answers, the author also uses an interview protocol [see APPENDIX B] which explains to the interviewee the topics that are covered in the interview. In addition, the interview protocol presents the definition of the key terms in this research: Cost overrun, Critical Success Factors, good performance project and poor performance project. BENEFICIARIO COLFUTURO 2012 46

Research Methodology The interviewees are asked to sign a confidentiality agreement [see APPENDIX C], which acknowledges that the interviewee s information is used only for dissertation purposes. The interviewees sign this agreement either on behalf of the company or on behalf of themselves. In addition, all the interviewees are asked if they accept to have the interview with the use of a tape recorder. This recorder is used to avoid the loss of interview details and biased inaccuracies. 3.6.1.2 Interview Questions Design During the interview, the use of an interview questionnaire [see APPENDIX D] facilitates the pace of the interview. The questions were designed to deal with background details about the project and to get enough information to create the case study report. The interview questionnaire was divided in four different sections, which tried to cover all the necessary details for the report and analysis of the case studies. Each section has a certain number of questions from which the author will collect qualitative data. These sections are explained below. SECTION I: GENERAL INFORMATION This section constituted of 9 questions, which aimed to collect information about the interviewee to verify if the interviewee fulfilled the requirements of this research. In addition, some questions focused on the type of company in which the interviewee works, to assess whether the company was a contractor company in the construction industry, which was one of the requirements of this research. SECTION II: GENERAL QUESTIONS ABOUT PROJECT PROJECTS PERFORMANCE This section consisted of two different questions about general issues in the construction industry. The idea of this section was to set the scenario of the research, trying to introduce one general question about the main causes of cost overruns and the most critical success factors in construction projects in the UK. In this section, a list of CSFs, which was created during the theoretical development [see Section 2.3], was provided to the interviewee to assess the agreement of the interviewees with this list. The list of CSFs was created after the review of literature and was used as a basis to confirm some propositions. The main idea of BENEFICIARIO COLFUTURO 2012 47

Research Methodology these two questions was to compare the perceptions of the interviewee with the findings of the literature review of this dissertation. SECTION III: POOR COST PERFORMANCE PROJECT This section comprised ten different questions. The main idea of these questions was to collect general details of the project, the causes of cost overruns and the CSFs that could have prevented this overrun. The answer of this question was used to compare the particular project with the other case studies. Additionally, the results of this comparison help to confirm or reject the propositions that were formulated after the review of the literature. SECTION IV: GOOD COST PERFORMANCE PROJECT This section consisted of nine different questions; the main idea of these questions was to collect general details of the project and understand the CSFs that helped to prevent cost overruns. The answer of these questions was used to compare this project with other case studies. The results of this comparison help to confirm or reject the propositions that were formulated after the review of the literature. SECTION V: COMPARISON BETWEEN GOOD AND POOR COST PERFORMANCE PROJECTS This section consisted of only one question which aimed to ask the interviewee about the differences between the good cost performance project and the poor cost performance project. The main idea of this question was to corroborate the CSFs mentioned before in the other questions and assess the way in which the interviewee assessed the performance of the projects. 3.6.2 Data Collection Analysis There are different techniques used to analyse qualitative data, such as pattern matching, explanation building, time-series analysis, logic models and cross case synthesis. As mentioned before, the cases studies in this research follow both, literal replication and theoretical replication, which implies that a cross-case synthesis can be used as the analysis technique. Yin (2009) assured that this type of technique can be used in situations where the cases have been authored by different people, due to the fact that this technique treats each case individually. According to this idea, the cross-case analysis is applicable to this research BENEFICIARIO COLFUTURO 2012 48

Research Methodology due to the fact that some of the cases were authored by different interviewees. However, in the cross-case analysis, the difference between companies had to be taken into account and the way in which this difference could have affected the results had to be assessed. 3.7 Quality of the Research Design The design of the research should be tested to assess if the design represents a logical flow. For this reason, Yin (2009) suggested four different aspects that should be tested in all the case studies design: Construct validity, internal validity, external validity and reliability. Therefore, this section explains the way in which the design of the case studies will meet these tests. However, these tests are also discussed in the Discussion section [See Chapter 5]. 3.7.1 Construct Validity Yin (2009) explained that this test aims to asses if the researcher developed sufficient operation measures and subjective judgements were used to collect the data. The author also mentioned that there are three ways of meeting these tests: Using multiple sources of evidence, establishing a chain of evidence and creating a draft of the case study report and sending this draft to the interviewees to be reviewed. Moreover, this research meets this test because of two different reasons. Firstly, this research is going to use two types of sources to collect evidence of the case studies: Information from an interviewee and documents from news and internet. Secondly, the author will create a draft of the case study, which will be sent to the interviewees to be reviewed. Therefore, the design of this research meets the construct validity test. 3.7.2 Internal Validity Yin (2009) stated that this type of test is mainly concerned with either those case studies that are explanatory or case studies in which the problem or event that is being studied cannot be observed and the researcher has to make inferences. Therefore, this research does not have to meet this test because it is an exploratory research in which the events that are being studied can be observed. BENEFICIARIO COLFUTURO 2012 49

Research Methodology 3.7.3 External Validity This test assesses the problem of generalisation in the case studies. Yin (2009) considered that if a design uses a theory or hypothesis as a basis for the generalisation and then this theory is tested by the replication of the findings with the use of some case studies, the external validity test can be met. Therefore, this research meets this test because all the design is based on some propositions/hypotheses created after the review of the literature. Then, six cases studies that follow the literal and theoretical replication are used and a cross case analysis technique is used to test the theory. In this way, an analytical generalisation can be made because, as mentioned by Yin (2009), the analytical generalisation tries to generalise an existing theory. 3.7.4 Reliability As the name indicates, this test aims to assess the reliability of the design. Yin (2009) expressed that the objective of this test is to ensure that if a later researcher decided to follow the same procedures used in earlier investigation and follow the same case study design, the later researcher should arrive at the same conclusions. There are two different tactics that are used to meet this test: using a case study protocol and developing a case study database (Yin, 2009). This research can be considered reliable because it meets both the requirements due to the fact that the author documented every decision and procedure during the design and development of the case studies. This documentation is described in detail in Section 3.5 and in the appendices which include the cover letter, interview protocol, interview questionnaires, confidentiality documents used during the interview process and detailed reports of the case studies. 3.8 Chapter Summary This chapter explained the research methodology used in this research. Firstly, this chapter provided an overview of the problem and explained how the literature review was used to answer some of the research questions and to create a theoretical background, used as a basis of the research design. Secondly, this chapter described the research philosophy, paradigms, approaches, strategies and data collection methods. The result can be seen in Figure 3-6. Finally, this chapter described the case study design, based on the main components suggested BENEFICIARIO COLFUTURO 2012 50

Research Methodology by Yin (2009), and tested the quality of this design. Therefore, the research design met all the tests and the quality of the design can be accepted. Research Philosophy Epistemology Ontology Research paradigm Positivism Phenomenology Research approach Deductive Inductive Research strategy Experiments Case study Grounded theory Survey Action research Ehnography Research timeframe Cross-sectional Longitudinal Data collection strategy Observation Documentation Archival records Interviews Physical artefacts Participant observation Data analysis technique Pattern matching Explanation building Time-series analysis Logic models Cross-case synthesis Figure 3-6 Research methodology adopted in this research (Adapted from Gray, 2004)

Case Studies Results and Analysis CHAPTER 4 4 Case Studies Results and Analysis 4.1 Introduction Based on the research approach explained in Chapter 3, this chapter aims to show the results and findings from the case studies. In addition, this chapter provides a comparison between these cases and tries to identify the Critical Success Factors that can improve cost performance on construction projects. Moreover, this chapter is divided in two sections. The first section assesses the quality of evidence and provides reasons to demonstrate that the information is valid for this research. The second section shows an overview of the results of each case study, which is concluded by a cross-case analysis. Therefore, this chapter is the basis of the critical discussion and the findings will be used to confirm, or reject, the propositions formulated after the review of the literature. 4.2 Quality of Evidence This section provides an analysis of the quality of evidence collected, for each of the case studies, in this research. As mentioned in the Research Methodology [see Chapter 3], there were some requirements in the selection of interviewees, types of projects, organisations and industry. For this reason, this section verifies if the case studies met the requirements of the research design. 4.2.1 Source of Evidence Choice of industry and companies: In this research, the construction industry in the UK was chosen to be studied. For this reason, the case studies were projects constructed by two different construction companies. These companies were chosen based on the top contractors list that was published in 2011 by Building Magazine. The name of one of the companies is Willmott Dixon, which is part of the top 20 contractors in the UK. Although, the name of the second company will not be revealed due to confidentiality issues and interviewee s BENEFICIARIO COLFUTURO 2012 52

Case Studies Results and Analysis preferences, this company was also ranked in the top 20 contractors. In fact, these two companies are ranked very closely by the Building Magazine. Additionally, during the research of the companies characteristics, it was found that the two companies selected had similar features. The interviewees gave some information about the company and this information was supported by an internet research. Although the name of the second company is not going to be revealed in the dissertation, the interviewee agreed to give the name to the author. This agreement was established to help the researcher find more information about the company. In this dissertation, the researcher will refer to this company as Company B and Willmott Dixon will be referred to as Company A The characteristics of the Company A and Company B were collected during the interviews and were complemented by the information found on their web sites. These characteristics are summarised below though the web address has not been provided due to confidentiality issues. Both companies have been in Britain s construction business for more than 100 years. The companies were founded in the 1880 s. Both companies have been considered as some of the largest privately owned companies in the UK and they have a good reputation because of the value of their services for customers. These companies have constructed projects in different market sectors. For instance, education facilities, commercial offices, leisure projects, health laboratories and hospitals. Both companies have approximately 2.000 employees in the UK and their turnover was almost similar in 2011 [between 950 million and 990 million]. Choice of case studies: As mentioned in the research methodology, the case studies used in this research were about projects constructed by a contracting company in the UK. This requirement was met by the fact that six different projects were chosen from two large and private contracting companies in the UK [Company A and Company B]. In addition, three projects presented cost overruns during their execution and the other three projects had good cost performance and they did not present any cost overruns. These characteristics were a requirement for the selection of case studies in this project. BENEFICIARIO COLFUTURO 2012 53

Case Studies Results and Analysis Choice of interviewees: After the researcher sent the interview protocol, five interviewees accepted to have a one hour semi-structured interview. Although the author had access to three more sources of information, two of those interviewees were not used in the design of the research due to the fact that they were not working as project manager(s) or senior manager(s) on those projects, which was one of the requirements for the selection of interviewees. Therefore, the research design of this dissertation was based on three interviews carried out with three project managers from two different contractor companies in the UK. Each interviewee talked about two different projects, one with good cost performance and one with poor cost performance. As mentioned before, the interviewees had to be either senior project leaders or had to be working at a managerial level. For this reason, some of the questions in the interview were about the interviewees details to verify that they met the requirements. Some information about the interviewees is shown below: Interviewee A: This professional has been working in the construction industry for 39 years and is currently working in Company A, a privately owned contracting company. Although this interviewee had worked in many different roles, he had been working as a construction manager for about 12 years and this is his current position. Interviewee B: This professional had been working in the construction industry for 15 years and is currently working in Company A, a privately owned contracting company. Although this interviewee had worked in different roles, he had been working as Senior Project Surveyor for about 13 years. Interviewee C: This interviewee had been working in the construction industry for 19 years and in Company B for about 7 years. His current position was Senior Project Surveyor in which he had been working for 10 years. As it can be seen, the interviewees had been working in the construction industry long enough to share their experience and support this project. In addition, all of them had a thorough understanding of construction projects in the UK, the management of cost on these projects and the critical success factors that help improve performance of construction projects. Therefore, their experience is useful because they could appreciate the relevance of the questions during the interview. BENEFICIARIO COLFUTURO 2012 54

Case Studies Results and Analysis 4.2.2 Initial Assumptions and Definitions In this research, six construction projects were selected: three projects with good cost performance [Cases 1, 3 and 5] and three with poor cost performance [Cases 2, 4 and 6]. As it can be seen, these projects had two different characteristics which were a requirement for the development of this research. For this reason, some key concepts were defined by the author to warrantee that all the projects meet this requirement. These key concepts were: Good cost performance project: Project in which the cost overrun on the project does not exceed 10% of the initial budget. Poor cost performance project: Project in which the cost overrun on the project exceeds 10% of the initial budget. As mentioned before, each interviewee had to choose two different projects: one with good cost performance and one with poor cost performance. For this reason, the author sent an interview protocol with these definitions. However, the researcher asked one question about the definition of cost performance in a project to clarify the interviewee s opinion. The main idea behind this question was to understand the logic in their answers and verify that the projects that were selected met the requirements. During the interview, the interviewees agreed with the definitions. Interviewee A commented that In the current climate, any overrun will be classed as poor cost performance. It is important to build it on time, to budget, because anything that overruns is going to be at somebody s cost; either the client or someone else, depending on who is to be blamed. On the other hand, Interviewee B agreed with the initial assumption made on in this project that more than 10% cost overruns is poor cost performance. He stated: I would probably say less than 5-10% is adequate because typically you have around 5% risk contingency. Finally, Interviewee C also agreed with the initial assumption about cost performance; he said: I would say less than 10% overrun is a satisfactory cost performance, everything over 10% is poor performance. Although Interviewee A considered any cost overrun as a poor cost performance, the other interviewees agreed that more than 10% cost overrun can be considered as poor cost performance, in line with the initial assumption. BENEFICIARIO COLFUTURO 2012 55

Case Studies Results and Analysis As it can be seen, the interviewees had slightly different perceptions of poor and good cost performance. However, the three interviewees agreed with the initial definitions of these concepts. As mentioned before, understanding interviewees perception is important in this research because of three main reasons. First, the research can confirm that the projects were chosen within the requirements of the research design. Second, the fact that the interviewees agreed with these definitions allowed the researcher to conclude that the projects had similar characteristics. Finally, the projects with similar characteristics can be compared and the researcher can expect consistent results from this comparison. 4.3 Case Studies Results and Analysis 4.3.1 General Information of Case Studies This research used a semi-structured interview as the main data collection method. This type of interview allowed the researcher to collect qualitative data about six different projects. The interview questions were classified into certain groups of questions, which were carefully designed after the review of literature. In this research, three professionals of two different companies were interviewed, about two different projects. However, in order to improve the construct validity of the research, the information provided by the interviewees was corroborated and complemented with the use of internet research. Although the interviewees expressed their concerns about confidentiality issues, they provided the names of the projects to facilitate the process of corroborating the information. The information collected on each individual case was used to create a report that contains all the necessary information, to thoroughly understand the case study. The report of each of these case studies can be seen in Appendices E J. Hence the information collected from interviewees, and the internet research, was organised in a certain way to assist the analysis process. Furthermore, the reports do not follow the same structure of the interview questionnaire due to the fact that the initial structure of the questionnaire was created in a neutral manner to avoid any potential bias. BENEFICIARIO COLFUTURO 2012 56

Case Studies Results and Analysis Figure 4-1 was created to clarify the number of the case studies, the characteristics and the Appendix in which the report can be found. For instance, Case 1 is a good cost performance project, constructed by Willmot Dixon. The data collection was provided by Interviewee A and the report of this case can be seen in Appendix E. In the same way, the rest of the cases are described in Figure 4-1. Interviewee A Interviewee B Interviewee C Appendix E Appendix G Appendix I Projects with good cost performance Case 1 Case 3 Case 5 Projects with poor cost performance Appendix F Case 2 Appendix H Case 4 Appendix J Case 6 Willmott Dixon Company B Figure 4-1 Multiple case studies [Created by the author] Beyond the creation of reports, the description of the characteristics of each case study formed the basis for the analysis of this research. For this reason, the next section aims at summarising the main findings of the case studies and then making a cross-case analysis. 4.3.2 Poor Cost Performance Projects The main purpose of this section is to conduct a cross-case analysis between the poor cost performance projects. This analysis will be based on the reports created for each case study [Case 2, 4 and 6], which can be seen in Appendix F, H and J. To facilitate the analysis and the comparison of these projects, the reports were structured following the same logic. Therefore, the main findings of the cross-case analysis will be used to evaluate the hypotheses formulated in the theoretical foundation of this research.

Case Studies Results and Analysis 4.3.2.1 Consideration of Poor Cost Performance Before starting the analysis of these cases, it is important to clarify the reasons why these projects were considered to have poor cost performance. These reasons are explained below. Case 2 The overall performance of this project was noticeably poor. Firstly, the project had a significant cost overrun, over 10% of the initial budget. In addition, this project also had a poor time performance because it took three months more than expected. Case 4 This project was also considered as an overall poor performance project because it had two weeks time overrun and the final cost of the project was10% over the budget. Case 6 This project also had 30 weeks time overrun and the final cost of this project was 40% over the budget, which clearly shows that the overall performance of this project was poor. As it can be seen, the three projects presented cost overruns which exceeded 10% of the initial budgets. For this reason, these projects can be considered as poor cost performance projects. In addition, the cases met the definition of poor cost performance projects in this research, which is: Poor cost performance project: Project in which the cost overrun exceeds 10% of the initial budget. 4.3.2.2 Main Causes of Cost Overruns This section summarises the main causes of cost overruns on three poor cost performance projects. The results, showed in this section, were adapted from each the case reports on these projects. BENEFICIARIO COLFUTURO 2012 58

Case Studies Results and Analysis Interviewees were asked about the main causes of cost overruns in these projects. However, the definition of cost overrun can vary depending on the perception of the interviewee. For this reason, this dissertation considered that a cost overrun occurs when the final cost of the project exceeds the initial original contract value at the time of completion. This definition was established in Section 2.1. Moreover, the author presented this definition to the interviewees in the interview protocol [See Appendix D], which was sent prior to the interview. The main idea of this protocol was to ensure that all the interviewees followed the same definition during the interview. The analysis in this section is adapted from the case reports. This data was mainly collected from interviewees. However, some internet documents were used to corroborate and complement this information. The process used to get the data in this section is shown in Figure 4-2. Interview questionnaire section Report Section Information provided Information about the project Important issues in the project execution Main problems encountered in the project that caused cost overrun Caused by Information about the project cost performance Main reasons for cost overruns in this project List of main causes of cost overruns Figure 4-2 Process used to get data about main causes of cost overruns [Created by the author] As it can be seen in Figure 4-2 above, the interview structure facilitated the creation of these reports and analysis. In other words, the interview questionnaire [see Appendix D] had two different sections that helped collect this data. Firstly, the researcher asked some background information about the projects. In this section, the interviewees talked about the main features of the project and explained the problems they encountered during the execution stage of the project. This information was used to compose the section of the report called Important issues during the project execution. On the other hand, the next section of the interview questionnaire had some questions about the cost performance of the projects where interviewees were asked to talk about the main causes of poor cost performance on these

Case Studies Results and Analysis projects. This information was used to compose the section of the report called main causes of cost overruns in this project. Additionally, the author noticed that the interviewees justified the main causes of cost overruns with the problems encountered in the project, which they had explained in the first section of the interview. Therefore, the tables used in this section, to analyse the projects, are adapted from those two corresponding sections of the reports. Case 2 Table 4-1 Main causes of cost overrun Case 2 [Adapted from case study s report] Case study Cause of cost overrun Caused by The incompetency of the project * The project manager did not have the experience and skills to manager manage this kind of projects. * The clients were complaining about the quality of the job and Poor relationship between the client and contractor they attribute the poor quality to the project manager competency. This factor also caused time delays which consequently increased Case 2 the cost of the project. * The client was a local authority and the people dealing with that Client's unwillingness to help particular project were not as helpful as they could have been in the relationship with the contractor. Client s variation in the design * There were some variations made by the client that increase the time delays and caused cost overruns. As it can be seen in Table 4-1, there were three causes of cost overruns in this project. However, project manager s incompetency was considered as the main one. In other words, the poor job quality and poor relationship between contractors and clients were mainly caused by the lack of skills and experience of the project manager. Consequently, the poor relationship and the change of project manager during the execution of the project caused a significant time delay. This also increased the costs of the project. This fact was supported by Interviewee A, who stated that the main problem in this project was all down to an incompetent person doing the job. The interviewee also mentioned that all the things that led to the project manager s removal that weren t quite right, and had to be put right, cost more.

Case Studies Results and Analysis Case 4 Table 4-2 Main causes of cost overrun Case 4 [Adapted from case study s report] Case study Cause of cost overrun Caused by Case 4 Incorrect interpretation of contract specifications Client s variation in the design Poor initial planning * The client went through the Design and Build contract which they had not used before because they used to have traditional forms of contracts in their previous projects. For this reason, it was difficult for the client to understand some of the specification issues, such as employer's requirements and cost of changes, of this kind of contract. * The client did not choose the right form of contract and for this reason the flexibility of the project for client changes was not as expected. * The changes made by the client in this type of contract resulted in 400 thousand worth of costs. * Some information was not fully detailed during the planning stage, such as unidentified services and some design details. As it can be seen in Table 4-2, there were four causes of cost overruns on this project, which were related one to each other. For instance, the client did not understand the specifications of the form of contract because design changes were expensive in this type of contract. As a result, the variations to the design, made by the client during the execution of the project, increased the cost of the project. In addition, this type of contract had some specifications that were not fully understood by the project parties, such as the employer s requirements. As it can be seen, the main causes of cost overruns on this project were the misunderstanding of contract specifications and the client s inexperience of working with this type of contract. Case 6 Table 4-3 Main causes of cost overrun Case 6[Adapted from case study s report] Case study Cause of cost overrun Caused by Poor initial planning * The information the contractor had from a tender was wrong because of poor initial planning carried out by the client. Client s variation in the design * The client incorporate more than 2000 changes to the initial design. Case 6 Time Delays * The client was a local authority, Birmingham city council who had a very slow decision making process and took long time to make any formal decision which caused time delays Incorrect interpretation of contract specifications * The client did not understand some specifications of the traditional contract in which the design risk of changes and the coordination risk was held by the client who had not experience holding these risks.

Case Studies Results and Analysis In this project, there were four reasons of cost overruns which were not necessarily related to each other. However, the combination of all these factors increased the final cost of this project. Moreover, in this project, it can be noticed that poor client performance was a main issue during the planning and execution. This could be attributed to three main reasons. Firstly, the client carried out a poor initial planning, which produced inaccurate information. Secondly, the client did not understand some of the specifications of the contract, such as the person in charge of holding risks. Finally, the client had a very slow decision making process which was one of the main causes of time delay on this project. Cross case analysis The main causes of cost overruns in the poor cost performance projects have been summarised in Table 4-4. This table shows that some of the factors, which caused cost overruns on these projects, were present in more than cases. One example is the incorrect form of contract, which is one of the common causes between Case 4 and Case 6. Table 4-4 Summary of main causes of cost overruns in poor cost performance case studies [Created by the Case study Case 2 Case 4 Case 6 author] Cause of cost overrun The incompetency of the project manager Poor relationship between the client and contractor Client's unwillingness to help Client s variation in the design Incorrect interpretation of contract specifications Client s variation in the design Poor initial planning Poor initial planning Client s variation in the design Time Delays Incorrect interpretation of contract specifications Although the main causes of cost overruns on these projects were different, there were some similar causes that should be mentioned here. Firstly, clients variations in the design was the only common factor that caused cost overruns in all the three projects. Secondly, clients variations in the design, poor initial planning and incorrect interpretation of contract specification were causes of cost overruns that could be seen in Cases 4 and 6. As mentioned

Case Studies Results and Analysis in the analysis of each of the cases, these three causes of cost overruns are related to clients. For instance, the selection of the form of contract was made by the client of the project. In addition, poor initial planning stage was carried out by the client. Finally, the decisions around variations in the design were mainly taken by the client. Section 4.2.1 explained that Cases 2 and 4 were projects from Company A and Case 6 was a project constructed by company B. Although some differences in the results can be expected because the projects were constructed by different companies, the interviewees expressed that the main causes of cost overruns are not usually related to company characteristics. The interviewees agreed that the main problems on projects were usually inherent with the project. For instance, Interviewee A expressed: In my experience, in my view, on a poorly performing job, the problems are inherent in the job before they get anywhere near being built. In other words, if the project is going to have problems, they tend to be inherent from the outset. This idea was supported by the results which showed that the main causes of cost overruns in these three projects were not related with the organisational culture, or structure, of the contractor organisation. 4.3.2.3 Critical Success Factors This section summarises the critical success factors that were not present in the poor performance projects and that could have helped prevent cost overruns. The results showed in this section were adapted from the case reports of these projects. In addition, a cross-case analysis is made between these case studies at the end of this section. Interviewees were asked about the CSFs that were not present in these projects and the way in which they could have helped prevent cost overruns. For this reason, the definition of Critical Success Factors in this dissertation, which was established in Section 2.2.1, was mentioned during the interview to warrantee that all the interviewees considered the same definition of these factors. Additionally, CSFs were not only defined in the interview questionnaire [see Appendix D], but were also included in the interview protocol [see Appendix B]. The definition used is: CSFs are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule [see Section 2.2.1] BENEFICIARIO COLFUTURO 2012 63

Case Studies Results and Analysis The analysis in this section is adapted from the case reports. This data was mainly collected from interviewees. However, some internet documents were used to corroborate and complement this information. The process used to get the data in this section can be seen in Figure 4-2. Interview questionnaire section Information about the project Report Section Important issues in the project execution Information provided Possible solutions to problems encountered in the projects Corroboration Critical success factors influencing cost performance in this project Factors that could have improved cost performance CSFs that were not present and could have helped to improved cost performance Figure 4-3 Process used to get data about CSFs that were not present in poor cost performance projects [Created by the author] As it can be seen in Figure 4-3, the interview questionnaire structure facilitated the creation of the reports and analysis. In other words, the interview questionnaire [see Appendix D] had two different sections that helped collect this data. Firstly, the researcher asked background information about the project where the interviewees not only mentioned the main features of the project, but also the possible solutions to the problems encountered during the execution of the project. This information was used to compose the section of the report called Important issues in the project execution. On the other hand, another section of the interview questionnaire had some questions about the CSFs that could have influenced the cost performance on this project. This information was used to compose the section of the report called factors that could have improved cost performance. As the name of the section indicates, this section identifies the CSFs that were not present in these projects. Additionally, the interviewees talked about several ways in which these CSFs could have helped prevent cost overruns on these projects and the possible solutions to the problems that these factors could have presented. The information they provided in the section factors that

Case Studies Results and Analysis could have improved cost performance was similar to the possible solutions some of them gave in the section Important issues in the project execution. Therefore, the tables used in this section, to analyse the projects, are adapted from those two sections of the reports. Case 2 Table 4-5 Critical Success factors that could have help to prevent cost overruns in Case 2 [Adapted from case study s report] Case study Critical Success Factors Project manager competency How it could have helped? It is needed the right people on the job for the type of job it is, with the knowledge and experience to cope with all the demands. This factor could have prevented quality problems in the job and time delays. Case 2 Client commitment to getting the job done You cannot always choose your client, but the client willingness to getting the job done is a factor that could have help to reduce time delays and improve relationship with the contractor. Good relationship between project parties Accuracy of plans and initial information It could have helped to prevent conflinct between client and project manager, prevent time delays, improve client commitment Before starting, all necessary and accurate information should be in place to avoid poor cost performance and reduce clients changes. Table 4-5 shows the critical success factors that could have prevented the increase in the final costs of this project. In this case, one of the main causes of cost overruns was the lack of knowledge and experience of the project manager, which not only affected the quality of the project, but also the relationship with the client [See Table 4-1]. For this reason, the critical success factor that could have prevented this problem was project manager competency. As expressed by Interviewee A You might have someone who is more experienced in one or the other. So, you need to make sure that you get the right person on the right job. In addition, client commitment to get the job done was also considered as a critical success factor, because it could have reduced time delays and consequently, cost overruns. Finally, clients variations could have been reduced with accurate planning; making sure that accurate information is in place at the start of the work.

Case Studies Results and Analysis Case 4 Table 4-6 Critical Success factors that could have helped prevent cost overruns in Case 4 [Adapted from case study s report] Case study Critical Success Factors How it could have helped? Case 4 Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract It could have provided the full information on site to start working. In addition, this factor could have help in the clarification of employer's requirements and documents discrepancies in the form of contract chosen by the client. If in the level of detailing the project had got contractor involvement then the risks of misunderstanding in the employer s obligations had been reduced and the information of the planning stage would have been fully detailed If the form of contract had been carefully analysed, the client changes would have not increase the costs as they did. As it can be seen in Table 4-6, there are two critical success factors in this project that were not present in the execution of the project. The early involvement of the contractor could have helped clarify the employer s obligations and improve the details of information provided to the contractor in the planning stage. In addition, the accurate and adequate plans and specifications could have also helped clarify employer s requirements and documents discrepancies, which were a main issue that affected the cost performance in this project. Case 6 Table 4-7 Critical Success factors that could have helped prevent cost overruns in Case 6 [Adapted from case study s report] Case study Critical Success Factors How it could have helped? Case 6 More accurate initial information Initial identification of all the risks Selection of form of contract The initial information could have been more accurate and it could have avoided many client's changes to the initial design This identification of risks could have changed the form of contract due to the fact that from the client s point of view it should never have been a traditional contract, it should have been design and build contract to pass all the risk and coordination of plans to the contractor. It should have been design and build contract to pass all the risk and coordination of plans to teh contractor

Case Studies Results and Analysis Table 4-7 shows the critical success factors that were not present in Case study 6. In this case, lack of accurate information at the beginning of the project caused cost overruns because it increased the need of client s changes during the execution. For this reason, the first critical success factor is the accuracy of design information. In addition, the identification of risks in this case was considered an important factor. In other words, the form of contract chosen by the client was not appropriate for this type of project because in this type of contract, the client was in charge of managing the risks but they were not experienced in managing such risks. As mentioned by Interviewee C The person who holds the risk should always be the most capable of managing that risk and mitigating it effectively. For this reason, the client should have selected another type of contract in which the contractor is responsible for managing the risks of the project. This selection could have prevented the increase in the final cost of the project. Cross-case analysis A cross-case analysis aims at comparing the results from each of the cases to identify which factors were not present in the projects and could have prevented cost overruns. However, in this comparison, it is important to mention that all the interviewees took into account a similar definition of CSFs due to the fact that the author defined this concept and asked them to use this definition during the interview. The definition of CSFs used in this research is: CSFs are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule [see Section 2.2.1 ] Based on this definition, the interviewees were asked to identify the CSFs that could have helped in successfully achieving the budget objective. These factors are summarised in Table 4-8. BENEFICIARIO COLFUTURO 2012 67

Case Studies Results and Analysis Table 4-8 Summary of CSFs that could have prevented cost overruns in poor cost performance case studies [Created by the author] Case study Case 2 Case 4 Case 6 Critical Success Factors Project manager competency Client commitment to getting the job done Good relationship between project parties Accuracy of plans and initial information Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract More accurate initial information Initial identification of all the risks Selection of form of contract There are some critical success factors that were not present in these projects and are considered as factors that could have helped prevent cost overruns. Although the manner in which these factors are described in each of the cases is not the same, some of them are similar. For instance, Case 4 has accurate and adequate plans and specifications as one of the CSFs. In a similar manner, Cases 2 and 6 have also noted accuracy of plans and initial information and more accurate design information, which is the same as accurate and adequate plans and specifications, as CSFs. It can be said that forward planning is important because the accuracy of plans and specification can help prevent cost overruns. 4.3.2.4 Relationship between Critical Success Factors and Main Causes of Cost Overruns After the analysis of each case study, this section summarises the main causes of cost overruns and the related critical success factors that could have prevented these cost overruns if they were present. The relationships [see Figure 4-4] were adapted from the case reports which were created after the data collection. In the interview, the author asked the interviewees the next question: If we considered that Critical Success Factors are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule.

Case Studies Results and Analysis What are the critical success factors that were not present in this project and you think those factors could have helped prevent poor cost performance on this project? Can you please explain why and how it could have been improved? [See Appendix D] Based on this question, the interviewees talked about the main causes of cost overruns on these projects and explained the way in which certain CSFs could have prevented those problems. This information is based on the interviewees experience and for this reason; it can be used as a basis to understand the influence of CSFs in the cost performance of thesis projects. The detailed information can be seen in the Appendices F, H and J. Critical Success Factors Main Causes of cost overrun Project manager competency Client willingness to getting the job done Good relationship between project parties Accuracy of plans and initial information The incompetency of the project manager Poor relationship between the client and project manager Client's unwillingness to help Client s variation in the design Case 2 Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract Incorrect interpretation of contract specifications Client s variation in the design Poor initial planning Case 4 More accurate initial information Identification of all the risks Selection of form of contract Poor initial planning Client s variation in the design Time Delays Incorrect interpretation of contract specifications Case 6 Figure 4-4 CSFs that could have prevented cost overruns in each of the case studies [Created by the author, adapted from case studies reports] As mentioned in Section 4.3.2.2, there are some common causes of cost overruns in these cases, such as client s variations, time delays, poor initial design information and incorrect form of contract. For this reason, the critical success factors will be compared for each of these causes of cost overruns.

Case Studies Results and Analysis Clients variations Based on the information of each case, it can be seen that clients variations have a negative impact on the cost performance of these construction projects. Furthermore, Figure 4-4 shows that accurate plans and initial information was considered as a CSF as that could have reduced the negative impact of client s variations requests on the cost performance. In addition, in Cases 4 and 6, the right selection of contract was also considered as a critical success factor that can reduce the impact of client s variations requests. Poor initial planning Poor initial planning was also a common cause between Cases 4 and 6. As it can be seen, an increase in the costs of the project could have been prevented with more accurate and adequate plans and specifications. However, in Case 4, the early involvement of contractor in the planning stage of the project has been considered as a factor that could have helped in producing more accurate initial design information. Incorrect interpretation of contract specifications Misunderstanding the specifications and different conditions of the contract could have been prevented by different CSFs. These factors varied, depending on the project and the perception of the interviewees. While in Case 4 the CSFs chosen were accurate and adequate plans and specifications and early involvement of the contractor, in Case 2 the identification of risks was considered to be the CSF that could have helped chose an appropriate form of contract, by thoroughly understanding all the specifications. On the other hand, in Cases 4 and 6, the right selection of contract was considered as an individual factor, necessary to avoid the incorrect interpretation of contract specifications. According to this analysis, it can be seen that there are certain of factors that can prevent cost overruns in this kind of construction projects. However, these factors varied depending on the cause of cost overrun. Although some of the causes are similar, the problems behind these causes determine the CSF to prevent cost overrun. BENEFICIARIO COLFUTURO 2012 70

Case Studies Results and Analysis 4.3.3 Good Cost Performance Projects In this section, a cross-case analysis is carried out between good cost performance projects [Case 1, 3 and 5]. Furthermore, the reports of these cases were structured following the same logic [see Appendices E, G and I]. The main idea was to cover the main topics that helped in drawing a comparison between these cases. The main findings of this cross-case analysis will be used to evaluate the Hypotheses, formulated in the theoretical foundation, in the next chapter. 4.3.3.1 Consideration of Good Cost Performance Before analysing the critical success factors that influenced the cost performance of these projects, it is important to clarify the reason why these projects were considered to have good cost performance. Case 1 This project was considered as a very good project due to the fact that it was finished two weeks earlier than expected and some savings were made along the way through some value engineering. Due to this saving, the project was considered as a good cost performance project. Case 3 This project can be considered as having good performance for different reasons. Firstly, the project was delivered ten weeks earlier. In addition, there was a saving of approximately 30 thousand pounds. Therefore, this project had a good cost performance because it did not have any cost overruns, rather it delivered a saving. Case 5 Although the project had 5 weeks time overrun, this project ended up on budget. For this reason, the project was considered to be a good cost performance project. BENEFICIARIO COLFUTURO 2012 71

Case Studies Results and Analysis As it can be seen, these three projects did not present cost overruns and some of them had savings. For this reason, these projects can be considered as good cost performance projects, because they meet the definition, of good cost performance project, used in this research: Good cost performance project: Project in which the cost overrun does not exceed 10 percent of the initial budget. 4.3.3.2 Critical Success Factors that Influenced Good Cost Performance This section summarises the Critical Success Factors that were present in each of the projects. These CSFs improved the cost performance and prevented cost overruns in these cases. The results shown in this section were adapted from each of the case reports of these projects. In addition, a cross-case analysis is made between these case studies at the end of this section. Interviewees were asked about the CSFs that were present in these projects and the way in which these factors prevented cost overruns. As mentioned in Section 4.3.2.3, the definition of CSFs, in terms of this dissertation, was mentioned during the interview to ensure that all the interviewees took into account the same definition of these factors. Additionally, CSFs were not only defined in the interviewee questionnaire [see Appendix D], but also in the interview protocol [see Appendix B]. The definition is: CSFs are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule [see Section 2.2.1] The analysis in this section is adapted from the case reports. This data was mainly collected from interviewees. However, some internet documents were used to corroborate and complement this information. The process used to get the data in this section can be seen in Figure 4-5. BENEFICIARIO COLFUTURO 2012 72

Case Studies Results and Analysis Interview questionnaire section Report Section Information provided Information about the project Important issues in the project execution Important issues that helped to improve cost performance Information about the project cost performance Critical success factors influencing cost performance in this project Factors influencing the good cost performance Actions taken in this project that helped to have good cost performance Critical success factors that were present in this project and helped to avoid cost overruns Figure 4-5 Process used to get data regarding CSFs that were present in good cost performance projects [Created by the author] As it can be seen in Figure 4-2, the interview questionnaire s structure facilitated the creation of these reports and their analysis. In other words, the interview questionnaire [see Appendix D] had three different sections that helped collect this data. Firstly, the researcher asked background information about the project. In this section, they mentioned some important issues that facilitated the good cost performance of the project during the execution stages. This information was used to compose the section of the report called Important issues in the project execution. The answers to the questions from the section called information about the project cost performance were used to identify the factors that influenced cost performance. These factors were also complemented with the last section of the interview questionnaire that had some questions about the CSFs that helped avoid cost overruns in these projects. Therefore, the tables used in this section to analyse the projects were adapted from two sections of the case study reports: Important issues in the project execution and factors influencing the good cost performance.

Case Studies Results and Analysis Case 1 Table 4-9 Critical Success factors that influenced cost performance of in Case 1 [Adapted from case study s report] Case study Case 1 Critical Success Factor Adequate plans in the pre-construction stage Contractor's competency Architect's competency Client's involvement and feedback Explanation * All the plans, the initial information, designs, form of contract and ways of communication between parties was sorted out before starting the construction. * The contractor was comptetent and had the skills and knowledge to do this job. * The architect company was the right people for the job because of their knowledge and background. * The client was the county council who was always involved in the project. * The client used to go to the construction site and give the contractor some insights into what they wanted in the building. How did influence the good cost performance? * Having all the necessary and right information before starting was very important, because it reduced the possibility of future changes to the design and improved the control of the project. * The contractor's knowledge and experience helped to cope with problems during the execution of the project. * This factor was important because these architects provided accurate design information which reduced the changes during the execution of the project. * The relationship between contractor and client was good. For this reason, the management of the project run smoothly. * The design changes were controlled and the project was made as the end user wanted to use the building. Good relationship between project parties *The contractor had a good relationship with the architect and client company because they had worked together in past projects. * In the pre-construction stage they sorted out ways of communication between parties. * It helped to smootly run the planning and execution stages of the project and avoid conflict between parties. * Ways of communications helped to improve communication process. Availability of funding * The funding was was sorted out, signed, sealed and delivered before the job started. * The project always have funding available to be executed. There were different success factors that influenced the good performance of this project. It can be seen that these factors involved not only the contractor skills, but also architect s competencies. In addition, client s involvement and feedback was important during the execution of this project. Therefore, it can be said that in this project, the involvement of contractors, architects and the client, right from the pre-construction stage, was essential for good cost performance of the project as it reduced problems and changes during the execution

Case Studies Results and Analysis of the project. In addition, a good relationship between project parties also improved the performance on the project. Case 3 Table 4-10 Critical Success factors that influenced cost performance of in Case 3 [Adapted from case study s report] Case study Case 3 Critical Success Factor Early Involvement of contractor Explanation * Thoghout the SCAPE framework, the contractor worked very closely with the client in the conception stage, in getting a robust cost plans. * The contractor,client and Adequate plans in the architects worked together in the pre-construction stage pre-construction stage to get the desig right. Accurate selection of form of contract Good relationship between project parties Availability of funding *SCAPE provides an open book sort of contract approach, very much partnering with shared incentives to both client and Willmott Dixon where the parties come under the cost plan and would share savings. * Contractor worked together with the client and architect. * There was not any problem with the funding in this project because the contract was negotiated before strating the project. How did influence the good cost performance? * It helped to close out all the risks which decreases the posibility of future problems. * The construction started with the right design information which reduced client s changes during the execution of the project. * Because of the shared savings,the contractor were able to reinvest a certain amount of the client s money into the building to improve its performance as well. *Good relationship reduced conflict during the project. * The availability of funding helped to avoid problems during the planning and execution of the project. In this project, the use of SCAPE framework helped improve cost performance on the project. The critical success factors in this project are directly related to the use of this framework, which emphasises on the early involvement of the contractor to produce adequate plans and specifications. The relationship between project parties was also a CSF that reduced conflict during the execution of the project and consequently, helped improve the cost performance of the project. As it can be seen in Table 4-10, critical success factors are related to each other and the combination of these factors was the reason behind the good cost performance of these projects. However, Interviewee B expressed his opinion that, The early involvement of

Case Studies Results and Analysis the contractor and it s really down to the form of contract that we used as well. That is why the job we did was successful in terms of cost. Case 5 Table 4-11 Critical Success factors that influenced cost performance of in Case 51 [Adapted from case study s report] Case study Critical Success Factor Good relationship Explanation * Client, consultants and contractors worked extremely well together. The relationship was completely straight and open about things which are massively important. How did influence the good cost performance? * The good relationship helped to control the project and having control of the changes during the execution of project. Adequate specifications The client had very clear requirements in terms of specifications, design of buildings and performance of buildings. * This specifications made the it easy to control changes in the project. Case 5 Early Involvement of contractor The contractor was very much involved in the actual design of the project and the development of the specification and the drawings very early in the process. * It reduced problems during the execution of the project because the contractor brought their expertise of how buildings should be built and the common problems experience on site. Right selection of form of contract It was the right form of contract, because it passed the whole risk of managing the information, managing the consultants and managing the coordination of that information, to the contractor who had experience in this area. * It reduced risks and problems during the execution of the project. Adecuate funding It was a negotiated project, so the clients and contractors were always looking to exploit any opportunity to recover any additional money. * The adecuacy of funding facilitated the construction of the project. *Any oppotunity to recover additional money was used to improve the performance of the project. As it can be seen in Table 4-11, there are some CSFs that helped in preventing the increase of cost in this project. These CSFs reduced significant problems during the execution of the project such as relationship problems between contractor and client, clients variations and lack of funding. Additionally, the table shows that these factors are related to each other. For

Case Studies Results and Analysis instance, the early involvement of contractor in the project facilitated the adequacy of specifications. In the same way, the adequacy of plans and specifications also helped to choose the right form of contract by the client. Cross-case analysis Table 4-12 Summary of CSFs that influenced cost performance in the good cost performance case studies Case study Case 1 Case 3 Case 5 [Created by the author] Critical Success Factor Adequate plans in the pre-construction stage Contractor's competency Architect's competency Client's involvement and feedback Good relationship between project parties Availability of funding Early Involvement of contractor Adequate plans in the pre-construction stage Accurate selection of form of contract Good relationship between project parties Availability of funding Good relationship Adequate specifications Early Involvement of contractor Right selection of form of contract Adecuate funding As mentioned before, there are certain critical success factors that were present in Cases 1, 3 and 5. These factors influenced the cost performance of these projects and avoided cost overruns. The summary shows that some of these factors were present in more than one project. In other words, these projects had similar factors that helped in preventing an increase of costs during projects execution. For instance, adequate plans and specifications, good relationship between projects parties and availability of funding, were the factors that were present in these three cases. In the same way, this analysis showed that the early involvement of contractor, in the pre-construction stage, and selecting the right form of contract, were factors that helped avoid cost overruns in Cases 3 and 5. In the cross-case analysis of Section 4.3.3.2, it was mentioned that the interviewees commented on the main causes of cost overruns, noting that they are not related to the internal

Case Studies Results and Analysis characteristics of the contracting company, such as organisational culture and structure. Moreover, the interviewees suggested that these causes are usually inherent with the project. Furthermore, this idea has been reinforced by the analysis of good cost performance projects because, as it can be seen in Table 4-12, the CSFs that led to a good cost performance, on these projects, did not have any relationship with the characteristics of the company. The analysis showed common factors on projects that were constructed by different companies. This suggests that the factors varied depending on the characteristics of the projects and not on the internal characteristics of the organisation. 4.3.4 Comparison between Good and Poor Cost Performance Projects Based on the results of each case study, a cross-case analysis between good and poor performance projects is conducted. As mentioned before, there were some critical success factors that helped in avoiding cost overruns in the case of good cost performance projects. On the other hand, the critical success factors that could have helped avoid cost overruns on projects with poor cost performance were also identified. Therefore, factors that influenced the cost performance on these construction projects are shown in Figure 4-6. Critical Success Factors that were present Critical Success Factors that were not present Adequate plans in the pre-construction stage Case 1 Contractor's competency Architect's competency Client's involvement and feedback Project manager competency Client s commitment to get the job done Accuracy of plans and initial information Case 2 Good relationship between project parties Availability of funding Good relationship between project parties Case 3 Early Involvement of contractor Adequate plans in the pre-construction stage Accurate selection of form of contract Good relationship between project parties Availability of funding Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract Case 4 Case 5 Good relationship Adequate specifications Early Involvement of contractor More accurate initial information Identification of all the risks Case 6 Right selection of form of contract Adequate funding Selection of form of contract Figure 4-6 CSFs that influence cost performance [Created by the author]

Case Studies Results and Analysis The summary of all the CSFs, that influenced cost performance, were identified in two different ways. The first way consisted of identifying CSFs that were not present in a poor cost performance project and were essentially the factors that could have helped avoid cost overruns on these projects. The second way was about identifying CSFs that were present in good performance projects and actually helped avoid cost overruns. Some of the CSFs that avoided cost overruns in Cases 1, 2 and 5, are the factors that were found missing in projects with poor cost performance. For instance, adequate plans and specifications is a factor that was present in all the three, good cost performance projects. However, this factor was not present in any of the poor cost performance project and was considered to be a factor that was needed to avoid cost overruns. In the same way, other factors were present in good cost performance projects and were missing from the poor cost performance projects, such as early involvement of the contractor, good relationship between project parties, selection of an appropriate form of contract and client s commitment. 4.4 Chapter Summary This section provided the results and analysis of the six case studies. The main causes of cost overruns were summarised for each of the cases and a cross-case analysis was conducted to find a list of common causes of cost overruns on poor cost performance projects. In a similar manner, critical success factors, which could have helped in avoiding cost overruns on the poor cost performance projects, were analysed. The result from a cross-case analysis is a list of such critical success factors. On the other hand, a cross case analysis of the good cost performance projects resulted in a list of CSFs that influenced those projects in a positive manner. Therefore, these findings will be used in the discussion section to compare and contrast the results with the literature review. In addition, these findings will be also used to confirm or reject the hypotheses formulated as a basis of this research. BENEFICIARIO COLFUTURO 2012 79

Discussion CHAPTER 5 5 Discussion 5.1 Introduction This chapter is further explores the Critical Success Factors that can help avoid cost overruns on construction projects. The main idea is to meet the research objective of identifying the critical success factors that improve the possibility of avoiding or preventing cost overruns, on construction projects, in the UK. For this reason, this chapter is divided into three different sections. The first section provides an overview of significant findings and the relationship of these findings with the existing literature. In this section, the hypotheses that were formulated in the theoretical foundation of this project, are either confirmed or rejected, depending on the results of the case studies. The second section starts with an analysis of the research limitations and it is concluded with recommendations for further research. 5.2 Relationship between Findings and Existing Literature The analysis of the case studies was divided into three main sections. Firstly, the author analysed the results of the poor cost performance projects. Then, the author conducted an analysis of the good cost performance projects and finally, the author compared the results from the good and poor cost performance projects. Therefore, the findings from the analysis of these case studies can be divided into four different categories: Main causes of cost overruns on poor cost performance construction projects Critical Success Factors that were not present in the poor cost performance projects and could have helped to prevent cost overruns. Critical Success Factors that were present in the good cost performance projects and actually helped prevent cost overruns. Critical Success Factors that influenced the cost performance of these construction projects. In this section, these findings are compared with the existing literature, for two different purposes. Firstly, to understand the way in which the results of the case studies support the BENEFICIARIO COLFUTURO 2012 80

Discussion existing literature. Secondly, to perform the logical linking of data to the hypotheses formulated in the theoretical foundation of this research. In other words, the results are used to confirm or reject these hypotheses. Therefore, the next section provides a comparison between the findings of the case studies and the existing literature. 5.2.1 Main Causes of Cost Overruns The main causes of cost overruns were studied in this research in two different ways. Firstly, a review of current literature was carried out for the purpose of finding the main causes. Then, three poor cost performance projects were analysed and the main causes of cost overruns were identified in the context of these projects. Therefore, the main findings can be seen below. Findings from Existing studies One of the objectives of this research was to identify the main causes of cost overruns on construction projects in the UK. In order to meet this objective, a review of current studies was conducted with the purpose of setting up the context. For this reason, the literature review was focused on the most important studies that have been carried out about cost overruns on construction projects. However, the author found that these studies were mostly carried out in different countries and the main causes of cost overruns of these studies varied, depending on the country. This fact was discussed in Section 2.1.2.1, which shows a review of existing researches and different results from these studies. For this reason, the author critically reviewed those studies and tried to find similar studies for UK construction sector. Under these circumstances, the author found a study carried out by Olawale in 2010, who described the 20 main causes of cost overruns on construction projects in the UK. This study was a PhD research in which many different professionals from the construction industry were interviewed about the topic. The author also used a questionnaire, which was sent to more than 250 professionals with experience of construction projects in the UK. Therefore, the author created a list of the most common causes of cost overruns on construction projects in the UK, taking into account not only the contractors perception, but also the consultants and clients perception. BENEFICIARIO COLFUTURO 2012 81

Discussion This study provided an up-to-date investigation in which, the author found the main causes of cost overruns on construction projects in the UK. This has proven to be a topic on which there has not been any significant development during recent years, as previously conducted studies are now slightly outdated. For this reason, Olawale s study can be used in this research to meet the first objective. The main causes of cost overruns in the UK can be seen in Table 5-1. One of the objectives of this research was to identify the main causes of cost overruns on construction projects in the UK. In order to meet this objective, a review of current studies was conducted with the purpose of setting up the context. For this reason, the literature review was focused on the most important studies that have been carried out about cost overruns on construction projects. However, the author found that these studies were mostly carried out in different countries and the main causes of cost overruns of these studies varied, depending on the country. This fact was discussed in Section 2.1.2.1, which shows a review of existing researches and different results from these studies. For this reason, the author critically reviewed those studies and tried to find similar studies for UK construction sector. Under these circumstances, the author found a study carried out by Olawale in 2010, who described the 20 main causes of cost overruns on construction projects in the UK. This study was a PhD research in which many different professionals from the construction industry were interviewed about the topic. The author also used a questionnaire, which was sent to more than 250 professionals with experience of construction projects in the UK. Therefore, the author created a list of the most common causes of cost overruns on construction projects in the UK, taking into account not only the contractors perception, but also the consultants and clients perception. This study provided an up-to-date investigation in which, the author found the main causes of cost overruns on construction projects in the UK. This has proven to be a topic on which there has not been any significant development during recent years, as previously conducted studies are now slightly outdated. For this reason, Olawale s study can be used in this research to meet the first objective. BENEFICIARIO COLFUTURO 2012 82

Discussion Table 5-1 Main causes of cost overruns in construction projects in the UK (Taken from Olawale, 2010) Findings from this research Main causes of cost overruns Design Changes Risk and uncertainty associated with projects Inaccurate evaluation of project s time/or duration Non-performance of subcontractors and nominated suppliers Complexity of works Conflict between project parties Discrepancies in contract documentation Contract and specification interpretation Inflation of prices Financing and payment for completed works Lack of proper training and experience of PM Low skilled manpower Unpredictable weather conditions Dependency on imported materials Lack of appropriate planning Unstable interest rate Fluctuation of currency/exchange rate Weak regulation and control Project fraud and corruption Unstable government policies Based on the case studies reports, the author mentioned the main causes of cost overruns on each of the poor cost performance projects, in Section 4.3.2.2. In addition, the author also compared the results from three poor cost performance projects [Cases 2, 4 and 6]. Therefore, the author found that each of the projects had different causes of cost overruns. However, client s variation in the design, poor initial design information, time delays and incorrect form of contract were some of the factors that were common in these cases. Table 5-2 Main causes of cost overruns in Cases 2, 4 and 6 [Created by the author] Case study Case 2 Case 4 Case 6 Cause of cost overrun The incompetency of the project manager Poor relationship between the client and contractor Client's unwillingness to help Client s variation in the design Incorrect interpretation of contract specifications Client s variation in the design Poor initial planning Poor initial planning Client s variation in the design Time Delays Incorrect interpretation of contract specifications

Discussion Relationship between findings In order to complement this research, the author decided to make a comparison between the case studies results and the list of causes concluded by Olawale in 2010. However, the author found that the manner, in which these causes were expressed, was not the same in both lists. In other words, Olawale s study expressed the causes in a peculiar way while each of the interviewees in this research used different terminologies to express the main causes of cost overrun. For this reason, the author categorised each of the causes from the case studies and analysed which of those factors were similar to the ones from Olawale s study. This categorisation can be seen in Table 5-3. Table 5-3 Main causes of cost overruns comparison with existent literature [Created by the author] Case study Similar factor in Olawale's Cause of cost overrun study Reason The incompetency of the project manager Lack of proper training and experience of PM Both factors are the same because they are related to the lack of project manager skills Poor relationship between Conflict between project The poor relationship created conflict between client and Case 2 the client and contractor parties project manager which was a problem in this project. Client's unwillingness to Conflict between project The client unwilligness was caused by the poor relationship help parties with the PM. Client s variation in the Both factors are the same because they are related to changes Design Changes design in the design during the execution of the project Incorrect interpretation of contract specifications Contract and specification interpretation In this projects the clients did not understand the contract some specifications, as the contractor did. Case 4 Client s variation in the Both factors are the same because they are related to changes Design Changes design in the design during the execution of the project Poor initial planning Some information was not fully detailed during the planning Lack of appropriate planning stage by the client. Poor initial planning The information the contractor had from a tender was wrong Lack of appropriate planning because of poor initial planning carried out by the client. Case 6 Client s variation in the Both factors are the same because they are related to changes Design Changes design in the design during the execution of the project Incorrect interpretation of contract specifications Contract and specification interpretation The client did not understand the contract specification and they chose the incorrect form of contract Discussion: After drawing a comparison between the results from the case studies and Olawale s research, it can be noticed that most of the causes of cost overruns are common. These similar factors are: Lack of proper training and experience of PM Conflict between project parties Design Changes Contract and specification interpretation Lack of appropriate planning

Discussion As it can be seen, the causes of cost overruns in cases 2, 4 and 6 could be categorised into the factors mentioned by Olawale (2010). In addition, the main causes of cost overruns on the poor performance projects, analysed in this dissertation, are part of the 10 most common causes of cost overrun in Olawale s list. This fact suggests that the list suggested by Olawale (2010) can be considered as the answer for one of the objectives in this research which is, to identify the main causes of cost overruns in construction projects in the United Kingdom in this research. Therefore, the main causes of cost overruns in construction projects in the UK can be seen in Table 5-1. As it can be seen, the case studies results supported Olawale s research due to the fact that the projects that were study presented similar causes of cost overruns as those mentioned by Olawale. 5.2.2 Confirmation or Rejection of Hypotheses After reviewing the literature, in which many different studies on critical success factors in construction projects were analysed, the author found four studies that concentrated on the critical success factors that influence cost performance on construction projects. For this reason, the author used these studies to create two different hypotheses that were going to be either confirmed or rejected with the use of some case studies. The main idea of these hypotheses was not only to form the foundation of the research and give a direction to the research process, but also to allow generalisation in the case studies. This idea has been supported by Yin (2003), who stated that case studies can be generalised to theoretical propositions and not to populations or universes. Therefore, this section uses the findings from the case studies analysis to discuss the confirmation, or rejection, of these hypotheses. 5.2.2.1 Evaluation of Hypothesis 1 Hypothesis 1: The lack of certain Critical Success Factors causes cost overruns in construction projects in the UK. BENEFICIARIO COLFUTURO 2012 85

Discussion To confirm or reject this hypothesis, the analysis of the poor cost performance projects [Cases 2, 4 and 6] is used as a basis. The main reason is that these projects had cost overruns that could have been prevented in different ways. However, the analysis of these projects shows that the lacking factors led to poor cost performance. For this reason, a review of the findings is shown to discuss the confirmation or rejection of this hypothesis. Findings: In section 4.3.2.2 each of the poor cost performance projects were analysed and a list of causes of cost overruns was created. From this analysis, which was based on the detailed report of each case study, a cross-case analysis was conducted which compared the CSFs that were not present in these projects and were considered as possible solutions that could have prevented cost overruns. The lacking CSFs can be seen in Figure 5-1, with the related causes of cost overrun that could have been prevented. Critical Success Factors Main Causes of cost overrun Project manager competency Client willingness to getting the job done Good relationship between project parties Accuracy of plans and initial information The incompetency of the project manager Poor relationship between the client and project manager Client's unwillingness to help Client s variation in the design Case 2 Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract Incorrect interpretation of contract specifications Client s variation in the design Poor initial planning Case 4 More accurate initial information Identification of all the risks Selection of form of contract Poor initial planning Client s variation in the design Time Delays Incorrect interpretation of contract specifications Case 6 Figure 5-1 Lacking factors that could have prevented cost overruns in Cases 2, 4 and 6 [Created by the author] The main finding of this analysis is that there are some Critical success factors that were not present in the planning and execution stages of these projects and that those factors could

Discussion have prevented cost overruns. Moreover, the results also showed that there are some similar factors between these cases, which are grouped in Table 5-4. Table 5-4 Summary of lacking CSFs in poor cost performance projects [Created by the author] Critical Success Factors Project manager competency Client commitment to getting the job done Good relationship between project parties Accuracy of plans and initial information Early involvement of the contractor Selection of form of contract Initial identification of all the risks Discussion: Based on the comparison between the findings from this research and the existing literature, there are some conclusions. 1. Based on the cross-case analysis of the results from the poor cost performance projects [Cases 2, 4 and 6], Hypothesis 1 can be confirmed. As the results showed, some factors were not present in the poor cost performance projects during the planning and execution stage. Moreover, the detailed analysis of these projects demonstrated that the lack of these factors could have prevented some problems during the execution stages of the project; problems that led to cost overruns. 2. Although cross-cases analysis showed that some of the CSFs in these three cases were similar, this does not imply that the CSFs, that were not common on all these projects, cannot prevent costs overruns. As it was mentioned by the interviewees, and can also be seen from the results, the CSFs vary depending on the project characteristics. Therefore, the results in Table 5-4 suggest that all the CSFs in the list can prevent cost overruns in construction projects, in the UK. 3. Even though some of the projects were not from the same company, there are some common factors that could have helped prevent cost overruns on these projects. In addition, the critical success factors identified in each of the cases did not depend on the organisational characteristics. In other words, one of the concerns of this research was that the internal characteristics of the contracting organisation, such as organisational culture and structure, impact the cost performance of the projects.

Discussion However, the critical success factors that could have helped prevent cost overruns on these projects only depended on the projects and not on the organisational characteristics. 5.2.2.2 Evaluation of Hypothesis 2 Hypothesis 2: The presence of certain Critical Success Factors prevents cost overruns on construction projects in the UK. To confirm or reject this hypothesis, the analysis of good cost performance projects [Cases 1, 3 and 5] is used as a basis. The main reason is that these projects did not have cost overruns and some factors were considered to have a positive impact on the cost performance of these projects. For this reason, a review of the findings is shown below and then discussed for the purpose of either confirming or rejecting the hypothesis. Findings: In section 0, each of the good cost performance projects were analysed and a list of factors, that were present in these projects and had a positive impact on the cost performance, was created. From this analysis, which was based on the detailed report of each case study, a cross-case analysis was conducted which compared the CSFs that were present in these projects and prevented cost overruns. The factors can be seen in Figure 5-2. Critical Success Factors that were present Adequate plans in the pre-construction stage Contractor's competency Architect's competency Case 1 Case 3 Client's involvement and feedback Good relationship between project parties Availability of funding Early Involvement of contractor Adequate plans in the pre-construction stage Accurate selection of form of contract Good relationship between project parties Availability of funding Good relationship Case 5 Adequate specifications Early Involvement of contractor Right selection of form of contract Adequate funding Figure 5-2 CSFs present in the good cost performance projects [Created by the author]

Discussion The cross-case analysis of good cost performance projects showed that some of the factors that prevented cost overruns on one project, also helped prevent cost overruns in other projects. For instance, the adequacy of plans and specifications was present, as a factor, in all the three cases and had a good impact on the cost performance of these projects. For this reason, common success factors were grouped together and a final list of CSFs can be seen in Table 5-5. Table 5-5 Summary of CSFs that were present in the good cost performance cases [Created by the author] Discussion: Based on the research findings and its comparison with the existing literature, there are three main conclusions: Critical Success Factor Adequate plans in the pre-construction stage Contractor's competency Architect's competency Client's involvement and feedback Good relationship between project parties Availability of funding Early Involvement of contractor Accurate selection of form of contract Adequate specifications 1. Based on the cross-case analysis results from the good cost performance projects [Cases 1, 3 and 5], Hypothesis 1 can be confirmed. As the analysis of the results showed, some factors were identified because they were present during the planning and execution stage of these projects. Moreover, these factors were considered to have a positive impact on the cost performance of these projects. Therefore, these factors helped prevent cost overruns on these projects. 2. Although the cross-case analysis showed that some of the CSFs in all these three cases were similar, this does not imply that the CSFs that were not common in these projects cannot prevent cost overruns. As it was mentioned by the interviewees, and can be seen in the results, the CSFs vary depending on the projects characteristics.. Therefore, the results in Table 5-5 suggest that all the CSFs in the list can prevent cost overruns on construction projects in the UK

Discussion 3. In this case, the difference between companies was also considered unimportant in the selection of Critical Success Factors. This idea was supported by the interviewees who also noted that the organisational characteristics, such as organisational culture and structure, did not have any impact on the cost performance of these projects. Therefore, some CSFs were found to be common between projects from different companies. 5.2.3 Critical Success Factors in construction projects In the previous section, hypothesis 1 was confirmed using the results from the cross-case analysis of the poor cost performance projects, which showed that some factors were not present during the planning and execution of these projects and their absence caused cost overruns. On the other hand, the cross-case analysis of the good cost performance projects showed different results due to the fact that some factors identified were present during the planning and execution stages of these projects and prevented cost overruns. The latter crosscase analysis was useful to confirm hypothesis 2. However, during the analysis of the results, another cross-case analysis was conducted between the good and poor cost performance projects. This section provides the main finding of this analysis and the way in which these findings helped support the confirmation of the hypotheses. Findings: the cross-case analysis between good and poor cost performance projects showed that some of the factors, that were present in the good cost performance projects, were not present in the poor cost performance projects. In addition, some of these factors were considered as Critical factors in the improvement of cost performance on poor cost performance projects. The summary of CSFs can be seen in Figure 5-3. BENEFICIARIO COLFUTURO 2012 90

Discussion Critical Success Factors that were present Critical Success Factors that were not present Adequate plans in the pre-construction stage Case 1 Contractor's competency Architect's competency Client's involvement and feedback Project manager competency Client s commitment to get the job done Accuracy of plans and initial information Case 2 Good relationship between project parties Availability of funding Good relationship between project parties Case 3 Early Involvement of contractor Adequate plans in the pre-construction stage Accurate selection of form of contract Good relationship between project parties Availability of funding Accurate and adequate plans and specifications Early involvement of the contractor Selection of form of contract Case 4 Good relationship More accurate initial information Case 5 Adequate specifications Early Involvement of contractor Identification of all the risks Case 6 Right selection of form of contract Adequate funding Selection of form of contract Figure 5-3 Summary of Critical Success Factors [created by the author] In Figure 5-3, it can be seen that some of the factors present in good cost performance projects were not present in the poor cost performance projects. These factors are: Accuracy of plans and specifications Project management competency Clients commitment Good relationship between project parties Early involvement of contractor Selection of the right form of contract Additionally, this cross-case analysis reinforced the idea that some critical success factors influenced cost performance on construction projects. For this reason, the author created a list, based on all the CSFs mentioned in all the cases, to identify a group of factors that can influence cost performance. This list can be seen in Table 5-6.

Discussion Table 5-6 Summary of Critical Success factors that influence cost performance in Cases 1,2,3,4,5 and 6 [Created by the author] Critical Success Factors Project manager competency Contractor's competency Client commitment to getting the job done Good relationship between project parties Accuracy of plans and initial information Adequate specifications Early involvement of the contractor Accurate selection of form of contract Client's involvement and feedback Availability of funding Initial identification of all the risks Architect's competency Relationship with existing studies In the theoretical foundation of this dissertation, 11 CSFs were identified that can potentially improve cost performance on construction projects. These factors were chosen because they overlapped with each other in the reviewed studies, and because these factors specifically influence cost performance on construction projects.. Table 5-7 Critical success factors that influence cost performance in construction projects taken from the Theoretical Foundation of this research [see Section 2.3.1] Crtical Success Factors Adequacy of funding Adequacy of plans and specifications Budget updates Constructability Economic risks Owner's involvement and frequent feedback Owner's commitment to established schedules and budget Project Manager commitment and involvement Project Manager competency/experience Realistic obligations/clear objectives Risk identification and management

Discussion Comparing Table 5-6 and Table 5-7, it can be seen that the results from the case studies showed factors similar to those mentioned in the literature review. These factors include as accuracy of plans and specifications, pproject manager s competency/experience, client s commitment and risk identification and management. However, three factors considered in the case studies, such as good relationship between project parties, early involvement of the contractor and selection of contract, are factors that were not found in the existing literature. Discussion: The cross-case analysis between good and poor cost performance allowed the researcher to create an extended list of Critical Success Factors that influence cost performance on projects. This list helped reconfirm the Hypothesis 2 because it shows the importance of some factors to avoid cost overruns on construction projects. In addition, this comparison also showed that there were some CSFs that were not present on the poor cost performance projects, and their absence caused cost overruns. This finding helped confirm Hypothesis 1. Additionally, the list created in this cross-case analysis, was compared with the list of CSFs extracted from existing studies in the theoretical foundation. It was found that these cases had some CSFs that were included in the list from existing studies. However, three factors considered in the case studies were not present in this list. These are; good relationship between project parties, early involvement of the contractor and selection of an appropriate form of contract. As it can be seen, the research results shows that a definitive list of CSFs cannot be concluded from this research because the number of projects used in the multi-case study strategy, were not enough to generalise. However, a list of CSFs, which can be seen in Table 5-8, is suggested. This list can be complemented with further research. Table 5-8 Suggested list of CSFs that influence cost performance in construction projects in the UK [Adapted from the results of thisresearch] Critical Success Factors Project manager competency Contractor's competency Client commitment to getting the job done Good relationship between project parties Accuracy of plans and initial information Adequate specifications Early involvement of the contractor Accurate selection of form of contract Client's involvement and feedback Availability of funding Initial identification of all the risks Architect's competency

Discussion 5.2.4 Conclusion of Discussion The results show that when the poor cost performance projects [Cases 2, 4 and 6] are compared against each other, Hypothesis 1 can be confirmed based on the fact that all of those projects lacked some factors that caused cost overruns. On the other hand, a comparison of the good cost performance projects [Cases 1, 3 and 5] helped confirm Hypothesis 2, due to the fact that these projects had some CSFs that helped prevent cost overruns. Finally, the comparison between good and poor cost performance projects also helped confirm Hypothesis 1 and 2, because it shows that the presence of some factors in Case 1, 3 and 5, which were not present in Cases 2, 4 and 6, helped avoid cost overruns on good cost performance projects and caused overruns on poor cost performance projects. The confirmation of the both hypotheses helped in partially meeting one of the main objectives of this research, which is to identify the critical success factors that improve the possibility of avoiding, or preventing, cost overruns on construction projects in the UK. Moreover, this objetvice was partially achieved. although the case studies confirmed that there are certain Critical Success Factors that improve the possibility of avoiding or preventing cost overruns on construction projects in the UK, a definitive list of CSFs cannot be concluded from this research due to the research s limitation regarding generalisation of results. A list of CSFs is suggested, based on the case studies results. Nevertheless, it cannot be concluded that this list cover all the CSFs that have an impact in the cost performance of construction projects due to the fact that these factors varied depending on the project and the amount of projects in this research is not enough to generalise the results. This conclusion will be further discussed in the limitations of this work. 5.3 Critical evaluation of this research There are some limitations in the research design, and the overall approach of this work, which should be critically assessed. In the same way, the validity and reliability of the work should also be evaluated. For this reason, this section provides an explanation of the limitations in different areas of the research and an analysis of the validity and reliability of the research. BENEFICIARIO COLFUTURO 2012 94

Discussion 5.3.1 Data Validity and Reliability of research Assessing the quality of the work is essential in any type of research due to the fact that it shows if the study represents a logical flow and if the results are reliable (Yin, 2009). For this reason, the actions taken in this research, to prove the data validity and reliability, are explained below: The construct validity test was met in this research because of two main reasons. Firstly, this study used two different sources of information: documentation and interviews. Secondly, the report of each of the cases was sent to the interviewees for their review. All the interviewees returned the report with their comments and suggestions. This study can also be considered reliable because the procedure used during the research was documented. If later on, another researcher decides to follow the same procedure and case study design, the conclusion will be the same. This reliability was enhanced with the creation of a case study protocol and the documentation of a report for each of the case studies. In addition, the interview questionnaire was also provided [see APPENDIX B]. The external validity of this research assesses the problem of generalisation in the case studies. Yin (2009) noted that the use of replication logic is needed in case studies to make an analytic generalisation, which allows to generalise an existing theory. Moreover, this research was designed after a review of existing studies in which some hypotheses were formulated. Then, six cases studies, which followed the literal and theoretical replication, were analysed and a cross case analysis was used to test the hypothesis. This cross-case analysis helped make an analytical generalisation, which enabled to meet the external validity test. 5.3.2 Limitations of the research During the development of this research, some possible limitations were identified. These limitations are discussed in this section. BENEFICIARIO COLFUTURO 2012 95

Discussion 5.3.2.1 Definitions of concepts One limitation of this research is the definition of some concepts related to cost performance. As explained in Section 3.5.3, the author made some assumptions about poor and good cost performance, and these assumptions were used to design the research. Furthermore, a multiple-case study method was conducted where three poor cost performance projects and three good cost performance projects were studied. For this reason, interviewees were asked to choose projects that could fit within the definition of poor and good cost performance, established in this research. However, the author noticed that there is no unique definition of cost performance, and that each interviewee had slightly different perceptions of good and poor cost performance. For instance, in this research, a poor cost performance project was the one where cost overruns exceeded by 10 percent of the initial budget. Therefore, the interviewees chose projects that presented cost overruns of over 10 percent of the initial budget. However, one of the interviewees in this research had a slightly different perception of poor cost performance. The interviewee commented that In the current climate, any overrun will be classified as poor cost performance. It is important to build it on time, to budget, because anything that overruns is going to be at somebody s cost; either the client or someone else, depending on who is to be blamed. Following this idea, some projects with cost overruns of between 0-10 percent of the initial budget could have also been used in this research, if this study was not limited by the poor cost performance definition. It is conclusive that although in this research the interviewees perceptions aligned with the definition of poor and good cost performance of this dissertation, many other projects could have been studies as part of this research if the researcher had not specified a criteria for poor and good cost performance. However, the definition was developed to allow the author to make a comparison between projects; this limitation can be adjusted in further research, to allow flexibility in the selection of projects. 5.3.2.2 Generalisability In the Discussion Section, the author could confirm two different theories: BENEFICIARIO COLFUTURO 2012 96

Discussion 1. The lack of certain Critical Success Factors causes cost overruns in construction projects in the UK. 2. The presence of certain Critical Success Factors prevents cost overruns in the UK. However, there are some limitations to generalise these theories. These limitations are discussed below. Industry of study This research studies the main causes of cost overruns and the CSFs that help prevent these overruns in the construction industry. For this reason, the author not only carried out a review of literature about these two subjects in construction projects, but also used six construction projects as case studies in this research. Therefore, these projects were constructed by companies that are part of the construction industry. For this reason, the results from this research may only be generalised for construction projects and not for projects from any other of industry. Country of study As mentioned in the research design [See Section 3.5], this research used projects that were constructed in the United Kingdom. Hence, the results obtained in this research may not be generalised for construction projects in other countries. Even though construction projects worldwide have similar characteristics, there are some different issues in each country that can have an impact on the construction projects, such as weather conditions, economic situation, social stability and political stability. Type of company of study The research design has also used a specific type of company, to be studied in this study [see Section 3.5]. In other words, the multi-case study used projects constructed by two top contracting companies in the UK. For this reason, the results obtained from the analysis of these projects are analysed from the contractor s point of view, and not from the client or consultant point of view. Therefore, it is unknown if the Critical Success Factors indentified BENEFICIARIO COLFUTURO 2012 97

Discussion in this research are also considered as factors that influence the cost performance of a project from the consultants and/or client s point of view. On the other hand, the companies used in this research are top contracting companies from the UK, which have been in the construction market for a very long time and have significant number of employees [See Section 4.2.1]. For this reason, it is also unknown if the findings from this research would be applicable to small and medium-sized contractors. 5.3.2.3 Possible bias in data collection Possible bias in interviewees responses Although the use of different sources of information can reduce bias in the case studies reports, there are some issues that could have been further improved in this research. As mentioned before, the sources for each case study were the documentation and the interview with someone who had worked on that project. However, this research focused on a potentially sensitive topic of poor cost performance on projects and this could have caused bias in the interviewees answers. Although the interviewees answers were also complemented with the use of documentation, the quality of the research could have been improved with triangulation. For instance, more people, who had worked on those projects, could have been interviewed and then the information between interviewees could have been compared. Therefore, the use of more sources could have improved the quality of the research. In this research, the triangulation was not done due to time constraints and the difficulty of finding people willing to be interviewed about this topic. 5.3.2.4 Conclusion of Limitations Although this section showed some limitations of this research, the overall quality of the work is sound and not undermined by these minor issues. For this reason, the next section aims to cover areas for possible further research, which uses some of the limitations mentioned above. 5.4 Chapter Summary This chapter provided a discussion of the results from the case studies and a comparison of these results with the existing literature. The discussion concluded that Olawale s study can BENEFICIARIO COLFUTURO 2012 98

Discussion be used to answer one of the objectives of this project, which was to identify the main causes of cost overruns in construction projects in the United Kingdom [see Section 5.2.1]. The discussion has also reached to the conclusion that hypothesis 1 and 2 are valid, which was concluded with the cross-case analysis between the projects that constituted the multi-case study. Therefore, the confirmation of these hypotheses helped in partially meeting another objective of this research; to identify the critical success factors that improve the possibility of avoiding, or preventing, cost overruns in construction projects, in the UK. This objective could not be fully met because the number of projects, used in the multi-case study method, was not enough to generalise and identify a definitive list of critical success factors. However, the list of CSFs developed can be used as basis for further research. On the other hand, this chapter also critically evaluated this work and suggested some ideas for further research. BENEFICIARIO COLFUTURO 2012 99

Conclusions and Further Research CHAPTER 6 6 Conclusions and Further Research This chapter provides the conclusions of this study, which are based on the review of literature and the results from the case studies. This section also presents some suggestions for further research, which are mainly based on the limitations discussed in Chapter 6. 6.1 Research Objectives Construction industry is considered to be dynamic industry which is constantly facing uncertainties that make the management of costs difficult and consequently, causes cost overruns. For this reason, cost overruns have been considered as one of the most critical issues during the execution of construction projects. On the other hand, it has been said that certain critical factors can help improve cost performance and prevent cost overruns. Therefore, the main objective of this research was to identify the Critical Success Factors that can help improve the possibility of avoiding, or preventing, cost overruns in construction projects, in the UK. Along with this objective, the research focused on two more objectives, which were: To identify the main causes of cost overruns in construction projects, in the United Kingdom. To understand the existing literature on Critical Success Factors and identify the most recent studies regarding CSFs in construction. In order to meet these objectives, the author critically reviewed some existing studies and used a multi-case study that constituted of six different projects within the construction sector. For this reason, each of the objectives is described below and the way in which this research met those objectives. BENEFICIARIO COLFUTURO 2012 100

Conclusions and Further Research 6.2 Key findings of the research To identify the main causes of cost overruns in construction projects, in the United Kingdom Studies regarding the main causes of cost overruns in construction projects have been carried out in different countries; however, there were only two studies that focused on the United Kingdom. For this reason, these studies were compared and critically reviewed in Chapter 2. Moreover, a list of 20 main causes of cost overruns was concluded, as suggested by Olawale (2010). These causes are: 1. Design Changes 2. Risk and uncertainty associated with projects 3. Inaccurate evaluation of project s time/or duration 4. Non-performance of subcontractors and nominated suppliers 5. Complexity of works 6. Conflict between project parties 7. Discrepancies in contract documentation 8. Contract and specification interpretation 9. Inflation of prices 10. Financing and payment for completed works 11. Lack of proper training and experience of PM 12. Low skilled manpower 13. Unpredictable weather conditions 14. Dependency on imported materials 15. Lack of appropriate planning 16. Unstable interest rate 17. Fluctuation of currency/exchange rate 18. Weak regulation and control 19. Project fraud and corruption 20. Unstable government policies BENEFICIARIO COLFUTURO 2012 101

Conclusions and Further Research This research have also compared this list with the main causes of cost overruns found after the analysis of three poor cost performance projects which were part of the multi-case study strategy used in this research. The evidence from this study supported the list taken from Olawale s study due to the fact that the main causes of cost overruns identified in this research matched with those suggested by Olawale (2010). To understand the existing Critical Success Factors literature and identify the most recent studies regarding CSFs in construction. This objective was met with the review of different types of studies. Firstly, the author conducted a review and critical analysis of the most significant studies that have been carried out regarding CSFs in projects. The conclusions from this review were: 1. This review was used to determine the definition of project success and Critical Success Factors that was going to be used in the development of this research. This definitions are: Project Success: success of a project means that the objectives of the project for a given participant were met Critical Success Factors: those factors that determine the success of the achievement of project objectives: Budget, quality and schedule 2. it can be concluded that there is not a unique list of critical success factors for projects; however, all the CSFs mentioned by different authors can be used as a guide for the management of projects to improve project performance because they took into account internal and external factors that nfluence the performance of projects. The second type of studies attempted to identify the CSFs that influence construction projects. From this review, it was concluded that there is a relationship between the CSF and the achievement of the project s objectives which are: finishing on time, on budget and with good quality. However, it was noticed that there were not many studies that had attemped to identified the CSFs that influence cost performance in construction projects. Thererfore, this dissertation had attemptted to fill this gap by confirming that some CSFs that had an influence in the cost performance of construction projects. For this reason, the review of these studies BENEFICIARIO COLFUTURO 2012 102

Conclusions and Further Research was used to create the theoretical foundation of this project in which some hypothesese were formulated to be confiremed or reject with the used of a multi-case study. It can be concluded that the review of studied regarding CSFs in projects was neccesarry to set the theoretical foundation of this reserach, due to the fact that it identidied the gaps and main issues thata can be addressed. To identify the Critical Success Factors that can help to improve the possibility of avoiding or preventing cost overruns in construction projects in the UK To meet this objective the review of literature was used as a basis. Firstly, based on the theoretical review about some studies that were trying to identify the critical success factors that improve cost performance in construction projects, a list of critical success factors was created and some hypotheses were formulated to be confirmed or rejected with the use of case studies. Though a positivis approach these hypotheses were resred and the were two different conclusion. Firstly, Hypothesis 1, The lack of certain Critical Success Factors causes cost overruns in construction projects in the UK, is valid. This conclusion was made after a detailed cross-case analysis between the poor cost performance projects, which demonstrated that the some factors were not present in this projects and were considered as those factors that could have prevented some problems during the execution stages of the project; problems that led to cost overruns. The second conclusion was that Hypothesis 2, The presence of certain Critical Success Factors prevents cost overruns in construction projects in the UK was also valid. This conclusion was made after a detailed cross-case analysis between the good cost performance projects, due to the fact that certain factors were present in these projects and were considered to have a positive impact on the cost performance. Based on the confirmation of these hypotheses, it is concluded that this objetvice was partially achieved. This is because although the case studies confirmed that there are certain Critical Success Factors that improve the possibility of avoiding or preventing cost overruns on BENEFICIARIO COLFUTURO 2012 103

Conclusions and Further Research construction projects in the UK, a definitive list of CSFs cannot be concluded from this research due to the research s limitation regarding generalisation of results. A list of CSFs is suggested, based on the case studies results and the comparison of these results with the existent literature. Nevertheless, it cannot be concluded that this list cover all the CSFs that have an impact in the cost performance of construction projects; however this is a list of the most common CSFs that can help preventing cost overruns. As it was mentioned before, these factors varied depending on the project and the amount of projects in this research is not enough to generalise the results. However, these factors can be complemented with further research. The factors are: Project manager competency Contractor s competency Client commitment to getting the job done Good relationship between project parties Accuracy of plans and initial information Adequate specifications Early involvement of the contractor Accurate selection of form of contract Client's involvement and feedback Availability of funding Initial identification of all the risks Architect's competency 6.3 Recommendation for further research There are different proposals for further research that can be suggested after this research. These suggestions are mentioned below. This research concentrated on the cost performance of construction projects in the UK. However, in construction projects, time and quality are also important success parameters for a project. For this reason, a recommendation for further research is to explore the CSFs that influence the time and quality on construction projects. Then, the research can incorporate three main objectives and analyse the CSFs that impact the overall performance of projects. BENEFICIARIO COLFUTURO 2012 104

Conclusions and Further Research This research confirmed the fact that there are certain Critical Success Factors that can help avoid or prevent cost overruns on construction projects, in the UK. However, the use of a multi-case study strategy in this research did not allow finding a unique list of Critical Success Factors that can prevent cost overruns. This was primarily due to the fact that the number of cases required for literal and logical replication, were not enough to generalise. For this reason, a suggestion for further research is to conduct a survey in which the sample size is adequate to generalise and create a unique list of CSFs that can improve cost performance on projects. Based on the suggestion above, the survey can be done in two different ways. Firstly, the survey can be sent to contractor companies and a list of CSFs can be generalised for this type of company. Secondly, this survey can be sent not only to contractors, but also to clients and consultants. The last option could provide a comparison between the project parties perceptions and a complete list of critical success factors that influence cost performance on construction projects, taking into account the perception of all the project parties. Another suggestion for further research is to carry out the same multi case-study strategy used in this research, but with projects from the public sector. As it could be seen during the research process, this research used six different projects that were constructed by two different companies, both from the private sector. For this reason, a multi-case study in the public sector can be done to compare the results with this research. In that case, some different or similar CSFs can be found with this comparison. This research can be useful to understand differences between the public and private sector construction, in the United Kingdom. BENEFICIARIO COLFUTURO 2012 105

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Appendix A APPENDIX A: COVER LETTER OF THE PROJECT Dear Sir/Madam, Cost overruns in major construction projects in the United Kingdom Construction has been considered as a dynamic industry which is constantly facing uncertainties in its budgets, processes and technology. These uncertainties, the complexity of projects and the increase of stakeholders make difficult the management of costs in a construction project. Even though there have been improvements in the management of construction projects, cost overruns problems are still a critical issue. I am currently conducting an MSc research at the University of Warwick. The Research is aimed to identify the main causes of cost overruns in construction projects in the UK. However, for such a research programme to be successful, we need your support. As COMPANY is one of the UK leader company in construction, I would appreciate if you accept to have an interview. The main objective of the interview is to identify the main causes of cost overruns and critical success factors in some of the COMPANY S projects. The research will need you to provide information on some projects that your company has had engagement. The idea is to analyse two projects: one project that had presented cost overruns and one that had not had overruns. On the other hand, I would appreciate if you can bring some information about any project that had poor cost performance during its execution. Your identity and that the organisation you work for and the information you provide will be treated as strictly confidential and will be used for the purpose of the research only. For this reason, a confidentiality agreement will be signed by the company and the student. I look forward for your answer and welcome further discussion on this research. Yours Faithfully, Susana Gomez Arcila

Appendix B APPENDIX B: INTERVIEW PROTOCOL Critical success factors for cost performance I am currently conducting an MSc research at the University of Warwick. The research is aimed to identify the main causes of cost overruns in construction projects in the UK and identify the critical success factors that can be used to limit the occurrence of cost overruns. As part of this research, I hope to interview a number of professionals who are either senior project leaders or at the management level so that he or she may be able to appreciate the relevance of questions in the wider context of the whole project. Good cost Performance Poor cost Performance Interviewee 1 Interviewee 2 CASE1 CASE2 CASE 3 CASE 4 Definitions: Cost overrun: occurs when the final cost of the project exceeds the initial the original contract value at the time of completion. Critical Success Factors: factors that determine the success of the achievement of project objectives: Budget, quality and schedule. Good cost performance project: Project in which the cost overrun of the project does not exceed 10% of the initial budget. Poor cost performance project: Project in which the cost overrun of the project exceeds 10% of the initial budget. For this research, two projects will be considered to have good cost performance while other two will have poor performance. I plan to conduct four interviews [Approx. 60 minutes each]. Representatives of the four projects will be interviewed with specifically-designed questions which will address the following areas for each project: What was the project about? What were the originally targeted project objectives? What changes occur to those objectives during the execution of the project? How did the project perform in terms of cost? o Poor cost performance project What were the main causes of cost overruns? What were the critical success factors that could have prevented cost overruns in this project? o Good cost performance project What success factors were present in this project that enhances the cost performance and help to limit the occurrence of cost overruns? In addition, some questions will be related to the interviewee and the company were he/she is working. These questions about the company will try to understand the organizational culture and the way in which the organisation is structure. Thank you very much for your help. I sincerely look forward to the interview.

Appendix C APPENDIX C: CONFIDENTIALITY AGREEMENT THIS AGREEMENT is made the day of BETWEEN: [1] NAME OF COMPANY a company incorporated in England whose registered office is ADDRESS OF COMPANY; ["Company"] and (2) UNIVERSITY OF WARWICK of Coventry CV4 8UW and WHEREAS: [A] [B] Company is willing to support the student Susana Gomez Arcila [ the Student ] for a project as part of his/her degree programme at WMG [School of Engineering] at University of Warwick. As part of this support the Student will be assigned to the Company, and will have access to confidential information of Company [ Information ] about the business or affairs of Company which may come to his/her knowledge in the course of the assignment. The Student may need to disclose such Information to the academic supervisor and to certain other members of Warwick s academic staff [individually and collectively the Recipient ] to enable the assessment of the Student s performance [ the Purpose ], and only for this Purpose. NOW IT IS HEREBY AGREED AS FOLLOWS: 1. As a condition of the disclosure of Information to Recipient [either direct from Company or via the Student], Recipient agrees as follows: 1.1 to hold Company s Information in the strictest of confidence and secrecy and not to disclose or make available to third parties any part of the Information without Company s prior written consent; and 1.2 to treat Company s Information as it would treat its own confidential information and to take precautions against disclosure of Information to third parties at least equivalent to those normally taken by itself in the regular course of its business; and 1.3 to use Company s Information only for the Purpose. 2. The restrictions upon the disclosure of Information will not apply to Information which: BENEFICIARIO COLFUTURO 2012 114

Appendix C 2.1 is now publicly available; 2.2 subsequently becomes publicly available, otherwise than as a result of a breach of this Agreement, but only after it has become publicly available; 2.3 the Recipient at the time of disclosure already has in its possession and which is not subject to any obligation of secrecy on its part to Company. 3. The Student shall have freedom to publish in accordance with normal academic practice but will first confirm permission from the Company in respect of confidential Information. 4. This Agreement shall not be construed as granting to the Recipient any licence or other rights to any of Company s Information except as expressly stated above. 5. This Agreement shall be deemed to have commenced on the date of its execution by the last of the parties to sign it and the obligations of confidentiality and restricted use shall continue in effect for a period of five [5] years from such date. 6. The Student remains bound by all terms and conditions of Warwick. 7. The Company will allow the Student to attend its premises for the purpose of the project and shall be wholly responsible for the Student whilst on its premises. The periods of such attendance will be mutually agreed. The Student undertakes to comply with all rules and regulations in force at the Company s premises which the Company will provide directly to the Student. 8. This agreement may be terminated by mutual consent, not to be unreasonably withheld by either party. This Agreement shall be construed in accordance with the law of England and Wales and the parties irrevocably submit to the non-exclusive jurisdiction of the courts of England and Wales to settle any disputes which may arise in connection with this Agreement. Neither party shall assign any of its rights and obligations under this Agreement without the prior written consent of the other. BENEFICIARIO COLFUTURO 2012 115

Appendix C The parties have shown their acceptance of the terms of this Agreement by executing two [2] copies of it. Each executed copy shall count as an original. For and on behalf of: Signature: Name: Position: Date: For and on behalf of: UNIVERSITY OF WARWICK Signature: Name: Position: Date: Signed by the Student to confirm his/her acceptance of his/her obligations under this agreement: Student name [print]: Signature: BENEFICIARIO COLFUTURO 2012 116

Appendix D APPENDIX D: INTERVIEW QUESTIONS SECTION I: GENERAL INFORMATION Information about the interviewee 1. What is your title of current position? 2. What is the number of years of experience you have in the construction industry? 3. What is the number of years you have been working at you current position? 4. Are you working in the Public sector or Private sector? 5. Which type of organisation are you working with: client, contractor or consultant? Information about the company 6. How many people are employed by your organisation? 7. How long has your company been operating in the construction industry? 8. Having had experience in other company. In your experience, are there any specific factors in this company which might influence cost performance? For example, very aggressive tendering mentality which means that you pay a very low price for the tender which might be a reason for cost overruns? SECTION II: GENERAL QUESTIONS ABOUT PROJECT PROJECTS PERFORMANCE Main causes of cost overruns and critical success factors in construction projects 9. If I am defining cost performance and I am saying that: Less than 10% overrun is a good cost performance and more than 10% is a poor cost performance project, do you agree with this definition? If not, how do you define a good and poor cost performance project? BENEFICIARIO COLFUTURO 2012 117

Appendix D 10. Based on all the years that you have work in this industry; can you please tell me what the main causes of cost overruns in construction projects are? Do you think on any additional cause? 11. If we considered that Critical Success Factors are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule Based on your experience; which of these factors are the most important in a successful project? Do you think on any additional? Crtical Success Factors Adequacy of funding Adequacy of plans and specifications Budget updates Constructability Economic risks Owner's involvement and frequent feedback Owner's commitment to established schedules and budget Project Manager commitment and involvement Project Manager competency/experience Realistic obligations/clear objectives Risk identification and management SECTION III: POOR COST PERFORMANCE PROJECT Information about the project 12. What was the project about? Project Type: Residential, commercial, office, educational, health, industrial. 13. What was the project mission? 14. How long was the contract of the project? 15. Did the project have a time overrun? [Alternative, if it had a time overrun]

Appendix D 16. Do you thing that the time overrun had an impact on the cost performance of the project. How? Why? 17. Roughly what was the percentage of changes in this project To what degree do you think this changes cost performance of the project? Information about the project cost performance 18. Why do you think the performance of this project is poor with regards on cost? 19. Does this project encounter cost overrun? 20. Can you please explain what the main causes of cost overruns in this project were? Critical success factors influencing cost performance in this project 21. If we considered that Critical Success Factors are those factors that determine the success of the achievement of project objectives: Budget, quality and schedule. What are the critical success factors that were not present in this project and you think could have helped to prevent poor cost performance in this project? Can you please explain why and how could have been improved? 22. Can you please mention the actions that were taken to reduce the impact of cost overruns? SECTION IV: GOOD COST PERFORMANCE PROJECT Information about the project 23. What was the project about? Project Type: Residential, commercial, office, educational, health, industrial. 24. What was the project mission? 25. How long was the contract of the project? 26. Did the project have a time overrun? [Alternative, if it had a time overrun] BENEFICIARIO COLFUTURO 2012 119

Appendix D 27. Do you thing that the time overrun had an impact on the cost performance of the project. How? Why? Information about the project cost performance 28. Why do you think the performance of this project is good with regards on cost? [Can you please compare and contrast with the performance of the other project] 29. Does this project encounter cost overrun? [The answer should be no, or at least less than the other project 30. What were the actions taken in this project that helped to have good cost performance? Critical success factors influencing cost performance in this project 31. What are the critical success factors that you think were present in this project that helped to avoid cost overruns in this project SECTION V: COMPARISON BETWEEN GOOD AND POOR COST PERFORMANCE PROJECTS 32. Which factors were present in the good cost performance project, but were not present in the poor cost performance project? Why do you think this happen? BENEFICIARIO COLFUTURO 2012 120

Appendix E APPENDIX E: CASE 1-GOOD COST PERFORMANCE PROJECT Project Background This project is a new school constructed by Willmott Dixon. This project consisted on the construction of Post 16 centre. In other words, a 16 plus aged students school. The contractor, in this case Willmott Dixon, was chosen by the county council with a contract of 63 weeks duration. This project was an educational charitable trust founded project with a 15 million pounds contract which aimed to educate more than 3000 students across its academies. In addition, this project supports education growth, helps in the development of young people, produces employment opportunities and improves community facilities. The Post 16 facilities include a range of classroom sizes and open learning spaces, with clear articulation and circulation, together with a new restaurant and dining terrace, fitness suite, performance spaces, library, new business centre and flexible use spaces for use by the community and students alike Important issues in the project execution This project started in 2010 and it had a very good design team which was working together with the contractor [Willmott Dixon]. The design and planning stage started early in the process. During this stage, the contractor, the county council, the architect team, the electrical engineers and other subcontractors were working together to get the planning work in advance. In the same way the problems during the execution were tackled. In other words, the team tried to sort out each problem discussing all together the solutions. Project overall performance This project was considered as a very good performed project due to the fact that it was finished two weeks early than expected and some saving was made along the way through some value engineering. The contractor gave the client some money back and made a reasonable profit out of it. In addition, the contractor impressed the client with the installation BENEFICIARIO COLFUTURO 2012 121

Appendix E of an innovative heating and ventilation system which helped also to reduce the annual running costs Factors influencing the good cost performance In this project, there were some actions that help to improve the cost performance of this project. Initially, prior to starting the works, which is normally called pre-construction stage, the contractor got everything sorted out, all the plans, the initial information, designs, form of contract and ways of communication between parties. This factor was very useful because it reduced future changes to the design and improves the control process of the project. Another factor was that the right people were on the job: the contractor [Willmott Dixon], a very good architect team and the right client. In other words, they were competent and had the skills and knowledge to do this job. The contractor's and architect s knowledge and experience helped in two different ways. The experience of the contractor helped to cope with problems during the execution of the project and the architect s good performance improve the quality of design which reduced design changes during the execution of the project. In addition, in this project the contractor had a good relationship with the architect and client company because they had worked together in past projects which were very useful in the planning and execution of this project. Wilmott Dixon was aware of architect team s knowledge and background and they also knew that the architect company was the right people for the job. Additionally, the client was also the right client on the job. Although in construction projects you cannot always choose your client, in this project the client was the county council who was always keen on getting the job done and having good relationship with the contractor team. For this academy the end user was a non-profit organisation that sponsors the job and then run the job. In this project, this organisation had run the school for 25 years. They used to go to the construction site and give the contractor some insights into what they wanted in the building. For this reason, the design changes were controlled and made as the end user wanted to use the building. The contractor got the input from the end user which worked very well. The relationship between contactors, clients and subcontractors is very important and in construction projects it becomes a big plus. In addition, the right people on the job is also a big bonus because the management of the project run smoothly if everybody know what they are doing. BENEFICIARIO COLFUTURO 2012 122

Appendix E Forward planning is a highlighted factor in this project because it helps to get job on time and on budget. Having all the necessary and right information before starting is very important, because it reduces the possibility of future problems and improve the accurate control of the project. Finally, the funding was another CSF because this was sorted out, signed, sealed and delivered before the job started. Additional details This contractor won a recognition called value project of the year because of the delivery of this project, not only because the savings the contractor achieved in this project, but also because of the innovative heating system they installed in this project Additional questions Some additional questions related to the topic covered before where asked to the interviewees to understand the definition the interviewee has about a good cost performance project and the way in which the interviewee choose this project as the case to talk about. Defining good cost performance project a good cost performance project is that project in which there is not cost overrun. In the current climate, it is important to build it on time and on budget, because any time or cost overruns is going to be an extra cost in which somebody, such as contractor and client, is going to incur. Critical success factors in construction projects In construction projects, such as this project, there are some factors that can influence in the success of the project. However, some of those factors are most critical than others and usually the presence of those factors help to achieve projects goals. Mainly, these factors are BENEFICIARIO COLFUTURO 2012 123

Appendix E the funding, good plans, budgeted dates because you need to know where your money is going, and the economic risks. In addition, the owners involvement and the owners commitment are two of the big things and that includes project management commitment. Competency of the project manager is also important because if you are dealing with someone who is not competent then that could be a major problem. If these factors are evaluated from the architectural point of view, to get on cost, the main factors are planning controls, adequacy of the planning, where you got competencies and where you need architectural competency. If the architect does not produce very good plans, it makes life more difficult. BENEFICIARIO COLFUTURO 2012 124

Appendix G APPENDIX F: CASE 2-POOR COST PERFORMANCE PROJECT Project Background This project was an extension refurbishment of an existing school constructed by Willmott Dixon. The main idea of this project was to improve the environment in the school and in this way improve the academic development of students. The refurbishment includes the construction of science labs, dining facilities, new kitchen construction and computers and technology labs construction. The clients of this project were a local authority, it was a council job. Important issues in the project execution There were some problems during the execution of this project. For instance, the project manager that was in charge of this project was not performing well in this job. It can be said that getting on with your client is a big part of the construction projects and it is an issue that can determine the success or failure in a project. In this case, the project manager did not have a good relation with the client which influences the performance of the project. In addition, the clients were complaining about the quality of the job and they attribute the poor quality to the project manager competency which was in charge of the workers. For this reason, there were problems with the client because of three main reasons: the building was not going the way it should; things were not to the quality that the clients were expecting and the client was complaining because of the bad relationship with contractor. All these reasons combined to the point where, the company had to get rid of the project manager and find a new project manager to take on the job. However, all the things that the project manager led to his removal that were not right, and had to be put right, increase the cost of the project. Although the beginning of the project was not good, the new project manager could finish the job and they put everything right and finished it to a good standard. In this project, the funding was not a problem because the job was reasonably sized project and the funding was sorted out, signed, sealed and delivered before the job starts. There was some enabling works to do on one job, so the contractor had a budget to do enabling works BENEFICIARIO COLFUTURO 2012 125

Appendix G and then a budget to do the other job. With this company, Willmott Dixon, the funding is guarantee before the work starts. Project overall performance The job took longer, overran for probably about three months. The contractor did get a very good recommendation from the client when they finished the project, because the client valued the fact that the contractor did complete the job and they did not walk away from the job. In addition, the project finished to a very good standard. However, the problems that the project had during its planning and execution stages caused a significant cost overrun [over 10% of initial budget] which means that the project did not performed as expected. For these reasons, the project Main reasons for cost overruns in this project There were some factors that cause cost overrun in this project. The first cause of this poor cost performance was the incompetency of the project manager that it was on the job. As mentioned before, the project manager did not have the experience and skills to manage this kind of projects. In addition, the client was a local authority and the people dealing with that particular project were not as helpful as they could have been to improve the relationship with the project manager. For these reasons, the relationship between the client and project manager was not good which had a negative impact in the project performance. In construction projects you would think that everybody involved in the job would be very helpful in trying to get the job done. However, in this project, the architects and the consultants were not as good as they could have been. For this reason, the initial information was not as accurate as expected which cause client changes during the execution of this project. For example, there are things happening outside of the contractor unit, such as furniture, computers and all sorts of equipment arriving to the buildings as expected. However, the delay in the construction of the project disrupts the school as they have got plans for people to move in, they have got furniture arriving at the site but the building is not complete to accommodate them, and all such problems. Another problem then is that if these subcontractors are put on hold and stop from coming, they have got other work booked BENEFICIARIO COLFUTURO 2012 126

Appendix G around school holidays. Especially since a lot of companies that deal with schools, do a lot of work in the school holidays. So when the project is ready to receive them, they will not be able to come back. Therefore, these factors caused cost overrun in this project. Factors that could have improved cost performance Putting the right person on the job is the key, specifically on sides that is, project manager, architects and the consultants; you need the right people on the job for the type of job it is with the knowledge and experience to cope with all the demands. For example, if there is the construction of a new building or an old building upgraded to a listed building, not everybody will be good at both, due to the fact that people are more experienced in one or the other. For this reason, the project manager competency was a factor that could have help to prevented quality problems in the job and time delays. In addition, as mentioned before the client was not as helpful as they could have been, for this reason a factor that could have help to prevent some problems, such as time delays and poor relationship between parties could have been client commitment to get the job done. In the same way, good relationship between client and contractor could have helped to improve cost performance. Finally, forward planning, before starting, all necessary plans and accurate information should be in place to avoid time delays and reduce clients changes.. Actions taken to reduce cost overrun In this project the only thing the contractor did, was trying to get it done as fast as they could and that means employing more subcontractors and extra members of staff to manage the works. They tried to rush it, they might not follow the logical sequence, but they were backtracking to try and correct the works. Poor cost performance and causes of cost overruns In order to compare the expected reasons of cost overruns in construction projects with the reasons of cost overruns in this specific project, the interviewee was asked to mention the most common reasons of cost overrun in construction projects. In addition, the interviewee BENEFICIARIO COLFUTURO 2012 127

Appendix G was asked to define poor cost performance to understand why the interviewee chose this project as a case to talk about. Defining poor cost performance project In the current climate, any overrun will be classed as poor. It is important to build it on time, to budget, because anything that overruns is going to be at somebody s cost; either the client or someone else depending on who is to be blamed. Causes of cost overruns In order to compare the expected reasons of cost overruns in construction projects before starting the project with the reasons of cost overruns in this specific project, the interviewee was asked to mention the most common reasons of cost overrun in construction projects. Main causes of cost overruns in construction projects The most common causes of cost overrun in projects in the UK are the bad weather or client s variations. Usually the client wants the contractor to do some extra work or change something that it was not specified since the beginning of the job. On the other hand, the performance by subcontractors could also cause overruns, however this performance does not often raise costs because of the overall penalty clauses. These clauses stated that if the subcontractor does not finish the work, they get charged. BENEFICIARIO COLFUTURO 2012 128

Appendix G APPENDIX G: CASE 3-GOOD COST PERFORMANCE PROJECT Project Background This project was a construction of a new phase of one secondary school in the UK for 1175 students. This project consisted on the construction of 2400 m 2 building. This building had classrooms for the students, accommodations, rooms to have meetings, an atrium and a drama studio. This project was considered an opportunity to improve the learning environment and provide much better facilities to students of the community. In addition, this project was owned the county council with a contract of 5 million pounds for the construction of this new phase. In addition, the project was expected to finish within 52 weeks. Important issues in the project This project was procured using the partnering framework called SCAPE which is an authority-controlled company. In this framework, the whole team is appointed to work at the earliest stage and contributed to briefing and design. This framework was an advantage for the contractor, Willmott Dixon, during the tendering process. In addition, this project also used another framework called Soft Landings for schools. Soft Landings help to make buildings that perform better and much more sustainably. For this reason, this framework helped during each of the stages of the construction of the school. The soft landing frameworks used the feedback from previous buildings to assess the performance of the current construction. In this project Willmott Dixon had a workshop during the execution of the project in which the project team, design team, clients and some subcontractors assist to assess the project development. The feedback was useful for Willmott Dixon to improve the performance in this project and future projects. Project overall performance This project can be considered as having good performance for different reasons. Firstly, the project was expected to be finish within 52 weeks; however the project was delivered ten BENEFICIARIO COLFUTURO 2012 129

Appendix G weeks early. In addition, there was a saving of approximately 30 thousand pounds comparing with the initial budget. In addition, the initial agreement was that the contractors and the client were going to share savings. For this reason, the contractor was actually able to reinvest a certain amount of the client s money into the building to improve its performance as well. Factors influencing the good cost performance There were some main factors that influence the good cost performance of this project. The first factor was actually a very early involvement of Willmott Dixon throughout the SCAPE framework, which meant that the contractor worked very closely with the client and architects in getting a robust cost plans and accurate design. If in the initial stage you have got contractor involvement then you can close out all the risks, and that was why the job has good cost performance. Adequate plans and specifications which were improved in the preconstruction stage, is also a factor that influenced the good cost performance because the construction started with the right design information which reduced client s changes during the execution of the project. Additionally, SCAPE provides an open book sort of contract approach, very much partnering with shared incentives to both client and Willmott Dixon, where the parties come under the cost plan, communication plan and would share savings. For this reason, a good relationship between contractor and client helped to reduce conflict during the project. Finally, in this project there was not any problem with the funding which helped to avoid problems during the planning and execution of the project.. Good cost performance and critical success factors Some additional questions related to the topic covered before where asked to the interviewees to understand the definition the interviewee has about a good cost performance project and the way in which the interviewee choose this project as the case to talk about. Defining good cost performance project BENEFICIARIO COLFUTURO 2012 130

Appendix G In this case, a good cost performance project is that project the cost overrun is between 5%- 10% of the initial budget due to the fact that construction projects have usually around 5% risk contingency. Critical success factors in construction projects In construction projects, such as this project, there are some factors that can influence in the success of the project. However, some of those factors are most critical than others and usually the presence of those factors help to achieve projects goals. In this case the adequacy of plans and specifications, risk identification and management and budget updates. It is very important to keep the client fully aware of the budget changes and updates. What Willmott Dixon tend to do is to create an independent financial forecast every month, so the contractor know the client is getting the contractor s view of the account. The main idea is to give the client realistic updates of where the job is going really and the money that it has been spent. These factors are those factors that can help a project to succeed and have a good cost performance. BENEFICIARIO COLFUTURO 2012 131

Appendix H APPENDIX H: CASE 4-POOR COST PERFORMANCE PROJECT Project Background The project consisted on the construction of a research building of 2.300 m 2. This building is design to improve and increase the research and technology transfer in the region. The design of this building was made through a joint venture company of two well known architectural companies. The funding of this project was provided by the University in which is constructed and a European regional development Fund. For this reason, the one of the departments of the university is the client of this project. This was a 5.2 million pounds contract with a 51 weeks expected duration. Important issues in the project execution From the client s point of view, this project is not over-budget but from the original contract value it has gone up significantly. The project has not fallen out because the client has got a good budget, but most of it is down to probably the form of contract because the contractor needed to get on site quickly and with the funding. The client went through the Design and Build contract which they had not used before because they used to have traditional forms of contracts in their previous projects. For this reason, it was difficult for the client to understand some of the specification issues and they tweaked a lot of things as they got more and more involved in the project. These changes resulted in 400 thousand worth of costs. Although client could afford it because they got a good budget, but form the contractor point of view this project went significantly wrong regarding cost management. Project overall performance The performance is considered as poor due to the fact that it had 2 weeks time overrun and the cost of the project was over budget. Initially the value contract of the project was expected to be 5 million pounds and the final cost of the project was 5.6 million pounds. For this reason, this project has been considered as a poor cost performance project. BENEFICIARIO COLFUTURO 2012 132

Appendix H Main reasons for cost overruns in this project The main causes of cost overrun in this project were mainly the client s variation and the selection of form of contract. As mentioned before, the clients did not understand the specifications of the contact that they decided to choose. For this reason, the flexibility of the project for client changes was not as expected. Then, if the form of contract had been carefully analysed, the client changes would have not increase the costs as they did. In addition, the employer s requirements were not fully detailed which means that the adequacy of plans and specification was not accurate. Finally, some design information and some of other issues, such as unidentified services, were not shown on any of the drawings and were not really identify in the planning stage. Factors that could have improved cost performance Based on the reasons mentioned above, there are some factors that could have improved the cost performance of this project. Firstly, in this project there was no problem with the funding, the problem was purely just getting on site to hit funding. As mentioned before the European Union Fund Board was providing the funding they have to just give start-on-site dates and completion dates to ensure that they get the funding. They just had to get it out and get it to tender quickly, and there was not the full information on site to start working. For this reason, the lacking factor was the adequacy of plans and specification which were not on time to start the project. In addition, if the project had had addecuate of plans and specifications the form of contract would have been analysed. In this case, one of the main reasons of cost overruns if that the client decided to use a Design and Build contract in which any change caused increases of costs. On the other hand, this was the sort of project that cost overruns was rushed on to site with no proper thought given to contractor involvement. If in the level of detailing the project had got contractor involvement then the risks of misunderstanding in the employer s obligations had been reduced and the information of the planning stage would have been fully detailed. Actions taken to reduce cost overrun BENEFICIARIO COLFUTURO 2012 133

Appendix H The actions that were taking in this project to reduce cost overruns in this project were: to look at some value engineering, some of the provisional sums; some of the provisional sum allowances were expended. These were the only actions taken because, because there was not a problem on budget over running from the client s perspective. Poor cost performance and causes of cost overruns In order to compare the expected reasons of cost overruns in construction projects with the reasons of cost overruns in this specific project, the interviewee was asked to mention the most common reasons of cost overrun in construction projects. In addition, the interviewee was asked to define poor cost performance to understand why the interviewee chose this project as a case to talk about. Defining poor cost performance project In this case, a poor cost performance project is that project that has cost overruns of more than 10% of the initial budget. For this reason, a project can be considered a poor performed project if the final budget is over 10% the initial. Main causes of cost overruns in construction projects The possible expected causes of cost overruns in construction projects and in this case study are mainly three. The first cause is the use of a wrong form of contract from the client s perspective. In other words, choosing a Design and Build Contract rather than a traditional contract, in the sort of context where the client want more control on the finishes of the building. A Design and Build contract is more expensive than a traditional due to the fact that this contract have employee s requirements and as long as you meet the employees requirements, you can tweak them, and sometimes that does not suit all clients expectation because they want to make changes and that can be very costly. On the other hand, another main cause of cost overrun is not having enough information and starting the job on-site with poorly detail information. The third factor can be choosing the cheapest contractor and not fully investigating the reasons as to why they are cheap in the first place. Sometimes, clients choose the cheapest contractor and this contractor cannot cope with the project requirements BENEFICIARIO COLFUTURO 2012 134

Appendix H due to lack of knowledge, capacity or experience. For this reason, one cause of cost overruns is the lack of competency of the contractor for the job. Finally, late issuance of information typically is another issue, because sometimes if the information had to be revised by the client, this process can delay the information release.. BENEFICIARIO COLFUTURO 2012 135

Appendix I APPENDIX I: CASE 5-GOOD COST PERFORMANCE PROJECT Project Background The project was a new materials and analytical sciences building in a University in the UK constructed by Company B. This project was comprise by 4795.5 m 2 which were constructed with the main idea of supporting world class specialist science and achieve a high BREEAM rating which was one of the University s aspirations for an environmental sustainable campus. This project was a 17 million pound Design and Build contract and the main client was the University that was constructing this laboratory. Important issues in the project execution This project was essentially negotiated with the university, so the contractor had a small tender competition based on their staff and their people. During this process the university analysed what the contractor could add to the process and how they could work with the university to develop the scheme and to develop the design. Finally, Company B was selected on the basis of that and then both parties [the university and the contractor] had a six month period where contractor, client and designers work together developing the design to come up with the building that the university wanted, whilst they were also negotiating the cost of the job. Therefore, the contractor was very much involved in the actual design of the project and the development of the specification and the drawings very early in the process which is how this company tend to work. This company likes to be involved and influence things and bring their expertise of how projects should be built the problems that they commonly experienced on site, because very often designers do not think about the problems that can have during the construction. The performance of this project was good in regards of cost because it was controlled. It was a design and build contract in which the responsibility of the design an d build was with the contractor company which was good because this company is best place to control this kind of projects than an architect or an engineer. The contractor company was in controlled of the designers, they were responsible to get the information right and on time, so they can build BENEFICIARIO COLFUTURO 2012 136

Appendix I and coordinate it and looking for errors. They came up with a figure, contract to the university at the end of the tender period of 17 million pounds and we were responsible for constructing this project with that amount of money, unless the university changes they mind, we could not ever come back to the university and ask for more money. So, it was the passing of that whole risk of managing the information, managing the consultants and managing the coordination of that information, to the contractor who had experience in this area. This project had a time overrun [three weeks overrun for the weather] and 2 more weeks of changes that were asked by the client to be incorporated into the project. These changes from the university were most of them because the end users secured additional funding or had a fundamental change on how they wanted to use a room or a laboratory. For this reason, this project did not have cost overrun because funding was taking from other projects elsewhere in the university and allocated to this specific project. This project was a very controlled experience. If the contractor was asked for a change, the client asked how much that change was going to cost and the programme implication. The contractor had to calculate the price and the implication o the change. If those implications could have been managed, the decision was taken by the university with the advice of the contractor. Therefore, this project had this whole process in which any programme changes was analysed by the contractor who analysed the change cost and programme implication and then decided if the change was going to be incorporated or not. Project overall performance This project had 5 weeks time overrun in which three of those weeks were due to an incredible cold weather in December and January. There were temperatures on site of -16 degrees, so it was difficult to work with these conditions. Moreover, the project was closed for those three weeks. The other two weeks delay were cause due to the client s variation request which were decided within two months of the project to incorporate a change that the contractor could not do because there was not time to accommodate it. However, this change was very beneficial to the university. For this reason, the contractor decided to incorporate this change and incur a delay of two weeks. On the other hand, the project was on budget. For this reason, the project was considered a good cost performance project. BENEFICIARIO COLFUTURO 2012 137

Appendix I Factors influencing the good cost performance As an overall team, client, consultants and contractors worked extremely well together. They got on well together; they respected on each other and were also open. In conclusion, the relationship was completely straight and open about things which are massively important. In addition, the university had very clear requirements in terms of specifications, design of buildings and performance of buildings which help to control changes during the execution of the project and start the construction on time. These factors influence the good performance of this project. The six month period, in which the contractor was involved earlier, helped to clarify objectives which were captured within the design because the contractor brought their expertise of how projects should be built and the problems that they commonly experienced on site. This early involvement helped to reduce problems during the execution of the project and control changes. Another factor was the right selection of the form of contract, design and build contract, because the risks were manage by the contractor who had experience in this area. Additionally, the funding as well was an important factor because it was a negotiated project, so the contractor were not forced into a situation of taking jobs with a negative margin, which is what usually happen in the market. Therefore, clients and contractors were always looking to exploit any opportunity to recover any additional money and reinvest this money in the project. Good cost performance and critical success factors Some additional questions related to the topic covered before where asked to the interviewees to understand the definition the interviewee has about a good cost performance project and the way in which the interviewee choose this project as the case to talk about. Defining good cost performance project BENEFICIARIO COLFUTURO 2012 138

Appendix I A project is considered to have good performance when it has less than 10% overrun of the initial budget. In this case, everything over 10% is poor cost performance. Critical success factors in construction projects In construction projects, such as this project, there are some factors that can influence in the success of the project. The adequacy of plans and specification, realistic obligations, risk identification and planning and controlling are the most important. Additionally, honesty and transparency between the client and the contractors is also a very important factor to have good performance in a project. In other words, just being completely open and honest to each other, this is very easy to say but very difficult to achieve. That comes with people willingness to be honest. BENEFICIARIO COLFUTURO 2012 139

Appendix J APPENDIX J: CASE 6-POOR COST PERFORMANCE PROJECT Project Background The project was a school refurbishment project with a traditional form of contract. It was tendered competitively and in a period of recession [the economic situation was not good]. This client of this project was the City council and the contract had an expected duration of 19 weeks. Important issues in the project execution The information the contractor had from a tender was produced was inaccurate due to poor planning carried out by the client. In projects, the poor initial planning is directly responsible for the poor outcome. On the other hand, the client was a local authority, Birmingham city council who had a very slow decision making process. In other words, the council took long time to make any formal decision which caused time delays. In addition, the contractor had somewhere in the origin 2000 change requested that they had to manage process and include in the process. The project run out of money, so the construction stopped the job waiting for further funding. This project was considered as an absolutely disaster. However, at the end the project ended up ok, because the client got what they were expecting. This case is a classic case about the consultant giving the contractor not accurate information and then not managing the construction process at all. Project overall performance The expected duration of this project was 19 weeks, however this project ended up with a 30 week time overrun. In addition, the cost of this project was 40% over budget which clearly shows that the performance of this project in overall was poor. BENEFICIARIO COLFUTURO 2012 140

Appendix J Main reasons for cost overruns in this project The main causes of cost overrun as mentioned before were poor initial planning from the client, client variations, poor performance consultant [client] team because of two main factors. Firstly, the client took long time making decisions. Secondly, the client did not understand the specifications of the form of contract that they chose in this project. Factors that could have improved cost performance The main factors that could have helped to prevent these cost overruns are: Firstly, the consultant team doing a much better job of producing initial design information because the information that the contractor received was wrong which cause many changes in the design. Secondly, taking longer during tender period to produce higher quality and accurate information, to identify all the risks. This identification of risks could have changed the form of contract due to the fact that from the client s point of view it should never have been a traditional contract, it should have been design and build contract to pass all the risk and coordination of plans to the contractor. Actions taken to reduce cost overrun The actions taken during the execution of this project were: to increase the control measures, make sure that every change, every error on the drawing and on a specification document was picked, monitored and recorded back to the client. In this way, the client knew the updates about the changes made to the initial budget and the way in which the money was being spent. For this reason, the contractor put control in places far as they could in terms of advising the clients of problems where they thought things were going wrong and they were continuously updating in a monthly basis about all these issues. Additionally, the contractor was constantly asking for information to the consultant team and put some deadlines to receive the information needed. The consultant still missed most of those deadlines but the contractor try to manage the consultancy team receive information before it created an impact. There is not anything else as contractor that they could have done to change that project. The fundamentals about what went wrong with the project, the form of contract and the poor BENEFICIARIO COLFUTURO 2012 141

Appendix J quality design information, were already there and in place before the contractor was engage with the project. Poor cost performance and causes of cost overruns In order to compare the expected reasons of cost overruns in construction projects with the reasons of cost overruns in this specific project, the interviewee was asked to mention the most common reasons of cost overrun in construction projects. In addition, the interviewee was asked to define poor cost performance to understand why the interviewee chose this project as a case to talk about. Defining poor cost performance project A project is considered to have good performance when it has less than 10% overrun of the initial budget. In this case, everything over 10% is poor cost performance. Main causes of cost overruns in construction projects The most common cause of cost overrun in projects in the UK is clients changing their mind during the course of the project. Change is biggest single influence on costs on projects and the timing of change is critical. For example, if the changes are made all at the start of the project the contractor can cope and deal with them and it does not tend to be a problem. However, if clients continue changing their minds during the course of the project, it creates cost problems. The second cause would be the financial performance of the job. In other words, if a contractor tenders the job and the contractor is losing money from this job, it would be a natural reaction to try to recover that money back from the clients and so the contractor looking to recover money and profit will cause problems in the project. The third cause is about the procurement of the job, the form of contract whether it was a traditional contract or a Design and Build contract. As a client you will get much less cost overrun on a Design and Build projects that have been tender properly, than in a traditional contract. Finally, if the quality of the design information from the consultant and the quality BENEFICIARIO COLFUTURO 2012 142

Appendix J of information you given at the start at the job are good, then there is very little reason for cost to move, if the information is poor then the cost will escalate and go for the roof. BENEFICIARIO COLFUTURO 2012 143