Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview

Joseph Ignatius Teye Buertey; Theophilus Adjei-Kumi; Felix Atsrim; Kwesi Boateng

doi:doi:10.11648/j.ijsts.20150306.14

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Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview

Joseph Ignatius Teye Buertey, Theophilus Adjei-Kumi, Felix Atsrim, Kwesi Boateng

Published in International Journal of Science, Technology and Society (Volume 3, Issue 6)

Received: 14 September 2015 Accepted: 21 October 2015 Published: 24 November 2015

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Abstract

The management of construction cost escalation requires that proponents understand the drivers of project cost. The aim of this research was therefore to evaluate the causes of project cost escalation with a case study in Ghana. The research was carried out using quantitative approach by distributing questionnaires to built-environment professionals and stakeholders in the road sector. Findings suggest that fluctuations in cost indices, variation in work due to incomplete scope definition, corruption, unstable exchange rate, schedule delays, and poor risk management are the major key drivers affecting cost escalations on road projects in Ghana. The study held that the lead times allowed between base dates of estimates, actual award and commencement date of the project has a contributing factor for cost escalations. To manage cost escalation, the challenge of incomplete scope definition and instability in micro economic indicators must be managed by the players of the economy. To curtail corruption, the procedures for the awarding of contracts which are subjective with public officials having discretions to determine the least evaluated bidders even though there are procedures for determination, must be reviewed. The use of such discretionary powers accounts for perceived corruption along with contractor behaviour resulting in under dealings. The bidding and award stage of projects mark the beginning of interaction between public official and contractors and hence, the hatching point for project corruption. It is recommended that the management of cost escalation would require the improvement of the governance structures and procurement process for public sector projects. The conclusion of the survey suggests that a holistic approach is required to control the trend but more importantly, on attitudes of officials involved which would require improved ethical commitment.

Published in	International Journal of Science, Technology and Society (Volume 3, Issue 6)
DOI	10.11648/j.ijsts.20150306.14
Page(s)	295-303
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Road Projects, Cost Escalations, Risk Management, Cost Growth, Construction, Civil Engineering

References

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[3]	Buertey J.T.I., Amoa, P., Adjei Kumi, T, (2011) Construction cash flow Prediction Model: A Case Study of the District Assembly Common Funded Projects. Pentvars Business Journal.Vol 5, No. 2.
[4]	Buertey Joseph T.I., (2014). Project Cost Risk and Uncertainties: Towards a Conceptual Cost Contingency Estimation Model, International Journal of Construction Engineering and Management, 3(5): 144-155.
[5]	Chabota, K., Mundia, M., Kanyuka M., Cost escalation and schedule delays in road construction projects in Zambia, International journal of project management, Volume 27, Issue 5, July 2009, Pages 522–531.
[6]	Cheri H. (2015). Understanding and Managing Cost Escalation. Construction Risk Engineer with XL Group’s North America Construction team. http://xlgroup.com/fast-fast-forward/articles/understanding-and-managing-construction-cost-escalation.
[7]	Dawood, N., Yasuhara, T., Usuda, Y., Matsuda, C., Sawada A., (2001). Analysis of cost escalation and risk assessment of infrastructural projects: an application in Japanese civil engineering projects. In Akointoye A. (Ed) 17^th Annual ARCOM conference, University of Salford 2001, Vol. 1, 835-44.
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[9]	Ehuman L. and D.R. Rao (2008), African Development Fund for the supplementary loans for the Tema-Aflao road/Akatsi-Akanu road/Eumoa-Ghana road program.
[10]	Frimpong, Y., J. Oluwoye, and L. Crawford (2003).Causes of delay and cost overruns in construction of groundwater projects in developing countries; Ghana as a case study, International Journal of Project Management, Vol. 21, Issue 5, pp. 321-326.
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[14]	Kaliba, C., M. Muya, and K. Mumba (2009). “Cost escalation and schedule delays in road construction projects in Zambia”, International Journal of Project Management, Vol. 27, Issue 5, pp 522-531.
[15]	Mensah Amoah, K. (2003b). First African Conference on Road Maintenance, Libreville: Ghana Road Fund.
[16]	Messick, R, (2011) Curbing fraud, Corruption, Collusion in the Road Sector. Washington: World Bank.
[17]	Naoum, S. G. (2007), Dissertation Research and Writing for Construction Students, Oxford, Butterworth-Heineman.
[18]	New Zealand institute of Economic Research (NZIR, 2014). Construction Industry study. Implications for cost escalation in road building, maintenance and operation. NZIER final report to the Ministry of Transport, November 2013.
[19]	Peter M., & William F. W. (2006), Measuring and Managing Cost Escalation AACE International Transactions, CSC.06.
[20]	Price Water House Coopers (2009). Corruption Prevention in the Engineering & Construction Industry. PWC, 1-6. Fufulso – Sawla Road project appraisal report, [Available from], http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Ghana/Fufulso-Sawla Road Project.pdf.

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APA Style

Joseph Ignatius Teye Buertey, Theophilus Adjei-Kumi, Felix Atsrim, Kwesi Boateng. (2015). Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. International Journal of Science, Technology and Society, 3(6), 295-303. https://doi.org/10.11648/j.ijsts.20150306.14

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ACS Style

Joseph Ignatius Teye Buertey; Theophilus Adjei-Kumi; Felix Atsrim; Kwesi Boateng. Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. Int. J. Sci. Technol. Soc. 2015, 3(6), 295-303. doi: 10.11648/j.ijsts.20150306.14

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AMA Style

Joseph Ignatius Teye Buertey, Theophilus Adjei-Kumi, Felix Atsrim, Kwesi Boateng. Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. Int J Sci Technol Soc. 2015;3(6):295-303. doi: 10.11648/j.ijsts.20150306.14

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@article{10.11648/j.ijsts.20150306.14,
  author = {Joseph Ignatius Teye Buertey and Theophilus Adjei-Kumi and Felix Atsrim and Kwesi Boateng},
  title = {Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview},
  journal = {International Journal of Science, Technology and Society},
  volume = {3},
  number = {6},
  pages = {295-303},
  doi = {10.11648/j.ijsts.20150306.14},
  url = {https://doi.org/10.11648/j.ijsts.20150306.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsts.20150306.14},
  abstract = {The management of construction cost escalation requires that proponents understand the drivers of project cost. The aim of this research was therefore to evaluate the causes of project cost escalation with a case study in Ghana. The research was carried out using quantitative approach by distributing questionnaires to built-environment professionals and stakeholders in the road sector. Findings suggest that fluctuations in cost indices, variation in work due to incomplete scope definition, corruption, unstable exchange rate, schedule delays, and poor risk management are the major key drivers affecting cost escalations on road projects in Ghana. The study held that the lead times allowed between base dates of estimates, actual award and commencement date of the project has a contributing factor for cost escalations. To manage cost escalation, the challenge of incomplete scope definition and instability in micro economic indicators must be managed by the players of the economy. To curtail corruption, the procedures for the awarding of contracts which are subjective with public officials having discretions to determine the least evaluated bidders even though there are procedures for determination, must be reviewed. The use of such discretionary powers accounts for perceived corruption along with contractor behaviour resulting in under dealings. The bidding and award stage of projects mark the beginning of interaction between public official and contractors and hence, the hatching point for project corruption. It is recommended that the management of cost escalation would require the improvement of the governance structures and procurement process for public sector projects. The conclusion of the survey suggests that a holistic approach is required to control the trend but more importantly, on attitudes of officials involved which would require improved ethical commitment.},
 year = {2015}
}

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TY  - JOUR
T1  - Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview
AU  - Joseph Ignatius Teye Buertey
AU  - Theophilus Adjei-Kumi
AU  - Felix Atsrim
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T2  - International Journal of Science, Technology and Society
JF  - International Journal of Science, Technology and Society
JO  - International Journal of Science, Technology and Society
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PB  - Science Publishing Group
SN  - 2330-7420
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AB  - The management of construction cost escalation requires that proponents understand the drivers of project cost. The aim of this research was therefore to evaluate the causes of project cost escalation with a case study in Ghana. The research was carried out using quantitative approach by distributing questionnaires to built-environment professionals and stakeholders in the road sector. Findings suggest that fluctuations in cost indices, variation in work due to incomplete scope definition, corruption, unstable exchange rate, schedule delays, and poor risk management are the major key drivers affecting cost escalations on road projects in Ghana. The study held that the lead times allowed between base dates of estimates, actual award and commencement date of the project has a contributing factor for cost escalations. To manage cost escalation, the challenge of incomplete scope definition and instability in micro economic indicators must be managed by the players of the economy. To curtail corruption, the procedures for the awarding of contracts which are subjective with public officials having discretions to determine the least evaluated bidders even though there are procedures for determination, must be reviewed. The use of such discretionary powers accounts for perceived corruption along with contractor behaviour resulting in under dealings. The bidding and award stage of projects mark the beginning of interaction between public official and contractors and hence, the hatching point for project corruption. It is recommended that the management of cost escalation would require the improvement of the governance structures and procurement process for public sector projects. The conclusion of the survey suggests that a holistic approach is required to control the trend but more importantly, on attitudes of officials involved which would require improved ethical commitment.
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Author Information

Joseph Ignatius Teye Buertey

Department of Built Environment, Pentecost University College, Accra, Ghana
Theophilus Adjei-Kumi

Department of Building Technology, University Post Office, Kumasi, Ghana
Felix Atsrim

Department of Project Management, Pentecost University College, Kaneshie, Ghana
Kwesi Boateng

Department of Built Environment, Pentecost University College, Accra, Ghana

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APA Style

Joseph Ignatius Teye Buertey, Theophilus Adjei-Kumi, Felix Atsrim, Kwesi Boateng. (2015). Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. International Journal of Science, Technology and Society, 3(6), 295-303. https://doi.org/10.11648/j.ijsts.20150306.14

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ACS Style

Joseph Ignatius Teye Buertey; Theophilus Adjei-Kumi; Felix Atsrim; Kwesi Boateng. Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. Int. J. Sci. Technol. Soc. 2015, 3(6), 295-303. doi: 10.11648/j.ijsts.20150306.14

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AMA Style

Joseph Ignatius Teye Buertey, Theophilus Adjei-Kumi, Felix Atsrim, Kwesi Boateng. Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview. Int J Sci Technol Soc. 2015;3(6):295-303. doi: 10.11648/j.ijsts.20150306.14

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@article{10.11648/j.ijsts.20150306.14,
  author = {Joseph Ignatius Teye Buertey and Theophilus Adjei-Kumi and Felix Atsrim and Kwesi Boateng},
  title = {Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview},
  journal = {International Journal of Science, Technology and Society},
  volume = {3},
  number = {6},
  pages = {295-303},
  doi = {10.11648/j.ijsts.20150306.14},
  url = {https://doi.org/10.11648/j.ijsts.20150306.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsts.20150306.14},
  abstract = {The management of construction cost escalation requires that proponents understand the drivers of project cost. The aim of this research was therefore to evaluate the causes of project cost escalation with a case study in Ghana. The research was carried out using quantitative approach by distributing questionnaires to built-environment professionals and stakeholders in the road sector. Findings suggest that fluctuations in cost indices, variation in work due to incomplete scope definition, corruption, unstable exchange rate, schedule delays, and poor risk management are the major key drivers affecting cost escalations on road projects in Ghana. The study held that the lead times allowed between base dates of estimates, actual award and commencement date of the project has a contributing factor for cost escalations. To manage cost escalation, the challenge of incomplete scope definition and instability in micro economic indicators must be managed by the players of the economy. To curtail corruption, the procedures for the awarding of contracts which are subjective with public officials having discretions to determine the least evaluated bidders even though there are procedures for determination, must be reviewed. The use of such discretionary powers accounts for perceived corruption along with contractor behaviour resulting in under dealings. The bidding and award stage of projects mark the beginning of interaction between public official and contractors and hence, the hatching point for project corruption. It is recommended that the management of cost escalation would require the improvement of the governance structures and procurement process for public sector projects. The conclusion of the survey suggests that a holistic approach is required to control the trend but more importantly, on attitudes of officials involved which would require improved ethical commitment.},
 year = {2015}
}

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TY  - JOUR
T1  - Managing the Drivers of Cost Escalation in the Road Development Sector: An Overview
AU  - Joseph Ignatius Teye Buertey
AU  - Theophilus Adjei-Kumi
AU  - Felix Atsrim
AU  - Kwesi Boateng
Y1  - 2015/11/24
PY  - 2015
N1  - https://doi.org/10.11648/j.ijsts.20150306.14
DO  - 10.11648/j.ijsts.20150306.14
T2  - International Journal of Science, Technology and Society
JF  - International Journal of Science, Technology and Society
JO  - International Journal of Science, Technology and Society
SP  - 295
EP  - 303
PB  - Science Publishing Group
SN  - 2330-7420
UR  - https://doi.org/10.11648/j.ijsts.20150306.14
AB  - The management of construction cost escalation requires that proponents understand the drivers of project cost. The aim of this research was therefore to evaluate the causes of project cost escalation with a case study in Ghana. The research was carried out using quantitative approach by distributing questionnaires to built-environment professionals and stakeholders in the road sector. Findings suggest that fluctuations in cost indices, variation in work due to incomplete scope definition, corruption, unstable exchange rate, schedule delays, and poor risk management are the major key drivers affecting cost escalations on road projects in Ghana. The study held that the lead times allowed between base dates of estimates, actual award and commencement date of the project has a contributing factor for cost escalations. To manage cost escalation, the challenge of incomplete scope definition and instability in micro economic indicators must be managed by the players of the economy. To curtail corruption, the procedures for the awarding of contracts which are subjective with public officials having discretions to determine the least evaluated bidders even though there are procedures for determination, must be reviewed. The use of such discretionary powers accounts for perceived corruption along with contractor behaviour resulting in under dealings. The bidding and award stage of projects mark the beginning of interaction between public official and contractors and hence, the hatching point for project corruption. It is recommended that the management of cost escalation would require the improvement of the governance structures and procurement process for public sector projects. The conclusion of the survey suggests that a holistic approach is required to control the trend but more importantly, on attitudes of officials involved which would require improved ethical commitment.
VL  - 3
IS  - 6
ER  -

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