Correlates of Time Overrun in Commercial Construction

This purpose of this study was to identify the factors that have the largest effect on time overrun on commercial construction projects. An extensive review of the literature indicates factors that could possibly have an effect on delay in completion of a construction project include underestimation of project cost, lack of timely progress payment, poor working relationship between client and the contractor, changes to design during construction, incomplete project information, timeliness of project information, lack of communication between the client and the contractor, number of subcontractors, and inclement weather conditions. A web-based instrument was prepared to gather the data related to the effects those variables on time overrun in commercial projects. The instrument was sent to the CEO’s of 100 randomly selected construction companies. Thirty-one completed responses were received. The data was analyzed by administering stepwise regression technique using SAS. The results of the study indicate that the cost of a project, timeliness of progress payments made by the owner, and communication between the contractor and the owner have a statistically significant (p=<0.05) effect on time overrun in commercial construction.

Key words: Commercial construction, Communication, Progress payments, Time overrun, Underestimation.

Introduction 

Accurate construction planning is a key determinant in ensuring the delivery of a project on schedule and within budget. A contracting organization needs a sound time-planning and control system, which allows not only efficient and effective management of an individual project, but also meets the likely need to manage multiple projects simultaneously (Odeh and Battaineh, 2001; Majid and McCaffer, 1998). Various factors affect the construction time in buildings; Nkado (1991) has shown that prioritizing these factors is a useful basis for modeling and predicting construction time. 

Construction time, although only a part of the lifecycle-duration of buildings, has become an increasingly important concern within the construction industry. The construction period demands the focus of attention of all the key participants in the construction process. It is during this period that the greatest part of the resources for a scheme is irreversibly committed.  

Furthermore, construction time is a basis for evaluating the success of a project and the efficiency of the project organization. Indeed, completing projects on time is symbolic of an efficient construction industry (NEDO, 1988). In contrast, severe criticism of the industry arises when buildings take much longer than planned to erect (Bennett et al., 1979). It is extremely important to analyze the factors that significantly influence time overrun in commercial construction. The objective of this paper is to analyze the factors influencing time overrun in commercial construction projects. 

Review of Literature 

The duration of construction projects from inception to completion is assuming great importance in the construction industry. Clients or consumers are no longer content merely with minimal cost and adequate functional performance for their projects; increasing interest rates, inflation and other commercial pressures, among other factors, mean that it is in many instances most cost-effective to complete a project within the shortest possible time. 

Construction time can be regarded as the elapsed period from the commencement of site works to the completion and handover of a building to the client. The construction time of a building is usually specified prior to the commencement of construction. It can also be deduced from the client’s brief or derived by the construction planner from available project information (Nkado, 1994). There are no ‘hard-and-fast’ rules for predicting construction durations of projects. Construction time is usually deduced from the client’s brief or derived by the construction planner from available project information such as design drawings, bill of quantities, method statements, specifications, bar chart programs, etc. The completion periods are often calculated on the basis of the planner’s own previous experience on similar projects. 

It is not uncommon for the delays to happen during the design and construction phases. Each member of the building team-owner, architect, and manager-should have in mind the cost to the project if delays incurred. The cost to the owner as mentioned involves inflation, interest and unrealized profit; there are also expenses, taxes and insurance to be paid. When the owner requires design changes or is late in furnishing space layouts, the architect will lose time in preparing drawings and will delay his mechanical electrical and possibly structural engineers, strikes, foundation problems, bad weather, casualties and changes during the construction phase are more serious than during the design phase since the unproductive investment in the group has grown. Extraordinary effort is required to minimize the effects of delays. The responsibility for devising means to combat delays rest with each member of the team. 

There is no consensus in the literature on the identification of factors which affect stipulated, planned or achieved construction times of buildings. One reason for this is that researchers have largely viewed the subject from diverse perspectives. Such viewpoints include identification of discrete factors, which affect productivity on-site, and taking systems view of the construction process and end product (Nkado, 1994). 

The factors which have been described as affecting site productivity and implicitly, construction time, include constructibality, management and leadership, knowledge of subcontractors work, the nature of relationships between the general contractor, subcontractor and client’s agent, and the degree of coordination in design information (communication) and the completeness and timeliness of project information (Chan and Kumaraswamy, 1997). Other factors that ultimately affect site productivity such as workspace availability, attendance of operatives, learning curve, weather labor relations, project complexity, foundation condition, and effectiveness of supervision. 

It is customary that a construction project requires the client to make periodic payments to the contractor during the construction period. Making accurate progress payments is a critical aspect of completion of a project in time. Progress of construction works are often hampered if cost reimbursements are not made periodically. Appropriate funding levels should always be determined at the planning stage of a project so that the contractor could be paid on a regular basis for work done. Several studies indicate lack of timely progress payment as one of the key factors that influence time overrun (Ahmed et al., 2003; Frimpong et al., 2003; Odeh and Battaineh, 2002; Chan and Kumaraswamy, 1997)  

Time and cost are two main concerns in construction projects (Choudhury and Rajan, 2003; Walker, 1995). In the construction industry, contractors usually use previous experience to estimate the project duration and cost of a new project. Typically, a project is broken down into activities to which resources can be assigned and durations and costs estimated. A building construction process, in general, often consists of several fundamental phases such as site set-up, substructure, superstructure, cladding, finishes, electrical and mechanical services, and external works. The durations of these phases for a certain type of project could be incorporated when modeling the overall construction period. The activities are linked according to work sequences to form network. CPM techniques are used to analyze the network to identify critical path(s) and project duration. In general, the more resources assigned to an activity, the less time it will take to complete the activity, but cost is usually higher. 

The trade off between time and cost gives construction planners both challenges and opportunities to work out the best construction plan that optimizes time and cost to complete the project. It is quite possible that the construction time required to complete the project may be underestimated, leading to overrun. Thus actual completion cost of a project can also be considered as an important factor influencing time overrun in commercial construction projects. 

Review of the literature indicates that are quite a large number of factors that could possibly have an effect on time overrun. However, some of the studies have prioritized these factors in order of their importance in relation to delays in completion of construction projects (Odeh and Battaineh, 2002; Majid and McCaffer, 1998; Chan and Kumaraswamy, 1997). In view of the suggestions made in these works, the following factors have been identified for use in this study: 

Hypothesis 

It was hypothesized that time overrun in commercial construction projects is affected by (1) underestimation of project cost, (2) delayed progress payments, (3) working relationship between the client and the contractor, (4) changes to design during construction, (5) completeness of project information, (6) timeliness of project information, (7) communication between the client and the contractor, (8) number of subcontractors, and (9) inclement weather conditions. 

Methodology 

Data collection 

A web-based instrument was prepared using HTML and ASP format. It contained the survey questions and text blocks, where the project managers could type the responses. There was a submit button at the bottom of the page. On clicking the submit button, the responses were directed and stored in the database. This database was accessible for viewing but could not be edited. This mode of survey was more economical and convenient than the usual mode of sending the survey questionnaire by mail. The instrument was emailed to the Chief Executive Officers of 100 randomly selected construction companies. The email contained a brief about the study and a link to a survey web page. Out of 100 emails, 40 did not reach their destination, and 31 completed responses were received. The response rate, considering only the emails that reached the destination, was 51.67 percent. Each survey was thoroughly reviewed to ensure that the data was entered completely. 

Variables and their Operationalization 

Time overrun (OVERRUN) 

It is the difference between the actual completion time and the estimated completion time. It was measured in number of days. 

Underestimation of Project Cost (UNDER) 

It is the difference between original cost estimate of a project and actual construction cost of on completion of works of a commercial sector construction project. It was measured in units of $1000. 

Progress Payment (PMT) 

It is the periodic payment made before and during the course of construction. It was operationalized using a single-item measure on a five-point Likert scale. 

Working relationship between the client and the contractor (WREL) 

It is the level of workability and a representation of coordination between the client and the contractor. It was operationalized using a single-item measure on a five-point Likert scale. 

Changes to design during construction (CHANGES) 

It is the degree of changes made in the original design during the course of construction. It was operationalized using a single-item measure on a five-point Likert scale. 

Completeness of project information (COMP) 

It is degree of accuracy and completeness of the information given by the owner/architect to the contractor. It was operationalized using a single-item measure on a five-point Likert scale. 

Timeliness of project information (INFO) 

It is a measure of how timeliness of providing information related to a project by the client/architect to the owner. It was operationalized using a single-item measure on a five-point Likert scale. 

Communication between client and contractor (COM) 

It is the degree of communication between the client and the contractor for exchange of information related to a project. It was operationalized using a single-item measure on a five-point Likert scale. 

Number of subcontractors (SUBCON) 

It is the number of sub-contractors employed for the project.  The variable was operationalized using a single-item measure on a five-point Likert scale. 

Inclement weather conditions (WEATHER) 

It is the prevailing weather condition during the construction of a project. The variable operationalized using a single-item measure on a five-point Likert scale. 

Results 

Analysis 

A stepwise regression model with a forward selection technique was employed to analyze the data. Regression analysis is a modeling technique for identifying a function that describes the relationship between a dependent and one or more independent variables. The reason for utilizing stepwise regression was primarily for two reasons: (1) to obtain a sequence of the independent variables in order of their contribution in explaining variability, and (2) to obtain a best-fitting model through selection of an optimum set of independent variables.  A common value of this probability in sociological research is 0.05, but values such as 0.01 or 0.1 are also used (Iverson, 1979). In this study a level of significance of the statistical test (p-value) was set at 0.10. The following model was used for the analysis: 

OVERRUN = b₀ ± b₁ (UNDER) ± b₂ (LPMT) ±  b₃ (WREL) ± b₄ (CHANGE) ±  b₅ (COMP) ± b₆ (INFO) ± b₇ (COM) ±  b₈ (SUBCON) ±  b₉ (WEATHER) ±  e                                                                                                                   (1)

 where 

β₀ = Intercept

β₁, β₂, etc. = Regression coefficients, and

e = error term. 

The results of the analysis are shown in Table 1. 

Table 1

 Stepwise Regression Analysis of OVERRUN using Stepwise Forward Selection Technique 

The results indicate that only three independent variables (project cost, communication between the client and contractor, and progress payment) have relationships with cost overrun in commercial construction projects at a level of significance of <0.10. Based on the results of the analysis, the regression equation can be written as:

OVERRUN = 44.20 + 0.03*UNDER + 22.15*COM + 9.65*PMT                                                                   (2)

Interpretations 

The F statistic of the model was significant at the 0.01 level, which is strong evidence that a relationship exists between time overrun and the independent variables selected using the statistical procedure. An important aspect of a statistical procedure that derives model from empirical data is to indicate how well the model predicts results. A widely used measure of the predictive efficacy of a model is its coefficient of determination, or R² value. If there is a perfect relation between the dependent and independent variables, R² is 1. In case of no relationship between the dependent and independent variables, R² is 0. Predictive efficacy of this particular model was found not to be high with an R² of 0.33. However, such values are usually considered to be satisfactory related to empirical studies in social sciences (Freund and Wilson, 1991). 

Time overrun is indicated to have a positive relationship with underestimation of project cost—the higher the level of underestimation (i.e. cost overrun), the more is the delay in completion of project. Lack of good communication between the client and the contractor and delay in making progress payment also contribute significantly to delays in completion of a project. 

Conclusions 

The results of the study provide moderate support to the hypothesis that underestimation of the cost of a project, timeliness of progress payments made by the owner, and communication between the firm and the owner have a statistically significant effect on time overrun in commercial construction. Keeping all other variables constant, the construction time of a project is positively related to actual construction cost. It is thus apparent that underestimation of cost will have an effect on time required to complete a work. 

Lack of effective data communication among the different parties involved in a project hinders the progress of works (Chan and Kumaraswamy, 1997). It was not, therefore, surprising to find this variable to have an effect on time overrun. 

Delayed progress payments to contractors may jeopardize their mobilization and procurement process. This financial constraint will obviously have a negative impact on project completion time.  Appropriate funding level should be determined at the very inception of a construction project so that regular periodic payments may be made to the contractor for work done. 

This study will, hopefully, benefit the project managers in commercial construction firms as well the clients. Adequate measures may be taken to minimize time overruns in construction by focusing on the predictors that have been found to be statistically significant. 

References 

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