Causes of delay and cost overruns in construction of groundwater projects in developing countries ghana as a case study
Causes of delay and cost overruns in construction of groundwaterprojects in a developing countries;Ghana as a case studyYaw Frimponga,*, Jacob Oluwoyeb, Lynn Crawfordca1/9-11 Oxford Street, Merrylands, NSW 2160, AustraliabUniversity of Technology Sydney, PO Box 123, Broadway NSW, 2007 Sydney, AustraliacProject Management Program, University of Technology Sydney, PO Box 123, Broadway NSW, 2007 Sydney, AustraliaReceived 28 June 2001; received in revised form 19 September 2001; accepted 27 September 2002AbstractDelay and cost overruns are common in construction projects and groundwater construction projects in Ghana are not anexception. The paper presents the results of a questionnaire survey conducted to identify and evaluate the relative importance of thesigniﬁcant factors contributing to delay and cost overruns in Ghana groundwater construction projects. Respondents of this surveyincluded personnel from owners, consultants and contractors involved in groundwater projects in Ghana. The results of the studyrevealed the main causes of delay and cost overruns in construction of groundwater projects included: monthly payment diﬃcultiesfrom agencies; poor contractor management; material procurement; poor technical performances; and escalation of material prices.Hence, eﬀective project planning, controlling and monitoring should be established to enhance project performance in order tominimise or avoid delay and cost problems in groundwater construction projects.# 2003 Elsevier Science Ltd and IPMA. All rights reserved.Keywords: Project management; Groundwater projects; Construction; Overruns; Ghana; Developing countries1. IntroductionProject success can be deﬁned as meeting goals andobjectives as prescribed in the project plan. A successfulproject means that the project has accomplished itstechnical performance, maintained its schedule, andremained within budgetary costs.Project management tools and techniques play animportant role in the eﬀective management of a project.Therefore, a good project management lies in the man-agement tools and techniques used to manage the pro-ject. Project management involves managing theresources—workers, machines, money, materials andmethods used . Some projects are eﬀectively and eﬃ-ciently managed while others are mismanaged, incurringmuch delay and cost overruns.A construction project such as groundwater com-prises two distinct phases: the preconstruction phase,(the period between the initial conception of the projectand signing of the contract; and the construction phasewhich is the period after award of the contract when theactual construction is going on) . Delay and costoverruns occur in both phases however, major causes ofproject overruns usually take place in the constructionphase. Therefore, this paper is limited to this phase.Previous studies show extensive information on projectschedule delays and cost overruns [2–7].This paper identiﬁes and examines the causes of delayand cost overruns in the construction of groundwaterprojects. The study is based on data relating to ground-water construction projects in Ghana. There are manyfactors that can cause delay and cost overruns ingroundwater drilling projects. These range from factorsinherent in the technology and its management, to thoseresulting from the physical, social and ﬁnancial envir-onment. In a preliminary survey conducted in waterdrilling projects in Ghana, for the purpose of thisresearch, it was found that 33 out of a total of 47 pro-jects completed between 1970 and 1999 were delayed0263-7863/03/$30.00 # 2003 Elsevier Science Ltd and IPMA. All rights reserved.doi:10.1016/S0263-7863(02)00055-8International Journal of Project Management 21 (2003) 321–326www.elsevier.com/locate/ijproman* Corresponding author.E-mail address: email@example.com (Y. Frimpong).
while 38 projects were overruns . The data indicatedthat 75% of the projects exceeded the original projectschedule and cost whereas only 25% were completedwithin the budget and on time. The survey revealed thatdelay and cost overruns occur frequently in construc-tion of groundwater projects in Ghana and developingcountries in general, especially in long-duration pro-jects. It is therefore important that thorough analysis becarried out to help in eﬃcient project management, toreduce delay, and cost overruns.2. Nature of groundwater workGroundwater-drilling projects involve the followingactivities: Groundwater exploration (siting of boreholes)which involves geophysical surveys conducted atthe ground surface using highly sophisticatedequipment, borehole sampling, and geophysicallogging of the borehole with highly sophisticatedwell-logging equipment. Borehole drilling and construction; whichinvolves drilling, installing the casing, placing awell screen and ﬁlter pack, if required, groutingto provide sanitary protection, and developingthe well to ensure sand-free operation at max-imum yield. Pumping test and water quality analysis: whichinvolves pumping a well at a certain rate,recording the drawdown in the pumping well,monitoring and recording the recovery of thewater, and conducting water quality tests. Civil works and exploration: which involvesconstruction of well base pads and installation ofappropriate pump.The nature of work in groundwater projects and theenvironment within which they are built make suchprojects susceptible to delay and cost overruns. Some ofthe inﬂuential factors can be summarised as followings: Poor technical performance due to improperplanning result number of wells abandoned andthereby causes project delay and cost overruns. Work in these projects depends mainly onequipment, plants and materials, project may bedelayed without eﬀective and eﬃcient procure-ment procedures. Numerous series of activities are involved in thewater drilling project and reluctant to use ofscheduling techniques and update schedules onregular basis are needed. A great deal of co-ordination among these activities is required toavoid delay especially in public projects. Due to lack of skilful management less attentionis paid to resources allocation i.e. human, ﬁnan-cial and material resources.In an attempt to identify the reasons for such delaysand overruns, an extensive survey was conducted inGhana.3. Research aim and objectivesThis paper identiﬁes and examines the causes of delayand cost overruns in the construction of groundwaterprojects in Ghana. The objectives are: To study and evaluate the factors that contributeto delay and cost overruns in groundwater con-struction, To identify the main factors that inﬂuence thecauses of delay and cost overruns in constructionof groundwater projects and to examine theirrelative importance.4. MethodologyIn order to evaluate and analyse the causes of delayand cost overrun in groundwater projects, a wide rangeof personnel involved in groundwater construction inproject Ghana were targeted. Personnel were randomlyselected from Ghanaian project managers, consultants,contractors, client’s representatives and constructionmanagers. A questionnaire of 26 factors was carefullydesigned from previous preliminary investigations con-ducted in groundwater drilling projects between 1970and 1999 in Ghana. It was organised in the form of apriority scaling (1=very low, 2=low, 3=medium,4=high, and 5=very high).The questionnaire was directed towards three groupsin both public and private organisations: owners of thegroundwater projects, consulting oﬃces, and con-tractors working in the groundwater works. The ques-tionnaire was distributed to a random sample of 55owners, 40 contractors and 30 consultants. The sampleselected for each of the three groups is described belowas: Owners comprising the government agency (keydecision-makers) responsible for the projects,private organisations (industries), and individualowners. Consultants working in the groundwater con-struction projects. Contractors who are involved in the ground-water drilling project.322 Y. Frimpong et al. / International Journal of Project Management 21 (2003) 321–326
Respondents were from public and private agenciesthat sponsor groundwater construction projects, and thecontracting and consulting organisations that work forthem. There were 125 in the group targeted, 72 (57%)questionnaires were returned completed of these: 28were from owners; 19 from consultants; and 25 fromcontractors (see Table 1).5. Data analysisThe procedure used in analysing the results was aimedat establishing the relative importance of the variousfactors responsible for project delay and cost overruns.The score for each factor is calculated by summing upscores assigned to it by respondents. Therefore, the levelof importance as indicated by the owners, contractorsand consultants were used to measure the relativeweight of each factor. The relative weight was computedusing the following equation:Relative Importance Weight (RIW)=P5i¼1ai ÁniPNj¼1xjÂ 100 ð1Þwhere: xj=the sum of the jth factor; j=the factors 1, 2,3, 4, . . .. . .N; N=total number of factors (26); ai=con-stant expressing the weight given to the ith response:i=1, 2, 3, 4, 5for a response of ‘very high’ a1=5for a response of ‘high’ a2=4for a response of ‘medium’ a3=3for a response of ‘low’ a4=2for a response of ‘very low’ a5=1ni=the variable expressing the frequency of the ithresponsen1=frequency of ‘very high’ responsen2=frequency of‘high’ responsen3=frequency of ‘medium’ responsen4=frequency of ‘low’ responsen5=frequency of ‘very low’ responseEq. (1) was used to calculate the Relative ImportanceWeight for all delay and cost overruns factors. TheWeights were ranked for Contractors, Owners andConsultants.To determine whether there is degree of agreementamong the three groups with respect to their rankingsof the factors, Kendall’s Coeﬃcient of Concordancewas used. The Kendall’s Coeﬃcient of Concordancesays that the degree of agreement on a zero to one scaleis:W ¼12U À 3m2n n À 1ð Þ2m2n n À 1ð Þð2Þwhere:U ¼Xnj¼1SRð Þ2n=number of factors; m=number of the groups; j=thefactors 1, 2, 3, 4, . . .. . .N.The calculated Kendall’s Coeﬃcient of concordanceW =0.9208In order to know whether there is disagreement oragreement between the three groups on ranking thefactors, a test of hypothesis is needed.Null hypothesis: H0: Disagreement in rankingsamong the three groups.Alternative hypothesis: H1: Agreement in rankingsamong the three groups.Since n=26 is too large for the table of critical valuesof Kendall’s, chi-square approximation of the samplingdistribution of W is computed with Eq. (3).2¼ k n À 1ð ÞW ð3ÞTherefore, w2=69.06 and using a w2critical table forn=26 and a=0.05, the wa2(nÀ1)=2 25ð Þ:05 =7.65. Sincecomputed value w2is greater than critical table 2 25ð Þ:05null hypothesis H0 is rejected and alternative hypothesisH1 is accepted. Therefore, concluded that there is a sig-niﬁcant degree of agreement between the three groupswith respect to how they rank the factors.6. Survey results and analysisThe questionnaire was analysed from contractors,owners and consultants’ perspective. In order to identifythe most important factors that inﬂuence time and costTable 1Per cent of questionnaire distribution and their responseDescription QuestionnairedistributedNumber ofrespondentsPercentage ofresponsesOwners 55 28 38.9Contractors 40 25 34.7Consultants 30 19 26.4Total 125 72 57.6Y. Frimpong et al. / International Journal of Project Management 21 (2003) 321–326 323
overruns in groundwater projects, the items were rankedin the various groups. On the basis of ranking of thefactors by the various groups it was possible to identifythe most important factors that inﬂuenced project timeand cost overruns. A summary of all the factors causingdelays and cost overruns in groundwater projects inrelative importance weights, ranking by the groups, andoverall ranking as identiﬁed by all groups is shown inthe Table 2.The results show that, there are several importantfactors underlying causes of delay and cost overruns ingroundwater construction projects in developing coun-tries such as Ghana. The ﬁve most important factorsagreed by the owners, contractors and consultants, asthe main causes were (see Table 2) monthly paymentdiﬃculties from agencies, poor contractor management,material procurement, poor technical performances,and escalation of material prices.Contractors and consultants ranked the monthlypayment diﬃculties from agencies for completed worksﬁrst whereas the owners ranked it tenth. This problemmay be due to the existing culture in the constructionindustry. In Ghana, the biggest customer of thegroundwater industry is the government and there isvery little participation from private investors . Likemost developing countries, groundwater projects inGhana are ﬁnanced either through domestic savings orforeign funding. Groundwater construction projectsfunds may be from capital allocation from Ministry ofWork and/or foreign assistance which have been bud-geted. However, there is delay in payment for the com-pleted work due to bureaucracy in governmentsdepartments. Regular monthly payment to contractorsfor work done removed constraints which otherwise mayhave impeded project progress to cause delay and costoverruns. Failure to provide adequate funding resourcesto contractors for the job done will make it diﬃcult for thecontractors to meet project objectives .The second most important factor attributing to thecause of delay and cost overruns in groundwater projectsis poor contract management. Poor contract managementwas ranked ﬁrst by owners, second by consultants, whilecontractors ranked it sixth (see Table 2). This can beattributed to the way contracts are been awarded. Mostcases, projects are awarded to the lowest bidder. Someof the lowest bidders may lack management skills andless attention is paid to contractor’s plan, cost control,overall site management, and resource allocation, ie,human, ﬁnancial and material resources. Evidence fromOgunlana and Olomolaiye  and Wahab  postu-lated that many contractors in developing countries areentrepreneurs who are in the business of making moneyTable 2Rank of all the factors responsible for project delays and cost overruns according to contractors, consultants and ownersFactors Owners Contractors Consultants OverallRIW% RANK RIW% RANK RIW% RANK RANKPlanning and scheduling deﬁciencies 4.52 3 4.17 10.5 4.60 4 8Deﬁciencies in cost estimates prepared 4.29 8.5 4.13 12.5 4.14 10 10Inadequate control procedures 3.75 18 3.78 16.5 3.62 19.5 19Delays in work approval 3.67 20 3.87 15 3.62 19.5 18Waiting for information 2.97 24.5 3.22 23 3.45 22.5 24Mistakes during construction 3.48 21.5 2.96 24 3.50 21 22Delays in inspection and testing of work 2.97 24.5 2.87 25 3.22 24 25Cash ﬂow during construction 4.44 6 4.48 6 4.48 5.5 7Frequent breakdowns of construction plant and equipment 4.02 14 3.65 19.5 3.85 16 16Shortages of technical personnel 3.48 21.5 3.65 19.5 3.79 17 20Labour shortages 3.09 23 3.57 21 3.45 22.5 21Monthly payment diﬃculties 4.44 5 4.96 1 4.88 1 1Poor contract management 4.91 1 4.30 7 4.77 2 2Shortage of materials, Plant/equipment parts 4.09 13 3.78 16.5 4.08 11 15Contractor’s ﬁnancial diﬃculties 4.13 12 4.70 3.5 4.65 3 5Low bid 3.94 16 4.13 12.5 3.96 14 14Material procurement 4.71 2 4.78 2 4.31 9 3Imported materials 3.82 17 3.74 18 3.91 15 17Late delivery of materials and equipment 4.21 11 4.09 14 4.02 12.5 11Escalation of material prices 4.48 4 4.57 5 4.37 7.5 6Slow decision-making 2.96 26 2.81 26 2.78 26 26Inﬂation 4.36 7 4.70 3.5 4.48 5.5 4Diﬃculties in obtaining construction materials at oﬃcial current prices 3.98 15 4.17 10.5 4.02 12.5 13Ground problems 3.71 19 3.26 22 2.81 25 23Bad weather 4.29 8.5 4.22 9 4.37 7.5 9Unexpected geological conditions 4.25 10 4.26 8 3.68 18 12324 Y. Frimpong et al. / International Journal of Project Management 21 (2003) 321–326
at the expense of good management. They pay low wages,submit very low bids and have very little, if any, ability toplan and coordinate contracts.The third signiﬁcant factor identiﬁed was materialprocurement (see Table 2). It demonstrates a completeabsence of eﬀective material procurement managementon the part of the contractors. The established bureau-cratic structures in material procurement processes indeveloping countries like Ghana seem to hinder the easyﬂow of construction materials. In Ghana, the processingof an order can take from a week to several monthsespecially in public sector.Project procurement involves the development ofcontract strategy, the management of contracting activ-ities from initiation such as project and contract deﬁni-tion, market study through tendering process, contractdocumentation to contract performance, managementand administration after contract award. The projectteam of client, consultants and contractors should jointo establish proper material procurement strategy andmethods in order to remove all the obstacles in thematerial procurement.The fourth item in Table 2 which was given byrespondents as a cause of delay and cost overruns ingroundwater construction projects is poor technicalperformances. Well completion problems are emergingfrom problems faced during actual drilling activitiesand from technical failures, which are accountedfor improper planning and management experiencelimitation.The escalation of material prices was ranked ﬁfth,resulting principally from the high and unstable inﬂa-tionary trend in Ghana and developing countries ingeneral. The average rate of inﬂation in Ghana was12.7% between 1970 and 1979; 48.6% between 1980and 1989; 30.8% between 1990 and 1999 . The trendof inﬂation is probably due to demand exceeding sup-ply, which creates scarcity of goods and hence the pricesof materials increase. These unpredictable inﬂationarytrends are readily observed in many developing coun-tries and may have aided inaccurate projection of con-struction costs in such areas .Other factors that emerged clearly as not very impor-tant, but of interest, are bad weather and geologicalconditions. These are the natural factors. Bad weather isranked eight by owners and consultants and 10 by con-tractors while all the three groups ranked it 10. Therespondents ranked the geological condition factor low.The bad weather and geological condition are the mostdiﬃcult and unknown factors because they cannot becontrolled. In Ghana, the eﬀect of these natural factorsmay not be very signiﬁcant, but it is worthy of con-sideration. Ghana is located in a tropical zone with onlytwo climates: wet and dry. Rain would deﬁnitely stopgroundwater construction activities because of theworks nature. In the dry season, the average tempera-ture varies between 30 and 38 C while the humidityranges from 25 to 80%. Temperature and humidityaﬀect the productivity of workers. If the temperatureand humidity are high, workers feel dullness of sensesand poor coordination  and generate body heatand subsequent discomfort . Therefore, pro-ductivity in hot climates is certainly low. In the dril-ling world, the most apparent representative problemis the nature of the work itself. It is a work that cannot see what is happening deep in the subsurface.The number of abandoned well due to the unfavour-able geological conditions causes project delay andcost overruns.7. Summary and conclusionThe main survey of contractors, owners and con-sultants as discussed in this paper relates to the con-struction of groundwater projects in Ghana. The surveyfocused on identifying and ranking in order of impor-tance, the main factors causing project delay and costoverruns.The main conclusions of the survey are as follows: According to the contractors and consultants,monthly payments diﬃculties from agencieswas the most important delay and cost factor,while owners ranked poor contractor manage-ment as the most important factor. Despitesome diﬀerence in viewpoint held by the threegroups surveyed, there is a high degree ofagreement among them with respect to theirranking of the factors. The overall rankingresults indicates that the three groups felt thatthe major factors that can cause excessivegroundwater project overruns in developingcountries are poor contractor management,monthly payment diﬃculties from agencies,material procurement, poor technical perfor-mances, escalation of material prices accordingto their degree of inﬂuence. Other factors that emerged clearly as not veryimportant, but of interest, are bad weather andunexpected natural events. These are the naturalfactors. Bad weather is ranked eight by ownersand consultants and 10 by contractors while allthe groups on average ranked it 10. The respon-dents ranked geological conditions low. The badweather and unfavourable geological conditionsare most diﬃcult and unknown factors becausethey cannot be controlled. The result shows that many of the problems inthe groundwater construction projects are origi-nated from poor resources management (human,technical and material). In practice, this phe-Y. Frimpong et al. / International Journal of Project Management 21 (2003) 321–326 325
nomenon is expected to continue unless actionsare taken to control these causes right away fromthe planning to the implementation and man-agement stages. Therefore, good practice inplanning, coordinating, controlling and mon-itoring procedures needs to be recognised.8. RecommendationsBased on this study, and with developing countries inmind, some recommendations are given as follows: Appropriate funding levels should always bedetermined at the planning stage of the project sothat regular payment should be paid to con-tractors for work done. In order to improve contractors’ managerialskills there is need for continuous work-trainingprograms for personnel in the industry to updatetheir knowledge and be familiar with projectmanagement techniques and processes. haveeﬀective and eﬃcient performances. Eﬀective and eﬃcient material procurement sys-tems should be established within projects.Material procurement has the potential to causemajor delays to construction projects. Therefore,material procurement process should be executedproperly by improving procurement process inorder to avoid supply delays. Developing eﬀective and eﬃcient technical per-formances in the groundwater industry throughdiﬀerent types of training programs. The train-ing should cover project planning, scheduling,time and cost control, and the informationsystems. There should be adequate contingency allowancein order to cover increase in material cost due toinﬂation.References Giridhar P, Ramesh K. Eﬀective management of Turnkey pro-jects. Aace Transactions, PM7- PM11 1998. Dlakwa MM, Culpin MF. Reasons for overrun in public sectorconstruction projects in Nigeria. International Journal of ProjectManagement 1990;8(4):237–41. Ogunlana SO, Promkuntong K, Vithool J. Construction delays ina fast-growing growing economy: comparing Thailand with othereconomies. International Journal of Project Management 1996;14(1):37–45. Khalil ALMI, AL-Ghaﬂy MA. Delay in public Utility projects inSaudi Arabia. International Journal of Project Management1999;17(2):101–6. Mansﬁeld NR, Ugwu OO, Doran T. Causes of delay and costoverruns in Nigeria construction projects. International Journalof Project Management 1994;12(4):254–60. Okpala DC, Aniekwu AC. Causes of high costs of constructionin Nigeria. Journal of Management in Engineering, ASCE 1988;114:233–44. Arditi D, Akan GT, Gurdamar S. Cost overruns in public pro-jects. Project Management 1985;3(4):218–24. Frimpong, Y. (2000, November). Project management in develop-ing countries: causes of delay and cost overruns in construction ofgroundwater projects. Unpublished Masters Research Project,University of Technology, Sydney, Australia. Ogunlana SO, Olomolaiye PO. A survey of site managementpractice on some selected sites in Nigeria. Building Environ 1989;24(2):191–6. Wahab KA. Improving eﬃciency in the building sector. WestAfrica Tech Rev 1997:81–9. Okpala DC. Causes of delay and cost overrun in the constructionindustry. CENSER Seminar Series 1986;May. Ministry of Finance. Government Budget Statement. Ghana:Accra; 1999. Oglesby C, Parker H, Howell G. Productivity improvement inconstruction. New York: McGraw-Hill; 1989.326 Y. Frimpong et al. / International Journal of Project Management 21 (2003) 321–326