cost overuns in construction industry
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The document discusses several case studies of infrastructure projects that experienced significant cost overruns: 1. The Bandra-Worli Sea Link in Mumbai went 155% over budget due to ineffective project management, technical changes, delays in funding, and issues with rehabilitation. 2. The Sydney Opera House went 1400% over budget due to incomplete initial designs, uncertainty around construction methods, and changes in architects and designs that required demolition and rebuilding. 3. The Scottish Parliament went 730% over budget due to communication problems, additional space requirements, changes in oversight, and architects working remotely. 4. The Namma Metro in Bangalore went 215% over budget due to lack of coordination, wrong cost estimates
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cost overuns in construction industry
- 1. COST OVERRUN WITH CASE STUDIES Efforts by Pushkar Lunkad AP17022 Vaishnavi Bharne AP17059 Reshma Reddy AP17042 Vibhali Wankar AP17054 Khushboo Patel AP17069 Aanchal Ramtekkar AP17075
- 2. What is Cost Overrun? A cost overrun, also known as a cost increase, underrated or budget overrun, involves unexpected costs incurred in excess of budgeted amounts due to an underestimation of the actual cost during budgeting
- 3. General Information • Client: MSRDC • Contractor: HCC • Commenced:2000 • Planned Completion: 2005 • Opened: 2010 • Delay: 5 Years • Estimated cost: 371+255+22 =648 cr • Final Cost: 1653.25 cr • % Increased:155% Bandra-Worli Sea Link
- 4. Causes of Cost Overrun • Consultant for project and design management was ineffective. • Technical changes bought up by new consultant- Rs 70 Cr. • Changes in “Arch bridge” to “Cable stay”. • Government commitment Rs 580 Cr but provided only Rs 100 Cr till June 2007. • Rs 12.8 Cr they didn’t charged for stoppage of work. • Issues related to rehabilitation • Delay in environmental clearances • Contract disputes and court cases
- 5. General Information • Client: State of New South Wales • Design By: Jorn Utzon • Commenced:1959 • Planned Completion:1963 • Opened:1973 • Delay:10Years • Estimated cost:AUS $7 million • Final Cost: AUS $102 million • % Increased:1400% Opera House Sydney
- 6. Causes of Costoverun • Designs were only partially completed. • Methods to construct the proposed roof structure was not known initially. • No project manager was appointed resulting in lack of project evaluation. • New architect named Peter Hall was appointed in place of Jorn Utzon resulting in changes in original design. • Some sections of the opera house were even built then later demoli -shed, re‐designed and built again.
- 7. General Information • Client: The Secretary of State for Scotland until 31 May 1999. Thereafter the project transferred to the Corporate Body • Contractor: Bovis homes group • Commenced: 1999 • Planned Completion: 2001 • Opened: 2004 • Delay: 3 Years • Planned cost: £50m • Final Cost: £414m • % Increased cost: 730% Scotish Parliament
- 8. Causes of Costoverun • Communication problems with the involved project teams and political intervention. • Client requirement of additional usable area of 4000 sq.metres. • Client changed from Scottish office to Scottish parliament cooperate body. • Both architects used to work from their own cities. • High level design development.
- 9. General Information • Client: BMRCL • Contractor: ITD-Cem India (Phase-1) • Commenced: 2005 • Planned Completion: 2010 • Opened: 18 June 2017 • Delay: 7 Years • Planned cost: 5400 cr • Final Cost: 11609 cr • % Increased cost: 214.98 Namma Metro
- 10. Causes of Costoverun • Lack of co-ordination between state agencies and metro authorities. • Wrong estimation. • Land acquisition . • Delay in providing design. • Escalation of cost of land. • Escalation cost of material.
- 11. Conclusion Stages Issues Pre-planning • Delay in Regulatory Approvals • Unavailability/delayed availability of funds • Land/site handover • Local and Social Issue Planning and design • Ineffective Procurement Planning. • Design/scope change. • Delay in decision making. Execution and monitoring • Weak/ineffective project planning & monitoring • Lack of Integration Management in Project Planning • Unavailability/delayed availability of funds Closure and Handover • Contractual disputes • Finishing Work.
- 12. References • http://www.ptmfonline.com/doc/Newsletter/PTMF-E- News_Letter_December_2011.pdf • http://www.pmi.org.in/downloads/PMI_KPMG_2013.pdf • https://en.wikipedia.org/wiki/Bandra–Worli_Sea_Link • https://ocw.mit.edu/courses/civil-and-environmental-engineering/1-011- project-evaluation-spring-2011/projects/MIT1_011S11_proj_ex01.pdf • https://en.wikipedia.org/wiki/Scottish_Parliamen • english.bmrc.co.in/
- 13. Thank You