Factors affecting contractor’s risk on cost overburden in Sri Lankan Construction Industry

Abstract

Cost overrun is one of the major issue faced by the construction industry at present. The contractor’s cost overrun directly affects with the contractor’s profit margin which has become a major burden within the contractor’s scope of work. This study attempts to identify the severity of the factors affecting contractor’s risk on cost overburden in Sri Lankan construction industry under the factors affecting cost estimate, factors affecting final cost and contract specific factors. Data collection was done by a questionnaire survey which a questionnaire was distributed among experienced quantity surveying professionals in Sri Lanka. Collected data was subjected to a quantitative analysis using the Relative Index technique and ranking of questionnaire was done. The findings elaborated that the factors affecting the finl cost have the highest impact on contractor’s cost overburden in Sri Lankan context. Proper consultation of clients on variations and on time payments and proper management of stability of the country’s economy by the government will improve the contractor’s cost performance and the project performace as a whole. Focusing on mitigation approaches to avoid the risk factors causing cost overbureden will improve the efficiency of the construction industry in Sri Lanka.