MASTER THESIS WITHIN: General Management NUMBER OF CREDITS: 15
PROGRAMME OF STUDY: Engineering Management AUTHOR: Abdel Rahim El Khawas & Sanaz Aghaei JÖNKÖPING May 2020
Uncertainties and cost
overruns in
Construction Industry
An explanatory multiple case study investigating the
differences in cost management under uncertainties in
Master Thesis in General Management
Title: Cost Management Under Uncertainties in Construction Industry Authors: Abdel Rahim El Khawas and Sanaz Aghaei
Tutor: Tommaso Minola Date: 2020
Key terms: uncertainty, cost overrun, risk, sustainability, conventional construction, green construction.
Abstract
Background
Construction industry greatly affect the environment in the aspect of energy consumption and its contribution to global warming. Accordingly, green building construction is significantly growing, which makes it an interesting topic for researchers. Green buildings are defined as buildings constructed according to sustainability standards that keeps the natural environment healthy. However green construction is challenging in the economic aspect and the cost efficiency. Based on the researches, uncertainty is a main reason for cost overrun. In addition, procedures in early stages of the project is of great importance and have influence on the costs. However, further study is needed to identify the differences between conventional and green construction companies regarding uncertainties, cost overrun, and uncertainty mitigation techniques.
Purpose
The focus of this research is to compare two types of construction companies (conventional and sustainable) in the aspect of uncertainties as inevitable part of risks, it’s effect on cost overrun, and techniques being used in the pre-construction phase to mitigate them.
Method
Multiple-case study was conducted, and two construction companies were selected of each type. This research is a qualitative study with abductive approach. The empirical data were collected by conducting semi-structured interviews with several positions in each company. Also, secondary data were collected from companies’ archival reports and documents, and from scientific blogs.
Conclusion
The findings of this research indicate that sustainability creates fields of uncertainties extra to those existing in conventional construction. The study revealed the direct effect of uncertainties on cost, and the indirect effect by generating events which cause overruns in cost. Moreover, Companies work on improving managerial skills in the preconstruction phase to mitigate the effect of uncertainties and to reduce probability of cost overrun occurrence in both sustainable and convention construction companies. While in sustainable construction, additional techniques and efforts are needed as technology, artificial intelligence, and hiring external resources and staff.
Acknowledgements
We would like to thank all people who supported us in conducting this research. We gratefully acknowledge the support of our supervisor, professor Tomasso Minola, for his guidance, valuable suggestions, and feedbacks that resulted in improving the quality of this thesis.
We also would like to thank peers in our group who reviewed this work during the seminars. Also, we thank all companies and interviewees who donated by their precious times to provide us with required data.
We would like to thank all teachers at Jönköping International Business School who conducted workshop seminars and guided us during the whole process of writing this thesis.
Finally, we thank our families and friends for their support and love.
Jönköping University May 2020
Table of Contents
1.
Introduction ... 1
1.1. Background ... 1
1.2. Problem ... 2
1.3. Purpose and research questions ... 3
1.4. Delimitations ... 4
2.
Literature review ... 5
2.1. Green construction ... 5
2.2. Cost Management in construction ... 7
2.3. Importance of early Stage management ... 8
2.4. Cost overruns ... 9
2.5. Risk and uncertainties ... 11
2.6. Cost overrun mitigation ... 14
2.7. Literature Review Summary ... 16
3.
Methodology ... 18
3.1. Research philosophy ... 18
3.2. Research Strategy and Approach ... 18
3.3. Research design ... 19
3.4. Methods and Techniques for Data Collection ... 20
3.4.1. Sampling: Companies and Respondents ... 21
3.4.2. Interviews ... 21
3.4.3. Archival Records, websites, and blogs ... 22
3.5. Data Analysis ... 22
3.6. Quality Assurance and Trustworthiness ... 23
3.6.1. Credibility ... 24 3.6.2. Dependability ... 24 3.6.3. Confirmability ... 24 3.6.4. Transferability ... 24 3.7. Ethical Implications ... 25
4.
Empirical Findings ... 26
4.1. Interviews ... 264.1.1. Conventional Construction companies ... 27
4.1.1.1. Positions and Teams involved in preconstruction phase ... 27
4.1.1.2. Answers for questions (company A&B)... 28
4.1.2. Sustainable Construction companies ... 34
4.1.2.1. Positions and Teams involved in preconstruction phase ... 35
4.1.2.2. Answers for Questions (company C&D) ... 36
4.2. Archival records, companies’ websites, and blogs ... 39
5.
Analysis ... 42
5.1. Theme 1: Uncertainties’ Fields ... 44
5.1.1. Financial Uncertainties ... 44
5.1.2. Managerial Uncertainties ... 45
5.1.3. Technical Uncertainties ... 46
5.1.4. Procurement Uncertainties ... 47
5.1.5. External Uncertainties ... 48
5.2.1. Direct Relationship ... 49
5.2.2. Indirect Relationship ... 49
5.3. Theme 3: Mitigation Techniques ... 51
5.4. Post hoc analysis ... 53
6.
Conclusion ... 56
7.
Discussion ... 58
7.1. Relevance of the topic ... 58
7.2. Managerial implications ... 58
7.3. Limitations ... 59
7.4. Future research ... 59
Figures
Figure 3-1.Research Design ... 20
Figure 3-2. Template analysis procedure. ... 23
Figure 4-1. PRT organogram ... 28
Figure 4-2. Risk management oversight chart at WSP. ... 40
Figure 5-1. Typical steps in Template Analysis... 42
Figure 5-2. Template Analysis ... 44
Figure 5-3. Financial Uncertainties ... 45
Figure 5-4. Managerial Uncertainties ... 46
Figure 5-5. Technical Uncertainties ... 46
Figure 5-6. Procurement Uncertainties ... 48
Figure 5-7. External Uncertainties ... 48
Figure 5-8. Indirect relationship of uncertainties and cost overrun ... 50
Figure 5-9. Mitigation Techniques ... 52
Tables
Table 2-1. Causes of cost overruns in building construction ... 11Table 2-2. Causes of Cost Overrun in green construction ... 11
Table 2-3. Risks in Construction... 13
Table 2-4. Risks in Green construction ... 14
Table 2-5. Sources of uncertainties in green construction ... 14
Table 2-6. Minimization of cost overrun in construction projects ... 15
Table 2-7. Minimization of cost overrun in sustainable construction ... 15
Table 2-8. Skills needed in construction management ... 16
Table 5-1. Framework of uncertainties, events, and mitigation techniques in Conventional and green Construction ... 54
Table 5-2. Framework of uncertainties, events, and mitigation techniques in green Construction ... 55
Appendixes Appendix 1………65
1. Introduction
This chapter introduce the topic of the research by providing background information, which is followed by research problem, purpose, and the research questions. At the end of this chapter description of the delimitations is also presented.
1.1. Background
The construction industry is causing a massive exploitation of the world’s resources (Sertyesilisik, 2017). With the mounting awareness of negative impacts on the environment by human activities in recent years, many industries including building construction have integrated green concepts into their plans to mitigate these impacts (Hwang & Ng, 2013). Moreover, environmentally sustainable building construction has experienced a remarkable growth. The market is touching the beneficial side of green construction and is getting more aware about the consumption of existing resources. Sustainable construction has core competences during the life cycle of the project, which entails reducing consumption of resources, reusing resources, using recyclable materials, protecting the natural environment, eliminating toxics and pollutants, budgeting the whole project life cycle, and quality validation (Kibert, 2005; Robichaud & Anantatmula, 2011). According to Nalewaik, CCE and Venters (2009), benefits like lifecycle cost savings make green buildings attractive to the owners.
In the construction process, poor performance in terms of delay and cost overrun occur because of being affected by unexpected variables. One of the most important problems in the process of construction is cost overrun (Mahamid & Dmaidi, 2013). Cost overrun as a frequent phenomenon is associated with almost all the construction projects (Azhar et al., 2008; Mahamid & Dmaidi, 2013). Because of the negative effect of cost overrun, it is essential to identify different causes of cost overrun to minimize it (Mahamid & Dmaidi, 2013). Risk is one of the main causes of cost overrun in construction projects (Skitmore & Ng, 2003; O¨ ztas, 2004; Okmen & O¨ ztas, 2010; Dominic, Ahiaga & Simon, 2014) and risk is about managing uncertainty (Ward & Chapman 2003; Rafindadi, Mikic, Kovacic & Cekic, 2014). Construction is associated with more risk and uncertainty than perhaps other industries (Flanagan & Norman 1993; Rafindadi et al., 2014). When sustainability issues are added to the process of design and building, managers face more uncertainty in the projects (Demaid & Quintas 2006; Rafindadi et al., 2014).
Ismael and Shealy (2018), mention the complexity, lack of experience, and new technologies as the sources of uncertainty in sustainable projects. In addition, Hwang and Ng (2013), refer to these sources (new technologies, unknown performance, high cost in green material and equipment, uncertainty with green material and equipment, and lack of the technical skill regarding green technologies) as causes of cost overrun in these types of construction.
It is essential to establish strategies for controlling costs by project managers during the initial phases of the project (Robichaud & Anantatmula, 2011).
This topic would be interesting for construction companies since it helps them to increase profits and avoid cost overruns in construction projects, as the governments are pushing this industry toward achieving sustainability and reducing the environmental impact of construction.
1.2. Problem
Companies have been facing many obstacles in green construction, these challenges exist at managerial and financial levels. “Sustainable building projects present numerous challenges to project management teams that are not always addressed effectively” (Pulaski & Horman, 2012). Barriers exist in green construction, the most common ones are related to delivering the projects within acceptable costs (Robichaud & Anantatmula, 2011). Environmental sustainability in construction became an urgent need, but many difficulties currently being faced are related to the construction costs, lack of experience and knowledge, technical problems, and new technologies (Opoku et al. 2019; Opoku, Agyekum & Ayarkwa, 2019). These barriers can be avoided by designers, stakeholders, consultants, contractors, and suppliers during the whole project cycle, starting from initial phases until the end life of the buildings (Wibowo, Handayani & Mustikasari, 2018). In construction industry, managers put a lot of efforts in the early stages of the project life cycle, which are the planning and design phases, as it is more costly to make changes during the implementation phase. However, the project managers are confronted with the reality that the skills used in conventional construction are not enough to manage a sustainable construction project, but other managerial behaviors should be considered in green construction to deliver a cost-effective project. According to Hwang and Ng (2013), the project management skills have been identified by Project Management Institute (PMI) in nine knowledge areas: Time, cost, integration, quality, communication, risk, scope, and human resources.
Risks and uncertainties do exist in both conventional and green construction, which makes the project managers’ duties harder and more challenging. The analysis of cost overruns’ sources and causes shows that risks and uncertainties in green and conventional construction have a large impact on budget control and on cost management. Therefore, avoiding cost overruns in construction projects can be achieved by exploration of uncertainties causing cost overruns and the reduction techniques of these uncertainties. Uncertainties affect costs differently in both types of construction, and better understanding of uncertainties in the early stages of the project may result in reducing cost overruns and satisfaction of stakeholders, and the company itself.
1.3. Purpose and research questions
The purpose of this research is to highlight on the link between uncertainties and cost overrun. It is simply a meeting point of cost overrun and uncertainties in the construction industry. Moreover, the research will show to what extent uncertainties can cause cost overruns in green construction and conventional construction and how uncertainties can be reduced differently in these two types of building construction in the pre-construction phase.
Research Questions:
Research Question 1:
How does the effect of uncertainties on cost overrun differs between green and conventional construction?
To answer this question, interviews were conducted with several positions in each company such as project managers, designers, and cost estimation engineers who participated in managing building construction. Interviewees were asked to provide further documents of cost estimates, project reports, and real costs for implemented projects. The idea was to provide data that give us an idea about the impact of uncertainties on the real costs.
Another RQ was needed to empower the existence of relation between uncertainties and cost overrun, by discovering efforts and practices to mitigate uncertainties and cost overrun in both types of construction.
Research Question 2:
What is the difference in uncertainties mitigation procedures in green and conventional construction?
Managers and senior staff in green and conventional construction companies were interviewed and asked about the managerial procedures they follow to avoid overspendings and cost overruns. Also, archival data and scientific blogs were used. In another way this question reveals the difference in managing the costs under uncertainties in both types of building construction and shows the necessity to develop further special techniques to face uncertainties resulting in cost overrun.
1.4. Delimitations
This research is conducted in the field of construction management and delimited only for building construction. The topic resulted in better understanding of uncertainties and its effect in cost overruns, also the mitigation techniques, in green and conventional construction companies. We gathered data in the literature review chapter from only peer-reviewed articles. The journals have high impact factor, i.e. more than one. To answer the research questions, we conducted qualitative semi-structured interviews with large-size companies only. The participants in the interviews are limited to senior staff and engineers engaged in the pre-construction phase. We also referred to scientific blog from university of the west England, and archival records and documentation gathered from interviewees, in which cannot be attached to this research upon the interviewees’ requests.
2. Literature review
The purpose of this chapter is to provide a theoretical background to deeply understand the topic. To do so, green construction is introduced and is followed by description of cost management and its importance in green and conventional construction, definition of cost overrun, risk and uncertainty as causes of cost overrun, and the techniques which have been identified by previous studies to mitigate cost overrun. This chapter ends with the literature review summary.
Old school literature review was used in this research, this means that only peer-reviewed articles were used to ensure the quality of this paper. We started choosing interesting articles related to the topic, the keywords used are “Green”, “construction Manag*”, “sustainability”, and “cost”. After collecting general data about the topic, and in order to narrow the literature toward studying the fields of uncertainties, risks, and cost management, new keywords were introduced like “Risk”, “uncertainty”, and “cost overrun”. We used the snowball method to review all the discussions and data collected previously by researchers within the same Journal. Following the citations, further information about the topic were collected from other journals as well. The articles were summarized and analysed by the authors, and data was arranged carefully. This allowed to analyse the gaps in the literature to find interesting field of research and to formulate the research questions.
2.1. Green construction
Statistics shows that construction industry consumes more than 34% of the natural
resources, and it is a main cause for CO2 emissions, pollution, and climate change. Buildings are considered as main causes of the global challenges as energy saving, sustainability achievement, and climate (Kelly 2009; Chiang, Zhou, Li, lam & Wong, 2014). Within the environmental campaign all over the world, a new concept “Green Buildings” has been raised in the construction industry. Robichaud and Anantatmula (2011), described green building as incorporation processes of environmental considerations in all phases of construction. This means that all aspects of the design, efficiency of water and energy, building materials and natural resources, maintenance of the homes, and the environmental impact should be taken into consideration (Robichaud & Anantatmula, 2011).
The concept of green construction, or in other words sustainable construction has raised from the sustainable development concepts, which is adopting sustainable management focusing on managerial practices, wisely use of resources, and sustainable design as well (Kibert, 2016; Hart, 2013; Opoku et al., 2019).
Environmental sustainability in construction projects can be recognized and ensured through some drivers that includes: the governmental policies and regulations, the designer’s methodology, the customer’s requirements, competitive advantages, government roles, incentives for green construction, and the utilization of social networks (Bragança, Agyekum & Ayarkwa, 2019).
Many approaches have been raised and developed due to the claims for achieving sustainability in construction, such as the regenerative construction concept, which aims to reduce the environmental impact that is a result of human activities and to generate positive impact on the environment. According to Sertyesilisik (2017), this concept has several requirements such as: design processes which involve stakeholders and alter them to participate in the design phase, assessments for the life cycle revenue, operation and maintenance after construction, modifications in construction project management to include waste management, roles and competences of the construction management team involved in the regenerative construction, and changes in contraction and tendering procedures.
According to Hill and Bowen (1996), sustainability has four attributes that includes economic, social, technical, and biophysical aspects, and he considered them as the foundations of the sustainable construction. The green construction movement has set a standards and attributes of sustainability and green buildings concern reduction of the need for new infrastructure, damages during construction, environmental impact, and consumption of energy, water, and construction materials (Cole 2012a, 2012b; Sertyesilisik, 2017). The green movements are orienting companies toward using environmentally friendly materials, and to include sustainability criteria in its financial and managerial practices. Many other approaches are needed to reduce the environmental impact of conventional and unsustainable construction, such as developing new operation processes that increase efficiency, and usage of environmentally friendly greener materials (Wibowo et al., 2018).
2.2. Cost Management in construction
When the concept of green building improved, there was a common perception that green construction was more expensive since reducing the impact of the construction process itself may affect and increase the overall cost of the project (Nalewaik et al., 2009). The costs of green construction initially are higher than the conventional construction, but these costs can be recovered on the long term due to savings in energy consumption, and reduction of operation and maintenance costs. Comparing to conventional construction, the capital costs of green construction projects is higher for a range between 1% and 25% (Tagaza & Wilson, 2004; Hwang & Ng, 2013). In order to manage expensive green materials effectively and to prevent cost overruns it is of great importance for project managers to have a good understanding of cost management (Hwang & Ng, 2013).
According to Pulaski and Horman (2012), project managers manage sustainability separately instead of integrating it, and this leads to delays in the delivery process and generates extra costs and affects the process of optimization of sustainable building performance.
Another key point to mention is that cost management entails several processes as budgeting, cost estimation, planning of resources, and cost control (Hwang & Ng, 2013). Cost estimation is becoming a challenge for the managers in sustainable construction, due to several reasons related to uncertainties in using new materials, and technologies, new markets, new policies, and regulations. The cost estimation should be close to the actual cost and it should include the future savings and expected profit. Precise data in planning stage will create a value for companies and customers and will match with the sustainability management.
Without a clear cost estimation, managers will not be able to draft the financial plan which includes both hard and soft costs. The process of cost estimation can be done by using special software and on consecutive precise steps, in cooperation with the project team, the quantity surveyor should collect cost estimates from previous contracts and from the contractors, as well as conducting a market prices assessment.
Moreover, the project manager can improve the cost estimates and the materials’ reliability by investigating contractors’ feedbacks and knowledge, which in return optimize the level of accuracy of estimation (Hill, 2006; Robichaud & Anantatmula, 2011). The process is more complicated in green construction, where more data is needed, and more uncertainties exist. Given the relative youth of the green building
industry, sustainable building products are also a relatively immature market (Robichaud & Anantatmula, 2011).
2.3. Importance of early Stage management
Practices prior implementation and construction phase, namely, planning and design are very important and sensitive in construction projects. These processes continue till the end of the project (Hill & Bowen, 1996). Identification of project goals in the early stage, and integration of new criteria, will result in more sustainable construction and green buildings (Bragança et al., 2014). Early consideration of sustainability is considered as a key to realize a sustainable building (Edwards & Hyett, 2005; Mills & Glass, 2009). Companies are using time-based mechanism for costs in sustainable construction projects, this approach includes whole-life cycle cost (Tokede, Wamuziri, Sloan & Brown, 2014). Also, construction processes depend on the decision that take into consideration time and cost prior to design and implementation (Irizarry, Karan & Jalaei, 2013; Wibowo et al., 2018). Decisions taken during the design phase can affect the costs and efficiencies in later stages of the project, so quantity surveyors are included in the design phase (Osso et al., 1996; Matipa, Kelliher & Keane, 2009). In addition, the decision making is critical and can mitigate the difficulties related to green materials and equipment (Hwang & Ng, 2013).
According to Robichaud and Anantatmula (2011), some strategies are followed to decrease the cost of green construction, and practitioners started to develop managerial skills for this reason. Enhanced level of communication between the project team, early planning for the construction projects, and integration of stakeholders in the design process are being used to avoid increased cost in sustainable construction. The National Charrette Institute highlighted the impact of collaborative planning to produce smart plans during the preconstruction phase, which is known as charrette, where nine categories were identified as follows: working collaboratively; designing cross functionally; using design to achieve a shared vision and solutions; studying the details and the big picture; operating under constrained work schedules; communicating in short feedback loops; including a multiday charrette; working on site; and Producing a feasible plan (Robichaud & Anantatmula, 2011) .
Preconstruction phase is critical in a project life cycle since decisions made during the early stages of the process have more economic consequences than the decisions made later in the process. However, this is not simple, because of the lack of information in
the early stages of the project (Hegazy, 2002; Dominic et al., 2014). Therefore, risk management in most cases is so poorly performed, which result in cost overrun (Flanagan & Norman, 1993; Dominic et al., 2014). Besides to that, accurate cost estimation can be achieved only if the estimator can be able to predict the future, while this seems very hard even with usage of most recent technologies. Accurate estimation can be possible under certain circumstances and when all data and information are known. Uncertainties and risks are very crucial for the construction industry causing controversy and debates. (Dominic et al., 2014).
Cost management tools are used by project managers in the early stages of the project to avoid cost overruns during implementation and to handover the project according to the committed budget (Mahamid & Dmaidi, 2013).
2.4. Cost overruns
The difference between the contractual estimated amounts and the actual cost is known as the cost overrun (Mahamid & Dmaidi, 2013). Cost overrun has a negative impact on the project’s outputs and on the consultants, customers, and contractors causing mistrust, cash flow problems, litigation, and ineffective management (Ahmed et al., 2003; Mahamid & Dmaidi, 2013). For these reasons, researchers have studied the reasons of cost overrun and how it can be mitigated (Tables 2.1 and 2.2). Most of the causes are related to managerial mistakes, financing, unstable prices of materials, changing in designs, incorrect cost estimation, contractual problems, unclarity in contracts’ conditions, and environmental requirements (Mahamid & Dmaidi, 2013). In the construction industry, cost overrun refers to several sources as design mistakes, low-level managerial competences, risks and uncertainties, deception, and corrosion (Dominic et al., 2014).
The following two tables below show the reasons for cost overrun in conventional and sustainable construction.
Authors/References Reasons for cost overrun in building construction Jackson, 2002; Memon
Abdul Rahman, Zaniun & Abd Karim, 2013. (UK)
Design changes, method of estimation, performance of design team and project management.
Olawale & Sun, 2010;
Memon et al., 2013. Design changes, risk and uncertainty, inaccurate time evaluation, complexity, conflict, inflation, lack of experience.
Frimpong et al., 2003; Memon et al., 2013.
(Ghana)
Material procurement, inflation, financial problems, poor planning and scheduling, weather, cost underestimation.
Le-Hoai et al., 2008; Memon et al., 2013.
(Vietnam)
Poor site management and supervision, poor project management, financial difficulties, design changes. Ali & Kamaruzzaman,
2010; Memon et al., 2013. (Klang Valley)
Inflation, improper planning, poor project management, lack of experience, unsuitable construction methods, site conditions, mistake in design, insufficient funds, cost underestimation. Khamidi et al., 2011;
Memon et al., 2013. Delays in implementation. Alaghbari et al., 2007;
Memon et al., 2013. Lack of materials, poor site management, construction mistakes, delay of material delivery, lack of experience. Sambasivan & Soon, 2007;
Memon et al., 2013.
Mistakes during construction stage, inadequate contractor experience, financial dificulties, lack of communication between parties.
Odeh & Battaineh, 2002; Memon et al., 2013.
(Jordan)
Owner interference, inadequate contractor experience, finance, labor productivity, site management, slow decision making, construction methods, improper planning and subcontractors.
Sweis et al., 2008; Memon
et al., 2013. Change orders from owner, poor planning and scheduling, incompetent technical staff. Fugar & Agyakwah-Baah,
2010; Memon et al., 2013. (Ghana)
Underestimation of the cost and complexity, time limitations, poor supervision, shortage of materials, poor professional management, fluctuation of prices, and poor site management.
Assaf & Al-Hejji, 2006; Memon et al., 2013.
(Saudi Arabia)
Change orders, delay in payments, ineffective planning and scheduling, poor site management and supervision, shortage of labors, changes in regulations, accidents during construction.
Al-Juwairah, 1997; Mahamid & Dmaidi, 2013.
(Saudi Arabia)
Incorrect planning, contract management mistakes, wrong estimation method, and previous experience in contract.
Al-khaldi, 1990; Mahamid & Dmaidi, 2013.
(Saudi Arabia)
Previous poor experience in contraction, financial difficulties, project location, and contract period. Al-Najjar, 2008; Mahamid
& Dmaidi, 2013. (Gaza strip)
Prices fluctuations, contractor’s delay of material delivery and equipment, and prices inflation.
Iyer et al., 2005; Mahamid
& Dmaidi, 2013. (In India) Conflict among project stakeholders, lack of knowledge, economic and climatic conditions, reluctance in timely decision, short preparation time. Elinwa et al., 1993;
Mahamid & Dmaidi, 2013. (In Nigerian)
Cost of materials, fraudulent practices and kickbacks, and fluctuation of prices of materials.
Frimpong et al., 2003; Mahamid & Dmaidi, 2013.
(Ghana)
Payment difficulties from agencies, poor contractor management, material procurement, poor technical performances, and escalation of material prices.
Azhar et al., 2008; Mahamid & Dmaidi, 2013.
(In Pakistan)
Price fluctuation, poor site management or poor cost control, delays between design and procurement phases, methods of cost estimation, additional work, improper planning.
Okpala et al., 1988; Mahamid & Dmaidi, 2013.
(In Nigeria)
lapses in the management of human and material resources, shortage of materials, methods of financing, poor contract management, price fluctuation.
Nega, 2008; Mahamid & Dmaidi, 2013. (Ethiopia)
Increase in the cost of construction materials, poor planning, and coordination, and change in orders. Table 2-1. Causes of cost overruns in building construction
Authors/References Reasons for cost overrun in green construction Magent, 2005; Leoto &
Lizarralde, 2019.
Inefficient and wasteful activities in design processes such as incomplete documents and unnecessary tasks. Hwang & Ng, 2013. New technologies, unknown performance, high cost in
green material and equipment, uncertainty with green material and equipment, difficulty in the selection of subcontractors, more time required to implement green construction, more alteration design change during the construction process, lack of communication and interest, specific performance required for green building projects, and lack of the technical skill regarding green technologies.
Wade, 2005. Design change, varying combination of alternatives. Gluch & Baumann, 2004;
Tokede et al., 2014. Unrealistic estimation and incorrect decisions. Table 2-2.Causes of Cost Overrun in green construction
2.5. Risk and uncertainties
Identification of risks at early stage in the project cycle is a challenging duty of project managers. Success in risk management requires building up a risk model and strategies that estimate the risks’ intensity and the appropriate response to mitigate the risks (Dikmen, Birgonul & Han, 2007). Risk is one of the main causes of failure to meet cost targets on construction projects (Skitmore & Ng, 2003; O¨ ztas, 2004; Okmen & O¨ ztas, 2010; Dominic et al., 2014). For the project to be successful there is a need of the combination of all risks, and strategies used to mitigate risks and manage them (Dikmen et al., 2007).
Risks that should be considered in the design phase are technical risks, managerial risks, resource risks, design risks. Examples of these categories would be unavailability of
resources, unavailability of subcontractors, design errors, poor planning, vagueness of scope, technical complexity, experience in similar projects, vagueness of construction techniques and methods (Dikmen et al., 2007).
According to Ismael and Shealy (2018), risk management is the process by which risks are recognized and used in planning such as likelihood of failure, delay of schedule, or increased cost by changing construction techniques, and lack of experience. For example, in changing materials for those with sustainable properties, errors can occur and lead to increasing probabilities of risks. Green construction can be more expensive when construction professionals are not aware of these possible risks. The success of sustainable construction depends on predicting risks and the developing a risk management plan. To develop risk management techniques, it is also essential to understand the unique variation between conventional and sustainable projects (Ismael & Shealy, 2018).
It is suggested to use process uncertainty management instead of risk management (Ward & Chapman 2003; Rafindadi et al., 2014). Uncertainty is conditional for a risk to occur, this means that risk is about managing uncertainty (Ward & Chapman 2003; Rafindadi et al., 2014). Uncertainties address the outcomes that cannot be identified, and no probability can be assessed to find alternatives for outcomes (Terje et al., 2011; Rafindadi et al., 2014). Uncertainty is more relate to variability and ambiguity, as it entails lack of information, unclear data, lack of structure, and unknown sources (Ward & Chapman 2003; Rafindadi et al., 2014).
Uncertainty management includes enhancing communication, concentrate on project objectives, and analysis. These attributes should be considered in sustainable projects to be successful (Ward & Chapman 2008; Rafindadi et al., 2014). When sustainability issues are added to construction practices, managers face more uncertainty (Demaid & Quintas 2006; Rafindadi et al.,2014).
Moreover, it has been agreed by researchers that uncertainties are the sources of risks, and it is a challenge to identify, assess, and deal with them in sustainable construction, (Remenyi & Heafield, 1996; Rafindadi et al., 2014).
Uncertainty can exist in different forms, as it can be unclear, fuzzy, and imprecise. Also, it can be the ambiguity and vagueness where several choices exist, and it can be in a form of intervals and data that is not specific, and it can be due to unpredictable events and changes (Ross, Booker & Montoya, 2013). Technology, market, organization, finance, and regulation are five main uncertainties’ sources in construction projects
which affect the estimated cost and generate delays in implementation (Zhong, Chen, Zhou & Hu, 2018).
The 3 tables below show the risk sources that exist in conventional constructions, risks in green construction, and sources of uncertainties in green construction, respectively.
Authors/References Risks in construction Rafindadi et al.,
2014.
General Project Risks: Project Complexity, Team Integration, Stakeholder Collaboration.
Risks in Feasibility and Design Phase: Client skills, Feasibility, Quality of initial surveys, Design contract parameters, Designer skills.
Risks in Construction Phase: Ground conditions, Design quality, Contract adequacy, Contractor skills, Resource issues, Financial resources, Engineer skills, Expropriation, Climatic conditions, Accidents on construction site.
Risks in Operating Phase: Climatic uncertainties, Resource scarcity, Human performance
Dikmen et al., 2007. Risks in the design phase: technical risks, managerial risks, resource risks, design risks.
Examples of these categories are unavailability of resources, unavailability of subcontractors, design errors, poor planning, vagueness of scope, technical complexity, lack of experience in similar projects, vagueness of construction technics and methods.
Table 2-3.Risks in Construction
Authors/References Risks in green construction Kang et al., 2013; Qin, Mo
& Jing, 2016. Greater complexity, lack of understanding of sustainability, and a greater possibility of cost overrun.
Qin et al., 2016. New technologies, expectations, and regulations Qin et al., 2013; Qin et al.,
2016. Social risks, political risks, certification risks, financial and cost risks, quality and technological risks, managerial risks.
Tulacz, 2008; Qin et al.,
2016. (US) Financial risks, standards of care/legal, poor performance. Li et al., 2011; Qin et al.,
2016. Technological risks, economic and managerial risks. Ismael & Shealy, 2018. Design changes, Material availability, Uncertainty in the performance of materials, Technology, Construction, Cost estimation inaccuracy, Payback
period, High cost of sustainable materials and equipment, lack of knowledge, High initial costs, Costs of investment in skill development.
Ismael & Shealy, 2018. Lack of experience in sustainability, high initial cost for materials and overall project costs.
Rafindadi et al., 2014. Legal conditions, Complexity, Team Integration, Stakeholder Collaboration, Feasibility studies, Quality of initial surveys, Designer and engineer skills, Design quality, Resource, Financial, Climatic, Accidents, Climatic, Human performance.
Horman, 2010; FIDIC,
2012; Rafindadi et al., 2014. Resource scarcity and availability.
Rafindadi et al., 2014. Complexity, Designer Skills, Financial difficulties, Human Performance.
Table 2-4.Risks in Green construction
Authors/References Source of uncertainty in green construction del Caño, Gómez & de la Cruz,
2012. Selection of contractors, and design change. Ismael & Shealy, 2018. Complexity, lack of experience, and new
technologies.
Fidic, 2004; Rafindadi et al., 2014. Requirements for sustainable development. Demaid & Quintas 2006;
Rafindadi et al., 2014.
Complexity, rapid and unpredictable change. Hwang & Ng, 2013. Uncertainty with green material and equipment.
Wade, 2005. New technologies, life cycles, maintenance rates. Ellingham & Fawcett, 2006;
Tokede et al., 2014. Investors’ commitment, component service life, building-life expectancy, and future decisions. Klotz & Horman 2010; Rafindadi
et al., 2014.
Complex processes for delivering sustainable projects, and unfamiliarity with sustainability. Fidic, 2012; Rafindadi et al., 2014. Human performance during the operation
phase.
Table 2-5.Sources of uncertainties in green construction
2.6. Cost overrun mitigation
As it can be seen in the tables, previous studies have identified different common reasons for cost overrun in conventional and green construction. In addition, the authors suggested some implications to deal with this issue. As the risk and uncertainty is one of the main reasons for cost overrun, some authors identified them with some techniques to handle it.
For instance, in sustainable projects more time is required during the project planning process. Therefore, to deliver the project in time, project managers should be effective at schedule and planning management and make sure that cheaper alternatives are
sourced while keeping up with planning. Furthermore, green construction requires the them to be more detailed when planning the project. Communication management is also important since project managers have to ensure that information is communicated to all sections involved in the pre-project process (Hwang & Ng, 2013).
Author/References How to minimize and control cost overrun in building construction projects
Mahamid & Dmaidi, 2013.
Improve managerial skills of project participants, update material prices and labor rates, sufficient time for preparing feasibility studies, planning, design, and information documentation, which avoid or minimize late changes, on time payment, more communication between project participants, positive react to changes by managerial and financial policies.
Table 2-6.Minimization of cost overrun in construction projects
Authors/References How to control cost overrun in green construction Egan, 1998; Leoto &
Lizarralde, 2019
Increasing efficiency in the design process and the quality in the construction output.
Zimmerman, 2004; Leoto
& Lizarralde, 2019 Better-integration in design process. Greenwood, 2003; Leoto
& Lizarralde, 2019. Making accurate designs that meets customer needs. Leoto & Lizarralde, 2019. Increasing efficiency in the design process.
Hwang & Ng, 2013. Improved Communication, drafting comprehensive designs, and interaction with different stakeholders. Hipkiss, 2005; Matipa et
al., 2009.
Effective collaboration in early phases within the project team.
Matipa et al., 2009. Analyzing of design options in early stages of the project. Wade, 2005. Setting the goals at the early stages, analyzing the cost of alternatives, economic analysis based on similar technologies, and determining difference(Δ) between the data with similar technologies and the matching data for the sustainable elements.
Verbruggen et al., 2011;
Tokede et al., 2014. Understanding the objectives and requirements of the system and considering time and uncertainty. Tokede et al., 2014. Focusing on mathematical inter-relationships of cost variables and following the time-based costing mechanism based on similar methodologies.
Edwards & Hyett, 2005;
Mills & Glass, 2009. Early consideration of sustainability. Mohamed, Maged &
Elsaid, 2008.
Integrating sustainability within the standard practice of construction.
The table below shows the skills which affects the cost management in construction, and the fields of improvement to avoid cost overruns.
References/Authors Skills needed in construction management Hwang & Ng, 2013. Schedule management and planning,
communication management, risk management, Decision making, cost management, human resources management, team working, problem-solving skills
Mills & Glass, 2009. awareness and passion, communication, technical knowledge, and experience
Riley et al., 2004; Demaid & Quintas, 2006; Swarup et
al., 2011; Rafindadi et al., 2014.
Designer Skills, Insisting on Designers with experience, Integrated design, design collaboration Leoto & Lizarralde, 2019. integrated design (ID) is a powerful way to enhance
collaboration in construction projects. Slaughter, 2000; Leoto &
Lizarralde, 2019. common objectives in the early stages can motivate stakeholders to collaborate. Chiocchio et al., 2011;
Leoto & Lizarralde, 2019. Team work to reach a common goal. Jalonen & Lehtonen 2011;
Leoto & Lizarralde, 2019. Trust as the foundation of effective collaboration. Hayton & Kelley 2006;
Leoto & Lizarralde, 2019. Encouraging and inspiring others. Table 2-8.Skills needed in construction management
2.7. Literature Review Summary
Climate change as an international phenomenon has received much attention in the last decade, resulting in raising the concept of environmental sustainability in construction; or in other words; green construction. However, applying sustainability in management is still a high barrier especially for managers and engineers. In sustainable projects, managers are confronted with different responsibilities to deliver a cost-efficient green project. Furthermore, managing green construction projects revealed a substantial change in the skills needed to match the sustainability criteria. Practitioners and researchers agreed that early stage in the project life cycle is crucial and critical in green construction and its less costly than making modifications during implementation stage. Looking deeply into the skills of project managers, cost management is a project challenge that should be considered to avoid cost overrun. Managers tend to hire
quantity surveyors to have the closest estimates to reality. But this task is more challenging in green construction due to absence of enough information about green materials, special equipment, sustainable logistic systems, and paradigms.
In addition to cost estimation, and budget control challenges, assessing risks that may affect cost overruns puts more pressure on managers as green construction is characterized by existence of uncertainties and ambiguity. On the other side, uncertainty is an inevitable part of the sustainable construction projects which is the result of ambiguity in material alternatives, unfamiliar and new technologies and techniques. Therefore, cost estimation and uncertainties involved in the project which can increase the cost in sustainable construction should be considered in the early stages of the project which is the pre-construction phase.
Different researches indicate similar reasons for cost overrun in conventional and green building construction. There are common risks and uncertainties in both cases which result in cost overrun including complexity of project decisions, design change, lack of communication, shortage of materials, cost underestimation, improper planning, high initial cost for materials and overall project costs, financial issues, unrealistic estimation, etc. Following the mentioned risks, previous studies identified some techniques to meet the challenges. However, further research is needed to compare uncertainties and its effect on cost overrun in green and conventional construction. The goal of the study is to investigate the difference between green and conventional construction regarding uncertainties, its effect on cost overrun, and the techniques being used to mitigate them.
3. Methodology
This chapter will show the methodology followed to conduct this research. Starting from the philosophy of the research and followed by the research strategy and approach. Then data collection section will show how primary data and secondary data were collected in this research through interviews, archival records, and blogs. Also, the reasons behind choosing the case studies, and the method used to analyse the data. The chapter ends with discussion about the research quality assurance, and ethical implications of the research.
3.1. Research philosophy
Ontology is about philosophical assumptions about the nature of reality and Epistemology is about the theory of knowledge, and ways of acquiring the nature of world (Easterby-Smith, Thorpe, Jackson & Jaspersen, 2018). The ontology position of this study is relativism, since the reality is based on different perspectives, examples of which would be interview with designers, project managers, and cost managers in each of the selected companies for interview.
According to Easterby-Smith et.al. (2018), in social constructionism ‘reality’ is determined by people rather than by objective, and hence it is important to consider the way people make sense of their experience. Based on the goal of the research, there is a need to consider and understand different perspectives of several positions involved in pre-construction phase of green and conventional construction companies since according to the literature review, these roles are significantly important in the early stage when the cost of the project is being estimated. Accordingly, to understand the effect of uncertainties on cost overrun and the techniques which are being used in these organizations to mitigate it, interviews have been conducted with different positions mentioned above in the companies. Therefore, this is a qualitative study based on social constructionism, in which the result highly depends on the experience and perceptions of interviewees, and the reality is given meaning by people and interviewees.
3.2. Research Strategy and Approach
An exploratory case study should be used when the research is aiming to understand a phenomenon and how it is happening (De Massis & Kotlar, 2014). In this research we used explanatory case study to understand the effect of uncertainties on cost overrun. Qualitative research strategy was conducted in this research through triangulation method as we collected data about construction companies through qualitative interviews which offer detailed information of dealing with uncertainties, also from
archival records such as the companies’ reports, and from scientific blogs and websites to discover further useful data .
This research is in line with abductive approach beginning with collecting data from multi case studies to develop a theory based on the comparison green and conventional construction companies. According to Dubois and Gadde (2002), An abductive approach is useful if the researcher aims to discover new things, variables, relationships and to develop a theory. In abduction approach, due to unanticipated empirical findings, the original framework is continuously modified, and it is a mixture of established theoretical models and new concepts derived from reality in which new combination can be developed (Dubois & Gadde, 2002).
3.3. Research design
The research started by collecting data and information from previous researchers in the fields of cost management and uncertainties in the construction industry. The data was analysed and summarized. Gaps were identified and research questions were formulated to be answered in later stages of the research. The research questions are designed in a way to compare uncertainties’ effect on cost overrun and the mitigation techniques in two types of construction (conventional and sustainable). After that, multiple cases were selected. Chosen construction companies are limited to large size companies. Data was collected through interviews with senior staff like project managers, and engineers in each company, interview guide and questions were prepared prior to interviews to facilitate the process of data collection. Other data was collected from companies’ reports and university blogs and websites. The data collection was followed by data analysis and drawing conclusions by the authors based on the knowledge and data discussed in the research. The research is designed in a systematic manner where readers can understand the content, the results, and the procedure of answering the research questions.
3.4. Methods and Techniques for Data Collection
To gather all the information needed, different methods for data collection were used including primary data and secondary data. Through interviews empirical data was interpreted by the authors, and company’s archival reports and data from blogs and websites were collected as the complementary for the primary data. Using various and different data, and making combination of subjective and information, improves the quality of data analysis, processes, and outcomes (De Massis & Kotlar, 2014).
Literature Review: Researchers Dialogue
Sampling: Multiple Cases Selection
Data Collection: -Interviews -Archival records -Blogs and websites
Data Analysis
Results and conclusions
3.4.1. Sampling: Companies and Respondents
We used multiple case study method to collect the data through interviews .We were careful in selection of the cases to ensure acquiring the required data, as we concentrated on discussing the relationship between uncertainties and cost overruns as two existing variables in green and conventional construction. Selection of cases in qualitative research is crucial in case study methods, unlike other sampling methods in quantitative research as random and statistical sampling, cases are selected carefully and on purpose since they are appropriate for discussing a phenomenon, and for clarifying relationships among variables (Eisenhardt, 1989; Graebner & Eisenhardt, 2004; De Massis & Kotlar, 2014). We selected two types of construction companies (Conventional construction companies and Green construction companies) to match with the research questions. To have a better and more reliable investigation we chose to compare large companies, since in large companies there are more engineers of different positions involved in the early stages of the projects than small companies. In this way we can also have more perspectives in the same company. Large size companies are classified as companies who have more than 250 employees (OECD, 2020). All selected companies belong to
this criterion.
Companies selected were based in different countries. All companies located in Sweden follow governmental policies and sustainability criteria, so we chose conventional construction companies in other countries (Lebanon and Iran). Regarding the sustainable construction companies, both selected companies are based in Sweden, while the company D interviewees were based in Canada and Sweden.
Interviewed persons (Respondents) were selected according to their position in the company. The positions targeted were limited to senior staff like project managers and engineers. These positions are involved directly in the early stages of the project, and involved in uncertainty, cost, and risk management in the preconstruction phase.
3.4.2. Interviews
Primary data was collected by conducting the interviews with construction companies as we mentioned before. 10 interviews were conducted with companies (Six interviews with Green construction companies, and four interviews with conventional construction companies). Besides to that, several interviews were conducted in the same
company with people of different positions. This method helps to avoid bias and ensure the authors to receive the right data.
Semi-structured interviews were conducted, the topic and structure of the interview were set prior to the interviews. This method allows the interviewees to share information easily and in a flexible way, and the interview questions were designed to guide the interviewer to provide data needed. The questions were open-ended, and laddering procedure followed to get gradual provision of information during the interview, it was applied by asking extra (why) questions and asking the interviewees to provide some realistic examples. The data was later transcribed carefully and prepared for analysis.
3.4.3. Archival Records, websites, and blogs
More data was collected by asking the companies to provide extra documentation related to cost estimation of projects, real costs after implementation, and project reports, and other data related to the study. Also, we collected some data from companies’ websites and blogs. This data is beneficial since it supports the information provided during the interviews. The documentation also shows the rules and internal discipline followed by the company. Moreover, data that exist in the documents serve as complementary data and helped the authors to conduct deep analysis in the research.
3.5. Data Analysis
Before starting data analysis, the process of data preparation was done. List of contacts were prepared and updated regularly. All the interviews were recorded and transcribed completely in written texts. To deeply understand the theory and compare it to the empirical data we tried to constantly move from the theory to the empirical work and vice versa. According to Dubois and Gadde (2002), by regularly going ‘back and forth’ between research activities including empirical observations and theory, researcher can expand his or her understanding of both theory and empirical phenomena.
Considering the research design, and research questions, it was found that the most appropriate approach for this study was the template analysis, since we try not only to understand the context considering different perspective of interviewees, but also to clarify and link the concepts and ideas.
Template analysis is a method between content analysis where codes are predetermined and grounded theory where codes emerge during the analysis. It is a flexible structure
which guides the analytical process and a way to fallow the notion of theory development. The process starts with open coding procedure, and by coding data in a thematic way a structure is produced and ends with a template in a more theory testing way (Easterby-Smith et al., 2018).
Analysis started with identifying categories based on the research questions and the topic. This open coding helped us to categorize and sort the information gathered from the interviews and start to compare them, finding similarities and differences between two types of companies. Template method was a flexible structure which we could update while finding new information. The figure below shows the procedure of template analysis.
Figure 3.2. Template analysis procedure (Easterby-Smith et al., 2018, p.374).
3.6. Quality Assurance and Trustworthiness
The Quality insurance in this research can be measured according to Guba criteria of trustworthiness that is composed mainly of the following four aspects: Credibility, dependability, confirmability, and transferability.
3.6.1. Credibility
Credibility is the process of understanding the depth of and scope of the issues under investigation (Guba, 1981). The interviews prolonged in this study is ambushed in using companies’ documentation. Moreover, conducting interviews with employees of different positions involved in the early stages of construction projects assures the credibility and prove the data transcribed. Also, the archival data used from the companies are official and it is considered as a reliable source of information.
3.6.2. Dependability
Dependability originates form production of stable results by using appropriate methodologies (Guba, 1981). We used purposive sampling criteria to match with the research questions. As we mentioned before, companies were chosen carefully, and positions to be interviewed were preselected. Also, the methodology of conducting this research is well described and we made it clear for the reader. The methodologies used were appropriate to achieve best results in these types of researches.
3.6.3. Confirmability
Confirmability tackles to the extent that the outcomes can be achieved by other researchers. It is simply the degree of neutrality and that the results of the research are not exposed to bias or affected by the interests of the authors (Guba, 1981). To do so, we transcribed the data carefully from the interviews, and analysis of this data was according to the facts and real-life incidents during implementation of construction projects. The feelings, or personal opinions was not taken into consideration in analyzing the data collected.
3.6.4. Transferability
Transferability according to Guba (1981), is about possibility of results transfer between context. As we are extending the knowledge about theories generated by other researchers, we used snowball technique in drafting the literature review. This research can offer easy transfer of data for readers and practitioners, since we discussed in details the researching procedure and the methodologies followed in all stages, starting from the literature review followed by choosing the case, data collection, and analysis. The results revealed can be easily transferred as researchers and companies are interested in
improving the managerial skills to reduce both uncertainties and cost overruns in the construction industry.
3.7. Ethical Implications
According to Easterby-Smith et.al. (2018), research ethics include protecting research participants and integrity of research community. This means ensuring no harm for participants, respecting, and considering dignity, informed consent of interviewees, protection of privacy, confidentiality, avoiding deception, transparency, and research honesty, and avoiding false reporting.
All these ethical issues were applied in the process of the interviews. To avoid ambiguity for interviewees, the topic was clarified, and research purpose was briefly described above interview questions, this information was sent to the participants prior to interviews. Interviewees were also insured that their name will not be disclosed in the research, and we asked for a permission to record the interviews. Interviews were accurately transcribed to avoid misleading of information and biasing by authors, or to avoid false reporting. Moreover, we ensure the confidentiality of the documents that was shared with us by some interviewees, and that these documents are just for academic use. Furthermore, we were greedy that this research will not harm any company or any actor in the construction industry. We believe that this research will help construction companies to improve its core competences and managerial capabilities. Also, it will result in better understanding about applying sustainability in the construction industry, and it will help in reducing the environmental impact and development of societies.
4. Empirical Findings
In this chapter the findings from interviews, archival records, and blogs will be presented. The interviews’ results will be arranged according to two types of construction, which are conventional and green companies. Interviews
4.1. Interviews
When conducting the interviews, we were trying to interview persons of different positions at the same company. The study is focusing on uncertainties faced in the pre-construction phase and its effects on the project cost, each interviewee provided different inputs through his role in the pre-construction phase of the project, which is preceding the implementation phase. The main positions targeted were project managers, and the engineers’ team like project engineers, cost estimation engineers, design/planning engineers, and procurement engineers. Some questions are not applicable in the conventional construction companies.
Company Company Name Location Size Type of Construction
A PRT Iran Large Conventional
B Anonymous Lebanon Large Conventional C Wästbygg AB Sweden Large Sustainable D Anonymous Canada, Sweden Large Sustainable
Table 4-1. Selected Companies
Company Positions No. of interviews Time of interview(s) A
Project Manager 1 45min
Cost Estimator 1 55min
Design Engineer 1 40min
B
Project Manager 1 50min
Design Engineer 1 35min
Project Engineer 1 45min
C Project Manager 1 45min
Design Engineer 1 30min
D
Project Manager 1 55 min
Procurement Engineer 1 50 min Table 4-2. Respondents list
4.1.1. Conventional Construction companies
We conducted interviews at two companies that are implementing conventional construction, where sustainability criteria are not followed or partially followed.
• Company A: PRT, it is a construction company, based in Iran, the company is implementing construction projects serving both corporate and public sector clients on a national basis in around 10 cities. This company is involved in major airports projects including runways, terminals, taxiways, railway, high rise buildings, and road construction.
• Company B: Anonymous, this company is a large-size company and working in 23 countries, it implements construction and infrastructure projects, and specialized in urban planning and mega development projects. The interviewees at this company are based in Lebanon and preferred not to mention the name of the company and the archival reports shared, due to sensitive data they wanted to provide. When project managers were asked about their role in planning stage, they replied that they are responsible about projects from the initiation phase until the closure phase. Their roles are to deliver projects within the required quality and the available budget.
4.1.1.1. Positions and Teams involved in preconstruction phase
To understand the size of teams involved in the early stages of the project, the interviewees were asked about the structure of the company, and the teams in charge of planning and design stages. The project manager at PRT discussed the whole process and how the company select the construction project. The project is selected according to the estimated profits by a specialized civil engineer and a cost estimator, in addition to the location and type of construction. Other staff are involved in the project after launching as architects, structural design engineer, mechanical engineer, and electrical engineer. All plans and documentation must be checked by the project manager before taking the final decisions.
In case of company B, the project manager identified three major positions who are involved in the pre-construction phase, namely the project engineer, quantity surveyor, and design engineers. While other staff are participating as well in this phase, the project manager is the chairman and holds the responsibility, two design engineers who create the full structural design, one project engineers to follow on the project since launching until handing over to the clients, a quantity surveyor to generate bills of quantities and produce cost estimates, electrical and mechanical engineers. These staff are supported by logistics and finance departments.
4.1.1.2. Answers for questions (company A&B)
In this section the answers will be presented from different point of views, as different positions conducted the interviews with us.
Question 1: What obstacles/challenges you face while estimating the project’s cost?
Company A: The project manager of PRT referred to difficulties in specifying the technical specs of materials in the contract, and small mistakes or unknown specs can make large differences in price, he stated “even small difference of the pipe’s size can make
difference”. Also, he mentioned that any mistake in documentation can affect the cost,
and the decisions made on site by some engineers could cost the company more than Figure 4-1. PRT organogram A rchitec ts C ivil E ng ine er M ec ha nic al E ngi nee r E le ctrica l E ngi nee r Qu ant ity Sur vey or Dr aw ing T ea m C os t E stima tor Projec t C ontr olle r Pr oj ec t ma na ger C ivil E ng ine er M ec ha nic al E ngi nee r E le ctrica l E ngi nee r Project Manager/CEO Project Engineers Finance Team Design Team
