Alexandria Engineering Journal (2013) 52, 51–66

Alexandria University

Alexandria Engineering Journal

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ORIGINAL ARTICLE

Factors causing cost variation for constructing

wastewater projects in Egypt
Remon Fayek Aziz *

Structural Engineering Department, Faculty of Engineering, Alexandria University, Egypt

Received 28 September 2012; revised 13 November 2012; accepted 20 November 2012

Available online 21 December 2012

KEYWORDS Abstract Cost is one of the major considerations throughout the project management life cycle
Factors; and can be regarded as one of the most important parameters of a project and the driving force
Cost management; of project success. Despite its proven importance, it is common to see a construction project failing
Wastewater projects; to achieve its objectives within the specific cost. Cost variation is a very frequent phenomenon and is
Relative Importance Index almost associated with nearly constructing all wastewater projects. Maintaining steady cost projec-
(RII); tion on wastewater projects had been recently an issue of serious concern, both to the client and
Rank; project contractors. Cost deviation from initial cost plan had been prevalent on construction sites.
Egypt
However, little or no effort has been made to curtail the phenomenon, this research work attempts
to identify, investigate and rank factors perceived to affect cost variation in the Egyptian wastewa-
ter projects with respect to their relative importance so as to proffer possible ways of coping with
this phenomenon. To achieve this objective, author invited practitioners and experts, comprising a
statistically representative sample, to participate in a structured questionnaire survey. Brain storm-
ing was taken into consideration, through which a number of cost variation factors were identified
for constructing wastewater projects. Totally 52 factors were short-listed to be made part of the
questionnaire survey and the survey was conducted with experts and representatives from private,
public and local general construction firms. The data were analyzed using Relative Importance
Index, ranking and simple percentages. It was analytically discovered that factors such as: (1) Low-
est bidding procurement method; (2) Additional work; (3) Bureaucracy in bidding/tendering
method; (4) Wrong method of cost estimation; and (5) Funding problems were critical for causing
cost variation, while (1) Inaccurate cost estimation; (2) Mode of financing and payment for com-
pleted work; (3) Unexpected ground conditions; (4) Inflation; and (5) Fluctuation in prices of
raw materials are also responsible. The study concluded with recommending, ensuring adequate
and available source of finance, allocating sufficient time and funding the design phase while cost
estimators should be aware of the problems, but must not allow to deflect them from their primary
* Tel.: +20 12 2381 3937.
E-mail address: [email protected].
Peer review under responsibility of Faculty of Engineering, Alexandria
University.

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52 Remon Fayek Aziz

tasks, which must always use all data and time available to produce the best possible estimate,
improve owner’s project management procedures, material bulk purchase, establishing fraudulent
system of individual accountability to discourage stealing and other related vices, adequate plan-
ning by breaking project planning into short term achievable goals, medium term planning and long
term planning, and through estimation process for projects cost calculations, with vigilant planning,
keeping in view trends of inflation and depreciation factors, construction cost variation trends in
wastewater projects with lead to smoother implementation and achievement of desired cost control.
Also, this paper serves as a guide and reference for contractors and construction managers for more
effective management in constructing wastewater projects to achieve a competitive level of quality
and a cost effective project.
ª 2013 Faculty of Engineering, Alexandria University. Production and hosting by Elsevier B.V.
All rights reserved.

1. Introduction exists in the construction work process and it inevitably can

have a significant impact on labor productivity’’. Cost has pro-
In most countries, experience and literature revealed that con- ven its importance as the prime factor for the project success.
struction wastewater projects would account for 30–50% of Most of the significant factors affecting project costs are qual-
the total project’s cost. Therefore, causes of cost variation of itative, such as client priority on construction time, contrac-
critical importance to the profitability of most wastewater pro- tor’s planning capability, procurement methods and market
jects. Many researchers, in the literature, have identified these conditions including the level of construction activity [2]. Basi-
problems as factors that affect the cost variation for construct- cally, variations will cause problems for everyone involved in
ing wastewater projects, and will affect company’s performance the project. Variations can be originated from numerous fac-
and the overall economy of the country as well. The cost varia- tors pertinent to the construction projects [3]. A project other-
tion for constructing wastewater projects by many factors is usu- wise completed may not be regarded a successful endeavor
ally linked to the performance of time, cost, and quality. until and unless it satisfies the cost limitations applied to it
Meanwhile, identification and evaluating factors causing cost [4]. It is believed that the construction projects experience an
variation for constructing wastewater projects have been done increase in cost of about 33% on average [5]. According to
in the last decade; however, a deeper understanding is still one very comprehensive research made on cost overrun in glo-
needed to improve that. Therefore, the objective of this research bal construction [6], it was found that 9 out of 10 projects had
is to identify and rank the relative importance of factors per- overrun, overruns of 50–100% were common, and overrun
ceived by consultants, managers, engineers and contractors to had been constant for the 70 years for which data were avail-
cause cost variation for constructing wastewater projects in able. Angelo and Reina [7] stated that the problem of cost
Egypt. The outcomes can be used by, not only local, but interna- overrun is critical and needs to be studied more to alleviate this
tional industry practitioners, who may be further, interested in in the future. They also pointed out that cost overruns are ma-
venturing into potential mega scale wastewater projects, but jor problem in both developing and developed countries. The
possess no prior practical knowledge of the construction indus- trend is more severe in developing countries where this overrun
try, especially wastewater firms in Egypt. The outcomes can help sometimes exceeds about 100% of the anticipated cost of the
all practitioners to develop a wider and deeper perspective of the project. Low quality materials cause higher construction cost
factors causing cost variance for constructing wastewater pro- than the expected because of the loss of material during the
jects, and provide guidance to projects and construction manag- implementation phase. This results from a lack of standards
ers for efficient solutions. The literature has identified several for materials and management systems [8]. Lack of ability to
factors causing cost variance for constructing wastewater pro- prevent cost overruns or to control construction costs, causes
jects that the author has explored in this study. A lack of stable many construction companies to fail [9]. An effective cost man-
metrics makes it difficult to compare results of studies that inves- agement strategy is therefore necessary; this could be achieved
tigate factors causing cost variance. This paper investigates fac- through putting in a proactive cost management [10,11]. Kerz-
tors perceived to cause cost variance in Egyptian wastewater ner [12] described cost management system as a process that
project with respect to identifying and ranking their relative should be carried out throughout the life cycle of a project
importance. Building from the literature and with input from from the inception to final completion and final payment to
industry experts, this research develops a schematic model of contractors. In the light of this, the timelines and cost effective-
factors causing cost variance for constructing wastewater pro- ness of various operation and decision carried out will deter-
jects in Egypt and explores them by using statistical methods. mine, to an extent, the magnitude of cost that could be
The following sections present literature review, research meth- saved on the project. However Dissanayaka and Kum-
odology, results with discussions and conclusions with aransammy [13] opined that time, cost and quality targets as
recommendations. well as project satisfaction tend to be the most important
key to measure the overall performance of project work. Fur-
2. Literature review thermore, various research works have also indicated that
most project records cost or time overrun during their tenure
of execution [14]. Hanna et al. [15] opined that 51% of average
Cost overrun can be simply defined as ‘‘when the final cost of delay was experienced yearly, which culminates in cost over-
the project exceeds the original estimates [1]. Variation almost run. Alnuaimi et al. [16] found that seven from eight of
Factors causing cost variation for constructing wastewater projects in Egypt 53

building contractors surveyed in the late 1960s in Australia, relations of the project influence cost overrun rates. Chang
were completed after scheduled completion, while in Oman [23] stated that the cost of a construction project is affected
70% of building projects were delayed and completed at cost by a large number of factors because of the fact that construc-
higher than initial budgeted cost. Ogunsemi and Jagboro [17] tion is a multidisciplinary industry and its work involve many
attributed the overrun to wrong cost estimation method parties such as the project owner and various professionals,
adopted at the early stage of building projects. Angelo and Re- contractors and suppliers. Thus, a construction project cost
ina [7] have attributed cost overruns to several factors that are not only depends on a single factor but a cluster of variables
either uncontrollable or, that to a varying degree, are unman- that are related to the characteristics of the project and to
ageable. They include: (1) Accuracy of original cost estimate; the construction team as well as the market conditions. Brad-
(2) Degree of government regulation and control; (3) Con- ley et al. [24] said traditional methods of estimating project
struction completion delays; (4) Number of design changes; costs do not attempt to assess the magnitude of the variation
and (5) Labor related matters such as: (a) Availability; (b) inherent in the estimate. As a result, there is a risk that deci-
Skills, and (c) Increases in fringe benefits. According to Wakj- sions on strategy selection will be based on a high degree of
ira [18] project owners identified five reasons for project cost uncertainty. Alternative approaches to cost estimating are
overruns. These reasons were: (1) Incomplete drawings; (2) available and they described the method adopted for a major
Poor pre-planning process; (3) Escalating cost of materials; sewerage project in Kuala Lumpur, Malaysia. The compo-
(4) Lack of timely decisions; and (5) Excessive change orders. nent-cost ranges and probability values are defined by a panel
According to User’s Guide [19] the following are the factors of estimators in order to reduce personal bias, and the alterna-
that change the cost of the construction projects through time: tive strategy costs are simulated on random-number basis, the
(1) Poor project management; (2) Design changes; (3) Unex- values for each component being selected randomly within the
pected ground conditions; (4) Inflation; (5) Shortages of mate- specified ranges. The computed median costs are therefore de-
rials; (6) Change in exchange rates; (7) Inappropriate fined within stated reliability ranges enabling investment deci-
contractors; (8) Funding problems; and (9) Force majeure. sions to be taken with higher degree of confidence [24]. Arain
Okpala and Aniekwu [20] concerned an investigation into and Low [8] mentioned that Nonparametric Friedman Test
the causes of high costs of construction in Nigeria. A prelimin- was performed to rank the effects of variations. The effects
ary survey involving all professionals in construction industry, of variations were also categorized into the most frequent
identified delays and direct cost overruns of the project as the one. The result of the research questionnaire showed that
principal factors leading to the high cost of construction. A the: (1) Increase in project cost; (2) Additional payment to con-
questionnaire was then designed incorporating factors causing tractor; (3) Increase in overhead expenses; (4) Completion
delays and cost overruns. It was distributed to engineers, archi- schedule delay; and (5) Rework and demolition, were consid-
tects; quantifying surveyors, contractors and others involved in ered to be the top five most frequent effects of variations for
construction. A method of analysis was formulated and carried construction projects. Jergeas and Ruwanpura [25] provided
out based on profession of respondents and on individual’s a definition of a ‘‘megaproject’’, illustrates the challenges in
role in the industry (i.e., client, consultant, and contractors) delivering megaprojects, and lists number of reasons for cost
and on the nature of construction (civil works and building and schedule overruns. Serag et al. [26] stated that the change
works). Results indicate that: (1) High costs can be minimized orders are very common in almost every construction project
by minimizing lapses in the management of human and mate- nowadays, often resulting in increases of 5–10% in the con-
rial resources; (2) Despite some slight differences, the profes- tract price. The model was based on data collected from 16
sionals generally agreed that shortage of materials, methods Florida projects with contract values that ranged between
of financing and payments against completed works, and poor $10 and $25 million, and that encountered an increase in the
contract management are the three major reasons for high con- contract price from 1% to 15%. Eleven variables were ana-
struction costs; and (3) Price fluctuation was identified as the lyzed to test their impact on the cost of change orders. The
most important factor responsible for the escalation of project study concluded that most significant variables that impact
costs. Elinwa and Buba [21] stated that cost of materials, the value of change order, which are: (1) Timing of change or-
fraudulent practices and kickbacks, and fluctuation of prices der; and (2) When the reason for issuing change order is
of materials are three of the most important factors, among unforeseen conditions. Two regression models are developed
other factors, leading to high construction costs in Nigeria. and validated as follows: (1) A model to quantify the percent-
Analyses of results leading to high construction costs show age increase in contract price due to change orders that in-
excellent agreement between the responses of the professionals crease the contract price from 1% to 5%; and (2) A model
(architects, engineers, and quantity surveyors) and the results to quantify the percentage increase in contract price due to
of past researchers [6,22], in developing countries, the lack of change orders that increase the contract price from 5% to
proper phasing of construction projects and lack of proper 15%. Those models will provide the owner with a retrospective
planning can contribute to the discrepancy of supply and de- or forward pricing of the change orders, and hence, allow the
mand. This leads to shortage of construction materials as the owner to estimate and utilize contingency amounts. Arian and
demand will exceed the supply, which in turn leads to an in- Low [3] stated that the project team should be able to take
crease in the cost of construction materials; this inevitably advantage of beneficial variations when the opportunity arises.
gives rise to project cost overruns, with consequential effects The need to make changes on a construction project may
on inflation and a decline on efficient activity in construction necessitate changes due to various factors. The variations
industry. They also found that (1) Size of the project; (2) Dif- can be minimized when the problem is studied collectively as
ference between lowest bid and engineer’s cost estimate; (3) early as possible, since the problems can be beneficial, varia-
Type of delivery method; (4) Level of competition; (5) Quality tions can be made. Project management teams must have the
of contract documents; and (6) Nature of interpersonal ability to recognize potential effects of variations in order to
54 Remon Fayek Aziz

minimize their adverse impacts to the project. Hanna and conducted with experts and representatives from local general
Swanson [27] suggested some strategies that both the client/ construction firms. The data were analyzed using Relative
developer and the contractor can undertake whenever there Importance Index, ranking and simple percentages to identify
are variations which have cumulative impacts on the project their impacts through a survey from construction firms and
to reduce disputes. A study on 15 different projects in Kuwait were discussed. Furthermore, some recommendations were
by Duaij et al. [28] showed that no construction projects were suggested to cope up with these factors.
completed without variation orders; only one (1) project was
completed with net omission in variation. Most of the projects 4. Research methodology
handled by the respondents have variations as about 95% of
the respondents have never handled projects that have no vari- The methodology of this paper is listed as follows:
ations. This result is in line with most of the previous research-
ers’ statements that no projects can be completed without  A thorough literature review was done and also opinions
variations as discussed in the previous chapters. Furthermore, all from industry experts were taken, through which a number
of the projects that the respondents handled have variation: net of cost variation factors were identified in the wastewater
addition. This shows that variations usually cause the construction projects scenario. Totally 52 factors were finalized to be
cost to inflate due to the additional works that are required to be part of the survey questionnaire.
carried out by the contractor. From the data, more than 60% of  Questionnaire consisting of two parts (A and B) was devel-
the projects handled by the respondents resulted in net omissions. oped. In part (A): personal information of the respondent
Osman et al. [29] provided a comprehensive analysis of the poten- (e.g. work experience of wastewater projects, annual amount
tial effects of variation orders in construction projects in Malaysia, of work per Egyptian pound was collected. Part (B): aimed to
which will be helpful for professionals in construction industry to obtain information about causes of cost variation for con-
assess and take proactive measures to mitigate the adverse impacts structing wastewater projects, it was asked to rate those ini-
of variation. It was achieved by carrying out a questionnaire survey tially identified 52 factors according to their frequency and
to collect information on the potential effects of variations. Anal- the procedures that used to reduce or terminate the difference
ysis was done to the 33 responses collected from professionals between the actual and budgeted cost of wastewater projects.
working with the developers in Penang. From the results, the most  A survey was conducted through personal interviews in
frequent effects of variations were: (1) Increase in project cost; (2) which respondents were asked to rank and score these fac-
Additional payment for contractor; (3) Increase in overhead ex- tors according to their experience. Totally 450 construction
penses; (4) Completion schedule delay; and (5) Rework and demo- firms were surveyed by questionnaires, total approached for
lition. Arian and Low [3] found that the effects of variation orders these questionnaires equal to 3500 out of which 2700
on institutional building projects contributed to increase construc- responses were received with response rate equal to 77.14%.
tion project cost. The occurrence of variation orders has indirect  Assessment of feedback from questionnaire survey was
cost implications. Direct cost constitutes the additional costs in- made. Analysis was carried out for 2700 responses to iden-
curred to perform the activities of the current variation orders. tify major cost variation contributing factors. Analysis is
The direct costs associated with variation orders include the follow- discussed in details, on the basis of which recommendations
ing: (1) Resources used including labor, material and plant to carry to construct wastewater projects were made.
out the actual variation order; (2) Increase in overheads related
charges and professional fees; (3) Cost of resources that were used The approach to the research has been summarized as
to carry out the aborted or substituted works; (4) Demolition cost shown in Fig. 1 below.
of aborted or substituted works; (5) Cost for resources lying idle be-
fore the ordered task restarts; (6) Plant hire and paid time for labor
5. The project development process
loitering around while waiting for instruction; (7) Loss of produc-
tivity due to interruption of works where the gang has to familiarize
with new working conditions, tools and materials; and (8) Cost for The development of construction projects is a complex and re-
redesign and administration of variation order. This research will source-intensive process. It is possible to analyze all projects in
study the variation of cost for constructing wastewater projects term of common life-cycle which comprises a series of stages.
and attempt to study the factors that are responsible for cost var- These stages are listed below and illustrated in Fig. 2 as fol-
iation, so as to identify them and proffer possible ways of tack- lows: (1) Project specification and feasibility; (2) Outline de-
ling the menace. sign; (3) Finance; (4) Consents and site acquisition; (5)
Detailed design; (6) Procurement of contractors; (7) The con-
3. Research objective struction contract; and (8) Project handover [19].

6. Determinants of initial project costs

The aim of this study is the attempt to determine the factors
causing cost variation in construction project especially waste-
water projects. To achieve this objective, author invited prac- Constructing wastewater projects costs are based on the actual
titioners and experts comprising a statistically representative cost of the land, materials, equipment and labor in the region
sample to participate in a structured questionnaire survey. where the project is being procured. These basic costs will vary
Brain storming was taken into consideration, through which depending upon a number of factors which are mentioned as
a number of cost variation factors were identified for con- follows [19]: (1) Project specification; (2) Location; (3) Form
structing wastewater projects. These factors were short-listed of procurement/contract; (4) Site characteristics; (5) Improve-
to be a part of the questionnaire survey and the survey was ments; (6) Tax liabilities; (7) Timescale; and (8) Inflation.
Factors causing cost variation for constructing wastewater projects in Egypt 55

Problem identification

Literature review

Data/information source
Determine cost variation factors

Designing questionnaire/survey

Data collection

Analysis and discussions

Actual cost prediction

Results
Case study

Conclusions and recommendations

Further research options

Figure 1 Research main activities/methodology.

Project specification feasibility

Outline design

Finance
Consents and land acquisition
Procurement of contractor

Detailed design

Construction

Handover

Figure 2 Project development cycle.

7. Project cost variation is full of projects that were completed with significant cost
overruns. Avots [1] stated in substantial increase of project
Molenaar [22] stated that the problem of cost variation, espe- costs than originally budgeted. Expressed as a percentage of
cially in the construction industry, is a worldwide phenome- estimated cost, this is often termed cost escalation, cost over-
non, and its consequences are normally a source of friction run or cost growth, and occurs as a result of many factors,
among clients, consultants and contractors. Project cost varia- some of which are related to each other, but all are associated
tions create a significant financial risk to clients. However, in with some forms of risks. Avots, Angelo and Reina [1,7] differ-
spite of the risks involved, the history of construction industry ent scholars defined project cost overrun in construction
56 Remon Fayek Aziz

industry in their works and some of them are outlined as fol- on at the same time; (39) Scope changes occasioned by inade-
lows: the difference between the original cost and the actual quate pre-contract study; (40) Scope changes arising from re-
cost when the project is completed. Wideman [30] said the design and extensive variation occasioned by change in brief;
amount by which actual costs exceed the baseline or approved (41) Inadequate site investigation; (42) Inappropriate precon-
costs during the contract agreement, according to User’s struction study; (43) Work suspensions owing to conflicts;
Guide [19], the cost overrun is an instance in which the provi- (44) Inadequate quality/ambiguity of contract documents;
sion of contracted goods or services are claimed to require (45) Inappropriate contractor’s policies; (46) Poor project (site)
more financial resources than was originally agreed between management/poor cost control; (47) Unexpected ground con-
a project sponsor and a contractor. An instance in which, ditions; (48) Land acquisition costs; (49) Force majeure; (50)
the provision of contracted goods or services are claimed to re- Inappropriate contractors; (51) Funding problems; and (52)
quire more financial resources than was originally agreed be- Shortage of material and plant.
tween a project sponsor and a contractor. These scholars
used the words cost growth, cost escalation and cost overrun
9. Questionnaire survey
interchangeably. For the purpose of this research cost varia-
tion or cost overrun is defined as the increase of the final actual
cost of a construction project (usually expressed as a percent- 9.1. Questionnaire design
age of original contract amounts) at a completion over the ori-
ginal contract amount, agreed by and between the client (the The questionnaire design took into consideration the objec-
project owner) and the contractor during the signing of the tives of the study with the aim to answer the research ques-
contract [18]. tions. Great effort and brainstorming were done for
designing the questionnaire. Meetings with members of the
8. Causes of project cost variation industry were conducted to identify the right questions re-
quired and to present them in a clear and an unambiguous for-
mat. Special care also was done for phrasing the questions in a
There are 52 factors that cause construction wastewater pro-
language that is easily understood by respondents. In anticipa-
ject cost variation, which are used in the paper, and grouped
tion that all respondents were not being fluent English readers
by category in (Table 1) as follows: (1) Inadequate planning;
or speakers, an Arabic version of the questionnaire was
(2) Inflation; (3) Incessant variation order; (4) Change in pro-
developed.
ject design; (5) Project complexity; (6) Shortening in project
period; (7) Fraudulent practices, kickbacks and corruption;
(8) Fluctuation in prices of raw materials; (9) Unstable cost 9.2. Contents of the questionnaire
of manufactured materials; (10) Mode of financing and pay-
ment for completed work; (11) High cost of machineries; The questionnaire was divided into two sections. The first sec-
(12) High interest rates charged by bankers on loans received tion contains general information about the respondents such
by contractors; (13) Long period between design and time of as: (1) Contact address; (2) Company size; and (3) Type. Ad-
bidding/tendering; (14) Lack of coordination between design dresses the general industry characteristics such as: (1) Years
team and general contractor; (15) Lack of coordination be- of experience; (2) List of their projects which had cost varia-
tween general contractors and subcontractors; (16) High tion about budgeted cost; (3) Causes of cost variation and rate
machineries maintenance costs; (17) High cost of skilled la- them as a point of respondent’s views etc. The second section
bors; (18) High transportation costs; (19) Domination of con- addresses causes leading to cost variations. A list of major
struction industry by foreign firms and aids; (20) Poor contract causes of cost variations as read from the literature is pre-
management; (21) Inadequate production of raw material in sented and the respondent is asked to state the frequency of
the country; (22) Conflict between design consultants and occurrence of these causes in his projects. Most frequent causes
implementation consultants; (23) Inappropriate government correspond to ‘‘very often’’ whereas the least frequent corre-
policies; (24) Poor financial control on site; (25) Absence of spond to ‘‘never’’ which denies existence of the condition as
construction cost data; (26) Inappropriate contractual proce- a cause. Respondents were given a chance to add other causes
dure; (27) Additional work; (28) Wrong method of cost estima- and rate them, a review of these causes and their effects is con-
tion; (29) Inaccurate cost estimation; (30) Poor relationship sidered. The questionnaire addresses the normally adopted
between manager and labors; (31) Stealing and waste on site; controls of cost variations for constructing wastewater projects
(32) Inadequate labor/skill availability; (33) Disputes on site; and the administrative procedures set to minimize their im-
(34) Adverse effect of weather; (35) Bureaucracy in bidding/ pacts, a review of these controls is arranged. The design philos-
tendering method; (36) Lowest bidding procurement method; ophy of the questionnaire was based on the fact that they had
(37) Litigation; (38) Numerous construction activities going to be simple, clear and understandable for respondents, and at

Table 1 Categorized factors that cause construction wastewater project cost variation.
Category item Related factor ID
Owner originated 1; 6; 10; 13; 20; 26; 27; 35; 36; 48; 50; and 51
Designer originated 3; 4; 14; 22; 25; 28; 29; 39; 40; 42; and 44
Contractor originated 7; 11; 12; 15; 16; 17; 18; 24; 30; 31; 32; 33; 37; 38; 41; 43; 45; 46; and 52
Miscellaneous 2; 5; 8; 9; 19; 21; 23; 34; 47; and 49
Factors causing cost variation for constructing wastewater projects in Egypt 57

the same time they should be able to be interpreted well by the respondents’ experience above 5 till 10 years; ‘‘group 3’’ for
researcher. The questionnaire has a definite advantage of respondents’ experience above 10 till 15 years; and ‘‘group 4’’
requiring smaller time to be responded and is more accurate for respondents’ experience above 15 years, (Table 3) depicts
in the final outcome. Factors causing cost variation for con- these groups. (Table 4), presented the various economy sectors
structing wastewater projects in Egypt were identified through that belong to the respondents, which partook in the question-
the literature based on previous research together with input, naire survey. The annual amount of work per Egyptian pound
revision and modifications by local experts where a total of of respondents was classified in (Table 5). Tables 2–5 give more
52 factors were identified. The participants were required to information with classifications of questionnaires respondents
rate the factors in the way they affect cost variation for con- that made the detailed results with full analysis.
structing wastewater projects using their own experiences on
building sites. The questionnaire required the respondents to 9.4. Sample determination and selection
rank these on a scale with the rating of ‘‘Never = 0’’ represent-
ing no effect; ‘‘Seldom = 1’’ little effect; ‘‘Sometimes = 2’’ The studied target population includes consultants, managers,
average effect; ‘‘Often = 3’’ high effect and ‘‘Very Often = 4’’ engineers and contractors. A systematic random sample was
very high effect according to the degree of importance on cost selected to ensure a representative sample of all targeted
variation for constructing wastewater projects. The numbers respondents using Eq. (1) [31]:
assigned to the agreement scale (0, 1, 2, 3, 4) do not indicate
m
that the intervals between the scales are equal, nor do they n¼   ð1Þ
indicate absolute quantities. 1 þ m1
N

where n, m, and N represent the sample size of the limited,

9.3. Data gathering unlimited, and available population, respectively.
On the other hand, m is estimated by:
Questionnaires were mailed to respondents (Consultants, z2  P  ð1  PÞ
Managers, Engineers, and Contractors) and completed forms m¼ ð2Þ
e2
were requested to be mailed or faxed back to the researcher,
the response for this request was poor. Another approach of
collecting data was used; involved follow up telephone calls
and subsequent visit to firms and work sites, most of data were Table 3 Respondents years of experience. Source: Research-
collected by this method. Forms were given to respondents to er’s Field Survey Analysis, 2012.
complete, and completed forms were collected later. In many Years of experience No. of respondents Percentage %
instances, forms were completed at the meeting; this method 1:5 Years 763 28.26
has the added benefit of making clarifications to respondents 5:10 Years 519 19.22
about questions in forms; it also gave a chance to the research- 10:15 Years 571 21.15
er to explore further cost variation management practices and Above 15 years 847 31.37
concerns. Over a period of 15 months later, the researcher col-
Total 2700 100
lected 2700 responses from 3500 total forms at 450 construc-
tion firms; this means the rate of response was 77.14%. The
details of various professional cadres of respondents with their
classifications were mentioned in (Table 2) for clarifications.
Table 4 Respondents economy sectors. Source: Researcher’s
This research is based on a survey designed to gather all neces-
Field Survey Analysis, 2012.
sary information in an effective way. The survey presents 52
factors generated on the basis of related research works on Economy sector No. of respondents Percentage %
causes of cost variation for constructing wastewater projects. Individuals 1800 66.67
These factors were classified into four categories based on pre- Private sector 500 18.52
vious section and as advised by researcher: (1) Owner origi- Public sector 400 14.81
nated factors; (2) Designer originated factors; (3) Contractor Total 2700 100
originated factors; and (4) Miscellaneous factors (Table 1).
To consider the effect of different levels of the participants’
experiences, the results are grouped into four groups: ‘‘group
1’’ for respondents’ experience till 5 years; ‘‘group 2’’ for Table 5 Respondents annual amount of work per EGP.
Source: Researcher’s Field Survey Analysis, 2012.
Table 2 Profession of respondent. Source: Researcher’s Field Annual amount of No. of respondents Percentage %
Survey Analysis, 2012. work per EGP
S/N Professional cadre No of respondents Percentage Less than 1,000,000 EGP 974 36.07
of respondents Ranged between 1,000,000 1111 41.15
1 Consultants 221 08.19 and 10,000,000 EGP
2 Managers 398 14.74 Ranged between 10,000,000 396 14.67
3 Engineers 847 31.37 and 100,000,000 EGP
4 Contractors 1234 45.70 More than 100,000,000 EGP 219 08.11

Total 2700 100 Total 2700 100

 58
Table 6 Total respondents results of all cost variation factors. Source: Researcher’s Field Survey Analysis, 2012.
ID Cost variation factor Very often Often Sometimes Seldom Never
W5 = 4 W4 = 3 W3 = 2 W2 = 1 W1 = 0
01 Inadequate planning 792 744 8 602 554
02 Inflation 368 1443 2 289 598
03 Incessant variation order 307 502 0 388 1503
04 Change in project design 325 909 3 688 775
05 Project complexity 109 304 11 878 1398
06 Shortening in project period 398 999 2 101 1200
07 Fraudulent practices, kickbacks and corruption 606 401 5 303 1385
08 Fluctuation in prices of raw materials 337 1458 0 183 722
09 Unstable cost of manufactured materials 199 1489 2 399 611
10 Mode of financing and payment for completed work 910 779 6 292 713
11 High cost of machineries 99 496 4 403 1698
12 High interest rates charged by bankers on loans received by contractors 394 197 8 503 1598
13 Long period between design and time of bidding/tendering 502 689 1 321 1187
14 Lack of coordination between design team and general contractor 333 887 7 412 1061
15 Lack of coordination between general contractors and subcontractors 108 392 10 111 2079
16 High machineries maintenance costs 302 508 2 197 1691
17 High cost of skilled labors 485 883 5 214 1113
18 High transportation costs 297 538 8 204 1653
19 Domination of construction industry by foreign firms and aids 197 12 3 299 2189
20 Poor contract management 899 698 1 99 1003
21 Inadequate production of raw material in the country 201 199 2 104 2194
22 Conflict between design consultants and implementation consultants 200 435 9 369 1687
23 Inappropriate government policies 527 974 0 201 998
24 Poor financial control on site 113 627 4 382 1574
25 Absence of construction cost data 409 388 3 0 1900
26 Inappropriate contractual procedure 200 1400 0 111 989
27 Additional work 911 1297 0 1 491
28 Wrong method of cost estimation 1194 817 6 179 504
29 Inaccurate cost estimation 1183 714 2 114 687
30 Poor relationship between manager and labors 1 298 0 400 2001
31 Stealing and waste on site 77 379 8 652 1584
32 Inadequate labor/skill availability 115 399 5 702 1479
33 Disputes on site 124 201 1 294 2080
34 Adverse effect of weather 126 0 14 991 1569
35 Bureaucracy in bidding/tendering method 877 882 7 221 713
36 Lowest bidding procurement method 1786 109 0 105 700
37 Litigation 104 406 9 697 1484
38 Numerous construction activities going on at the same time 199 336 2 438 1725

Remon Fayek Aziz

39 Scope changes occasioned by inadequate pre-contract study. 220 1379 1 300 800
40 Scope changes arising from redesign and extensive variation occasioned 84 963 12 876 765
by change in brief
41 Inadequate site investigation 583 887 0 204 1026
42 Inappropriate preconstruction study 766 601 11 222 1100
43 Work suspensions owing to conflicts 199 1098 2 107 1294
(continued on next page)
Factors causing cost variation for constructing wastewater projects in Egypt 59

where Z is the statistical value for the confidence level used, i.e.,
2.575, 1.96, and 1.645, for 99%, 95%, and 90% confidence lev-
els respectively; P is the value of the population proportion
which is being estimated; and is the sampling error of the point
W1 = 0
Never

estimate. Since the value of P is unknown, Sincich et al. [32]

1287
2074
1699

1678
1001

1899
497

996
654
suggested a conservative value of 0.50 to be used so that a sam-
ple size that is, at least as large as required, be obtained. Using a
95% confidence level, i.e., 5% significance level, the unlimited
sample size of the population, m, is approximated as follows:
W2 = 1
Seldom

ð1:96Þ2  0:5  ð1  0:5Þ

1583
621
186
387
391
222

289

498
3 00
m¼ ’ 385 ð2 Þ
0:052
Accordingly, the total number ‘‘N’’ of considered classified
contractors of construction companies in Egypt (current mem-
bers of the Egyptian Federation for Construction & Building
Sometimes

Contractors [EFCBCs]) who have valid memberships under

W3 = 2

the available seven grades for the category of integrated build-

ing works is 19,779 as on 1st of March, 2012. The sample size is
3
6
3
2
0
2
4
1
0

statistically determined as was shown in this Section. The re-

sults have been achieved by continuous follow-up and close
personal contact with all participants. The sample was selected
W4 = 3
Often

randomly from a combination of the contractors under the top

1483

1111
1085
584
434
610

714

303
3

four contractors’ grades to cover the sample representing the

total population of 19,779 construction companies. As there
is accurate data regarding the number of consultants/clients,
50 consulting and client firms are selected randomly and added
Very often

to the statistically determined sample, size of contractors as was

W5 = 4

shown in this Section. The survey gathered data from practitio-

ners of building consultants, managers, engineers, and contrac-
205

327

111
300
957
86
0
1

tors from as broad a geographic area within Egypt as possible.

The target population of contractors was 19,779 companies
which were the current members of the Egyptian Federation
for Construction & Building Contractors (EFCBCs) within
all grades during conducting this research. The required repre-
sentative sample size ‘‘n’’ of the target population of construc-
tion companies was determined using Eq. (1) as shown below:
Inadequate quality/ambiguity of contract documents

385 00
n¼   ’ 378 ð1 Þ
Poor project (site) management/poor cost control

3851
1þ 19;779

Based on that, a total of 378 construction companies in

Egypt were surveyed as a sample representing the total pop-
ulation of 19,779 construction companies. The surveyed com-
Inappropriate contractor’s policies

panies were of all grades in the Egyptian Federation for

Shortage of material and plant
Unexpected ground conditions

Construction & Building Contractors (EFCBCs). The sample

was selected randomly from a combination of contractors un-
Inappropriate contractors

der all contractors’ grades. Researcher received, more than

Land acquisition costs
Cost variation factor

one completed questionnaire from each surveyed company

Funding problems

representing different levels of experience but including at

Force majeure

least the input of one project manager. The total number of

completed questionnaires obtained from the 400 surveyed
construction companies was 2500. The total number of com-
pleted questionnaires obtained from the 50 surveyed consult-
ing and client firms was 200. Then, the overall number of the
completed questionnaires included in this study is 2700 which
(continued)

comprise the statistical data sample size that represents con-

sultants, managers, engineers and contractors.

9.5. Scoring
Table 6

(Table 6) shows the total number of all grouped respondents

 
ID

44
45
46
47
48
49
50
51
52

for each selection per factor, for analyzing data, RIIik the
60 Remon Fayek Aziz

Relative Importance Index technique was used per factor for The perceived effect of each of the 52 factors explored on cost
each year of experience (k) for each group of respondents (i). variation for constructing wastewater projects in Egypt, is deter-
This index was computed by using Eq. (3) [33]: mined. The overall factors are classified under four major cate-
4  ðn5Þ þ 3  ðn4Þ þ 2  ðn3Þ þ 1  ðn2Þ þ 0  ðn1Þ gories as follows: 12 factors, under the ‘‘Owner Originated
RIIik ð%Þ ¼  100 Category’’; 11 factors, under the ‘‘Designer Originated Cate-
4  ðn5 þ n4 þ n3 þ n2 þ n1Þ
gory’’; 19 factors, under the ‘‘Contractor Originated Category’’
ð3Þ
and 10, under the ‘‘Miscellaneous Category’’. The relative
where RIIik (%) is the yearly experience percentage of Relative importance indices, rank within the corresponding category,
Importance Index of each factor for each group of respondents; and the overall ranks of the factors investigated are presented,
which is calculated separately for corresponding year (k) of and discussed. The ‘‘category’’ importance indices are, further-
experience of grouped respondents; k is the number that repre- more, quantified; and a comparison among their relevant
sents years of experience of grouped respondents (from first year importance is carried out. The Relative Importance Indices of
00
of experience k = 1 to last year of experience k = K); and n1; n2; all factors for each category are calculated using Eq. (1 ). Then,
n3; n4; and n5 are the numbers of each grouped respondents who the weighted average of each category is calculated using prior-
selected: ‘‘Never (W1 = 0)’’ representing no effect; ‘‘Seldom ity rule as shown in next subsections and Eq. (3).
(W2 = 1)’’ little effect; ‘‘Sometimes (W3 = 2)’’ average effect;
‘‘Often (W4 = 3)’’ high effect and ‘‘Very Often (W5 = 4)’’ very 9.6.1. Owner originated category
00
high effect. As shown in Eq. (1 ), it is used for computing the The relative importance indices and ranks of the 12 factors
Overall Relative Importance Index (ORII) for each factor of that are classified under the ‘‘Owner Originated Category’’
all respondents representing ‘‘Consultants group (i = 4)’’; are shown in (Table 9). The surveyed consultants, managers,
‘‘Managers group (i = 3)’’; ‘‘Engineers group (i = 2)’’ and engineers and contractors ranked the ‘‘Lowest bidding pro-
‘‘Contractors group (i = 1)’’ considering all years of experi- curement method’’ factor as the most important factor causing
ences of respondents together; which is calculated as a weighted cost variation for constructing wastewater projects in Egypt in
00
average by RIIik from Eq. (2 ). this category, with a Relative Importance Index equals to
"Pk¼K  #
Xi¼4 i 70.37%. This top ranked factor is further ranked first in its ef-
i k¼1 k  RIIk
ORII ð%Þ ¼  Pk¼K ð4Þ fect, among all explored factors, which indicates the significant
4 k¼1 ðkÞ
i¼1 impact of this factor on the cause of cost variation for con-
where ORII (%) is the Overall weighted average percentage of structing wastewater projects in Egypt.
Relative Importance Index per factor; which is calculated based
upon all years of experiences of all grouped respondents to- 9.6.2. Designer originated category
gether; k is the number that represents years of experience of The relative importance indices and ranks of the 11 factors
grouped respondents (from first year of experience k = 1 to last that are classified under the ‘‘Designer Originated Category’’
year of experience k = K); i is the type of grouped respondents; are shown in (Table 10). The surveyed consultants, managers,
and RIIik is the yearly experience percentage of Relative Impor- engineers and contractors ranked the ‘‘Wrong method of cost
tance Index of each factor; which is calculated separately for estimation’’ factor as the most important factor causing cost
corresponding year (k) of grouped respondents experience and variation for constructing wastewater projects in Egypt in this
00
calculated by Eq. (2 ). category, with a Relative Importance Index equals to 68.51%.
This top ranked factor is further ranked 4th in its effect,
9.6. Analysis and discussions among all explored factors, which indicates the significant im-
pact of this factor on the cause of cost variation for construct-
The factors causing cost variation for constructing wastewater pro- ing wastewater projects in Egypt.
jects in Egypt will be looked at from different perspectives. It will
examine the data provided by respondents and that will be the basis 9.6.3. Contractor originated category
for case selection. The Relative Important Index will be calculated
The relative importance indices and ranks of the 19 factors that are
as final outlined results. These factors will be ranked and catego-
classified under the ‘‘Contractor Originated Category’’ are shown
rized based on their Relative Importance Index report. Table 7
in (Table 11). The surveyed consultants, managers, engineers and
lists the total results of responses per factor causing cost varia-
contractors ranked the ‘‘Inadequate site investigation’’ factor as
tion for constructing wastewater projects in Egypt.
the most important factor causing cost variation for constructing
Table 7 declared that respondents’ rank the factor number
wastewater projects in Egypt in this category, with a Relative
36 ‘‘Lowest bidding procurement method’’ as the prime cause
Importance Index equals to 49.07%. This top ranked factor is fur-
of cost variation for constructing wastewater projects in Egypt.
ther ranked 15th in its effect, among all explored factors, which
Therefore, it was ranked the 20 most factors with their related
indicates the significant impact of this factor on the cause of cost
category item, which cause cost variation for constructing
variation for constructing wastewater projects in Egypt.
wastewater projects in Egypt from respondents’ points of view
as shown in the following tabulation (Table 8). It was noticed
that the first factor ‘‘Lowest bidding procurement method’’ re- 9.6.4. Miscellaneous category
lated to ‘‘Owner Originated Category’’ the most effect with The relative importance indices and ranks of the 10 factors
Relative Importance Index equals to 70.37% and last one that are classified under the ‘‘Miscellaneous Category’’ are
‘‘Shortening in project period’’ related to ‘‘Owner Originated shown in (Table 12). The surveyed consultants, managers,
Category’’ the less effect with Relative Importance Index engineers and contractors ranked the ‘‘Unexpected ground
equals to 43.52% from top 20 factors only. conditions’’ factor as the most important factor causing cost
Factors causing cost variation for constructing wastewater projects in Egypt 61

Table 7 Overall RII and ranking of factors affecting cost variation. Source: Researcher’s Field Survey Analysis, 2012.
ID Factor cause cost variation Overall Relative Importance Index (ORII) Rank
01 Inadequate planning 54.63 11
02 Inflation 56.49 09
03 Incessant variation order 28.70 30
04 Change in project design 42.59 21
05 Project complexity 22.22 36
06 Shortening in project period 43.52 20
07 Fraudulent practices, kickbacks and corruption 36.11 27
08 Fluctuation in prices of raw materials 54.64 10
09 Unstable cost of manufactured materials 52.33 13
10 Mode of financing and payment for completed work 58.33 07
11 High cost of machineries 21.34 38
12 High interest rates charged by bankers on loans received by contractors 25.05 33
13 Long period between design and time of bidding/tendering 40.74 23
14 Lack of coordination between design team and general contractor 39.82 24
15 Lack of coordination between general contractors and subcontractors 15.74 45
16 High machineries maintenance costs 26.85 31
17 High cost of skilled labors 41.67 22
18 High transportation costs 26.80 32
19 Domination of construction industry by foreign firms and aids 10.19 52
20 Poor contract management 53.70 12
21 Inadequate production of raw material in the country 13.89 46
22 Conflict between design consultants and implementation consultants 21.30 39
23 Inappropriate government policies 48.15 16
24 Poor financial control on site 24.07 35
25 Absence of construction cost data 29.63 28
26 Inappropriate contractual procedure 47.22 18
27 Additional work 69.44 02
28 Wrong method of cost estimation 68.51 04
29 Inaccurate cost estimation 64.81 06
30 Poor relationship between manager and labors 12.04 50
31 Stealing and waste on site 20.37 42
32 Inadequate labor/skill availability 21.29 40
33 Disputes on site 12.00 51
34 Adverse effect of weather 12.96 47
35 Bureaucracy in bidding/tendering method 68.52 03
36 Lowest bidding procurement method 70.37 01
37 Litigation 21.28 41
38 Numerous construction activities going on at the same time 22.20 37
39 Scope changes occasioned by inadequate pre-contract study 49.09 14
40 Scope changes arising from redesign and extensive variation 39.81 25
occasioned by change in brief
41 Inadequate site investigation 49.07 15
42 Inappropriate preconstruction study 48.13 17
43 Work suspensions owing to conflicts 38.89 26
44 Inadequate quality/ambiguity of contract documents 29.63 29
45 Inappropriate contractor’s policies 12.95 48
46 Poor project (site) management/poor cost control 20.36 43
47 Unexpected ground conditions 56.84 08
48 Land acquisition costs 25.00 34
49 Force majeure 18.52 44
50 Inappropriate contractors 44.44 19
51 Funding problems 67.59 05
52 Shortage of material and plant 12.94 49

variation for constructing wastewater projects in Egypt in this cost variation. Author wants to compare the strength or the
category, with a Relative Importance Index equals to 56.84%. importance of each category, the weighted average value of
This top ranked factor is further ranked 8th in its effect, the causes composing this category was calculated. The results
among all explored factors, which indicates the significant im- are tabulated in (Table 13) by using priority rule formula as
pact of this factor on the cause of cost variation for construct- shown in Eq. (3) as follows:
ing wastewater projects in Egypt.
It might be noted that all these factors are originated either Pn¼N !
n¼1 ðPn  ORIIn Þ
by the owner, designer, contractor or miscellaneous. This is ex- ERIIj ð%Þ ¼ Pn¼N ð5Þ
pected since each party is trying to blame the other for causing n¼1 ðPn Þ
62 Remon Fayek Aziz

Table 8 Top 20 Overall Relative Importance Index for cost variation factors. Source: Researcher’s Field Survey Analysis, 2012.
Rank ID Factor description Related category item Overall Relative
Importance Index (ORII)
01 36 Lowest bidding procurement method Owner originated 70.37
02 27 Additional work Owner originated 69.44
03 35 Bureaucracy in bidding/tendering method Owner originated 68.52
04 28 Wrong method of cost estimation Designer originated 68.51
05 51 Funding problems Owner originated 67.59
06 29 Inaccurate cost estimation Designer originated 64.81
07 10 Mode of financing and payment for completed work Owner originated 58.33
08 47 Unexpected ground conditions Miscellaneous 56.84
09 02 Inflation Miscellaneous 56.49
10 08 Fluctuation in prices of raw materials Miscellaneous 54.64
11 01 Inadequate planning Owner originated 54.63
12 20 Poor contract management Owner originated 53.70
13 09 Unstable cost of manufactured materials Miscellaneous 52.33
14 39 Scope changes occasioned by inadequate pre-contract study Designer originated 49.09
15 41 Inadequate site investigation Contractor originated 49.07
16 23 Inappropriate government policies Miscellaneous 48.15
17 42 Inappropriate preconstruction study Designer originated 48.13
18 26 Inappropriate contractual procedure Owner originated 47.22
19 50 Inappropriate contractors Owner originated 44.44
20 06 Shortening in project period Owner originated 43.52

Table 9 RII and ranking of owner originated category factors. Source: Researcher’s Field Survey Analysis, 2012.
Priority Rank ID Factor cause cost variation Overall Relative Importance Index (ORII)
12 01 36 Lowest bidding procurement method 70.37
11 02 27 Additional work 69.44
10 03 35 Bureaucracy in bidding/tendering method 68.52
09 04 51 Funding problems 67.59
08 05 10 Mode of financing and payment for completed work 58.33
07 06 01 Inadequate planning 54.63
06 07 20 Poor contract management 53.70
05 08 26 Inappropriate contractual procedure 47.22
04 09 50 Inappropriate contractors 44.44
03 10 06 Shortening in project period 43.52
02 11 13 Long period between design and time of bidding/tendering 40.74
01 12 48 Land acquisition costs 25.00

Pj¼4 !
where ERIIj (%) is the Equivalent weighted average percent- j¼1 ðdj  ERIIj Þ
age of Relative Importance Index per category; ORIIn (%) is CVC ¼ 1 þ Pj¼4 ð6Þ
j¼1 ðERIIj Þ
the Overall weighted average percentage of Relative Impor-
tance Index per factor of specific category; which is calculated
PAC ¼ CVC  TBC ð7Þ
based upon all years of experiences of all respondents; n is the
number represents the factor number in the related category where CVC is the project Cost Variation Coefficient; ERIIj
(from first factor of category n = 1 to from last factor of cat- (%) is the Equivalent weighted average percentage of Relative
egory n = N); and Pn is the priority weight of the studied Importance Index per category; dj is the percentage of each
factor. category impact that ranged between (0.00–1.00); PAC is the
It is clear that the results of the four categories are almost Predicted Actual Cost at completion before construction of
consistent, where the categories are ranked from top to bottom the studied project; and TBC is the Total Budgeted Cost before
as owner originated, designer originated, miscellaneous, and construction of the studied project.
contractor originated (Table 13).
11. Case study
10. Prediction of project actual cost
11.1. Basic information
From previous analysis of collected data from wastewater pro-
jects field; one can predict approximately the construction ac- A case study will be carried out to illustrate and declare data
tual cost of any new construction wastewater project using analysis causing cost variance for constructing sewerage
Eqs. (4) and (5) as follows: project in Kafr El-Sheikh; implemented company was
Factors causing cost variation for constructing wastewater projects in Egypt 63

Table 10 RII and ranking of designer originated category factors. Source: Researcher’s Field Survey Analysis, 2012.
Priority Rank ID Factor cause cost variation Overall Relative
Importance Index (ORII)
11 01 28 Wrong method of cost estimation 68.51
10 02 29 Inaccurate cost estimation 64.81
09 03 39 Scope changes occasioned by inadequate pre-contract study 49.09
08 04 42 Inappropriate preconstruction study 48.13
07 05 04 Change in project design 42.59
06 06 14 Lack of coordination between design team and general contractor 39.82
05 07 40 Scope changes arising from redesign and extensive variation 39.81
occasioned by change in brief
04 08 25 Absence of construction cost data 29.63
03 09 44 Inadequate quality/ambiguity of contract documents 29.63
02 10 03 Incessant variation order 28.70
01 11 22 Conflict between design consultants and implementation consultants 21.30

Table 11 RII and ranking of contractor originated category factors. Source: Researcher’s Field Survey Analysis, 2012.
Priority Rank ID Factor cause cost variation Overall Relative Importance
Index (ORII)
19 01 41 Inadequate site investigation 49.07
18 02 17 High cost of skilled labors 41.67
17 03 43 Work suspensions owing to conflicts 38.89
16 04 07 Fraudulent practices, kickbacks and corruption 36.11
15 05 16 High machineries maintenance costs 26.85
14 06 18 High transportation costs 26.80
13 07 12 High interest rates charged by bankers on loans 25.05
received by contractors
12 08 24 Poor financial control on site 24.07
11 09 38 Numerous construction activities going on at the 22.20
same time
10 10 11 High cost of machineries 21.34
09 11 32 Inadequate labor/skill availability 21.29
08 12 37 Litigation 21.28
07 13 31 Stealing and waste on site 20.37
06 14 46 Poor project (site) management/poor cost control 20.36
05 15 15 Lack of coordination between general contractors 15.74
and subcontractors
04 16 45 Inappropriate contractor’s policies 12.95
03 17 52 Shortage of material and plant 12.94
02 18 30 Poor relationship between manager and labors 12.04
01 19 33 Disputes on site 12.00

Arab-Contractors for construction; starting date was 25/12/ gory’’ equals to 19%; and (4) ‘‘Miscellaneous Category’’
2008 and end date was 11/1/2011; project budgeted cost before equals to 3%.
start date was 3,950,000 EGP; project actual cost after comple-
tion was 4,749,500 EGP. 11.3. Analyzing and discussion

11.2. Reasons for cost variation From studying this project and analyzing the data, it was
found that initial cost was equal to 3,950,000 EGP and actual
Experts were asked for their opinions about causes of cost var- final cost was equal to 4,749,500 EGP, while one can predict
iation and the percentage of each category impact to enable the actual cost before completion from formulas (6) and (7)
prediction of actual cost of such project before completion as shown in the following:
as shown in the following: (1) Additional works; (2) Change CVC ¼ 1
in project design; (3) Inappropriate contractors; (4) Inadequate  
0:31  0:6056 þ 0:22  0:4925 þ 0:19  0:2949 þ 0:04  0:4422
site investigation; (5) Lack of coordination between design þ
0:6056 þ 0:4925 þ 0:2949 þ 0:4422
team and general contractor; (6) Funding problems; (7) Work
suspensions owing to conflicts; and (8) The drawings are not ’ 1:2015
00
clear. Percentages of each category impact are: (1) ‘‘Owner ð6 Þ
Originated Category’’ equals to 31%; (2) ‘‘Designer Originated 00
Category’’ equals to 22%; (3) ‘‘Contractors Originated Cate- PAC ¼ 1:2015  3; 950; 000 ’ 4; 745; 900 EGP ð7 Þ
64 Remon Fayek Aziz

Table 12 RII and ranking of miscellaneous category factors. Source: Researcher’s Field Survey Analysis, 2012.
Priority Rank ID Factor cause cost variation Overall Relative Importance Index (ORII)
10 01 47 Unexpected ground conditions 56.84
09 02 02 Inflation 56.49
08 03 08 Fluctuation in prices of raw materials 54.64
07 04 09 Unstable cost of manufactured materials 52.33
06 05 23 Inappropriate government policies 48.15
05 06 05 Project complexity 22.22
04 07 49 Force majeure 18.52
03 08 21 Inadequate production of raw material in the country 13.89
02 09 34 Adverse effect of weather 12.96
01 10 19 Domination of construction industry by foreign firms and aids 10.19

Table 13 Equivalent average Relative Importance Index of category. Source: Researcher’s Field Survey Analysis, 2012.
Priority Rank Category item Equivalent Relative Importance Index Eq. (3)
4 1 Owner originated category 60.56
3 2 Designer originated category 49.25
2 3 Miscellaneous category 44.22
1 4 Contractor originated category 29.49

11.4. Case study conclusion in bidding/tendering method; while the less effect factor iden-
tified by the obtained results is ‘‘Domination of construction
From studying and analyzing the previous project, it was industry by foreign firms and aids’’ is related to ‘‘Miscella-
found that there is a variation in cost as actual cost increased neous Category’’ with Relative Importance Index RII equals
from the budgeted cost with 20.24% and the predicted actual to 10.19%. Prediction model for estimating project actual cost
cost increased from the budgeted cost with 20.15%. The rea- was developed; a real case study tested the accuracy of predic-
sons for that increase are the same, which was found from ana- tion model.
lyzing the forms in questionnaires.
13. Recommendations
12. Conclusion
Based on the findings of this research discussed with main con-
To improve controlling of cost variation for constructing clusion listed above and the referring to findings of previous
wastewater projects in Egypt; one must identify and recognize studies discussed in the literature review, the following recom-
the influence of the main factors affecting it. This research has mendations are made: (1) Improve owner’s project manage-
identified and, based on the quantified relative importance ment procedures; (2) Include an appropriate contingency
indices, determined the influence ranks of 52 factors causing allowance in the pre-contract estimate; (3) Spend more money
cost variation for constructing wastewater projects in Egypt. on the design phase issued less cost variation; (4) Select compe-
The explored factors were classified under the following four tent and reliable contractor to carry out the work and hire
primary classifications: (1) Owner originated category; (2) De- supervision engineer to independently supervise work progress
signer originated category; (3) Contractor originated category; and ensure timely delivery of materials. All these reduce the
and (4) Miscellaneous category. To study the effect of partici- cost increase during the implementation phase; (5) The estab-
pants’ experience on the obtained results, the results were lishment of an appropriate set of rules, regulations and speci-
grouped under experience-based group of the participants fications concerning the qualifications of construction firms is
and professional cadre of respondents. In this regard, it was a pre-requisite to the elimination of unfit contractors from the
found that the results are consistent. The results were com- construction industry; (6) Ensure adequate and available
pared by studying all participants to cope up with all the fac- source of finance; (7) Perform a preconstruction planning of
tors that cause cost variation for constructing wastewater project tasks and resource needs; (8) Allocate sufficient time
projects in Egypt. This study reveals the importance of owner and money on the design phase; (9) An owner’s management
originated category on causes of cost variation for construct- of cost variation and claims must also be anticipated and pro-
ing wastewater projects over the other arranged three catego- vided for dispute prevention and dispute resolution processes
ries; designer originated, miscellaneous, and contractor from the outset; (10) Cost estimators should be aware of prob-
originated respectively. The most predictable and significant lems, but must not allow these to deflect them from their pri-
factor identified by the obtained results is ‘‘Lowest bidding mary tasks, which must always use all data and time available
procurement method’’ related to ‘‘Owner Originated Cate- to produce the best estimate possible; (11) Estimates, made
gory’’ with Relative Importance Index RII equals to 70.37%; with high degree of confidence, will greatly assist the responsi-
the results showed that the most cost variation can also be ble for any competitive pricing decision; (12) Good estimates
made by the owner due to additional work and bureaucracy improve the effectiveness of cost budgets and resource sched-
Factors causing cost variation for constructing wastewater projects in Egypt 65

ules; (13) Bulk purchase of materials; (14) Study of project his- restudying prices every 6 months; (15) Changing the tendering
tory for possible application on other similar projects; (15) and acceptance procedures and choosing the best bid; (16)
Establishing fraudulent system of individual accountability Reviewing drawings and designs, and comparing to avoid the
to discourage stealing and other related vices; (16) Adequate occurrence of any additional works after implementation; (17)
planning: breaking of project planning into short term achiev- Saving the desired instruments to achieve the desired scope of
able goals, medium term planning and long term planning; work; (18) Permuting the unsuitable government policies; (19)
(17) Contractors should expend more effort prior to contract Taking into consideration that the supervisor consultant is the
award to review contract document for both legal and contrac- designing consultant to avoid contradiction; (20) Using the clear
tual conditions as well as technical details to spot unclear areas form in making the contract to avoid the misunderstanding; (21)
where conflict over its interpretation may arise. These matters To be accurate in choosing the subcontractor and putting cer-
should be closed and resolved prior to the start of construc- tain specifications to choose them by the general contractor;
tion; (18) To stabilize the cost of materials: increase of supply (22) The supervisor staff of the project should include technical
of materials can be useful to break the monopoly of few sup- experts for the desired scope of work; (23) Dividing the project
pliers controlling the supply chain of the market; (19) Through between more than one contractor, everyone in his specialty;
estimation process for projects cost calculations, with vigilant (24) Using the local products in all projects as possible; (25)
planning, keeping in view trends of inflation and depreciation Choosing the counseling offices which make designs accurately;
factors, cost variation trends for constructing wastewater pro- (26) Evaluate the cost correctly and accurately; (27) Giving
jects which lead to smoother implementation and achievement applying contractors the sufficient time to study and review
of desired cost control; and (20) The government should think the designs and drawings accurately; (28) Formulating the tech-
of adopting, not just the conventional contracts but also the nical specifications accurately and clearly to give contractors
design–build contracts, direct negotiation contracts and other chance to study them accurately; and (29) Saving skilled labor
types of contracts. Alternative procurement strategies such as in wastewater works and training them well.
best value procurement should also be adopted in the projects
undertaken by government. One type of competitive bid can be 14. Future studies
the average-bid method, in which the winner is the contractor
whose bid satisfies a certain relationship with the average of all Although the current research study was able to fully accom-
bids. The basic advantage of the average-bid method, from an plish its objectives, a number of additional researches directions
owner0 s perspective, is that it safeguards against signing a con- have been identified during performing its main research tasks,
struction contract for an unrealistically low bid price that al- including: (1) Determination and ranking the factors causing the
most certainly will lead to adversarial relationships during cost variation in all types of Egyptian construction projects; (2)
construction, on the other hand, also safeguards contractors Determination and ranking the factors causing time delay in all
to fall for their mistaken low amounts bids. types of Egyptian construction projects; and (3) Proposed soft-
It will be mentioned that the controls of cost variation for ware to measure and predict exactly time delay and cost varia-
constructing wastewater projects in Egypt according to tion of all Egyptian construction projects.
respondents’ points of view are as follows: (1) Planning and
sufficiently studying the project and its benefits before the
beginning of design works, and it is also the visits to project References
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