Alexandria University

Alexandria Engineering Journal

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
and can be regarded as one of the most important parameters of a project and the driving force
Factors; of project success. Despite its proven importance, it is common to see a construction project failing
Cost management; to achieve its objectives within the specific cost. Cost variation is a very frequent phenomenon and
Wastewater projects;
is almost associated with nearly constructing all wastewater projects. Maintaining steady cost
Relative Importance
projec- tion on wastewater projects had been recently an issue of serious concern, both to the client
Index (RII);
Ra and project contractors. Cost deviation from initial cost plan had been prevalent on construction
nk; sites. However, little or no effort has been made to curtail the phenomenon, this research work
Eg attempts to identify, investigate and rank factors perceived to affect cost variation in the Egyptian
ypt 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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1110-0168 ª 2013 Faculty of Engineering, Alexandria University. Production and hosting by Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.aej.2012.11.004
 5 Remon Fayek

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].
problems as factors that affect the cost variation for construct- Basi- cally, variations will cause problems for everyone
ing wastewater projects, and will affect company’s involved in the project. Variations can be originated from
performance and the overall economy of the country as well. numerous fac- tors pertinent to the construction projects [3]. A
The cost varia- tion for constructing wastewater projects by project other- wise completed may not be regarded a
many factors is usu- ally linked to the performance of time, successful endeavor until and unless it satisfies the cost
cost, and quality. Meanwhile, identification and evaluating limitations applied to it [4]. It is believed that the
factors causing cost variation for constructing wastewater construction projects experience an increase in cost of about
projects have been done in the last decade; however, a deeper 33% on average [5]. According to one very comprehensive
understanding is still needed to improve that. Therefore, the research made on cost overrun in glo- bal construction [6], it
objective of this research is to identify and rank the relative was found that 9 out of 10 projects had overrun, overruns of
importance of factors per- ceived by consultants, managers, 50–100% were common, and overrun had been constant for
engineers and contractors to cause cost variation for the 70 years for which data were avail- able. Angelo and Reina
constructing wastewater projects in Egypt. The outcomes can [7] stated that the problem of cost overrun is critical and needs
be used by, not only local, but interna- tional industry to be studied more to alleviate this in the future. They also
practitioners, who may be further, interested in venturing into pointed out that cost overruns are ma- jor problem in both
potential mega scale wastewater projects, but possess no prior developing and developed countries. The trend is more severe
practical knowledge of the construction indus- try, especially in developing countries where this overrun sometimes exceeds
wastewater firms in Egypt. The outcomes can help all about 100% of the anticipated cost of the project. Low quality
practitioners to develop a wider and deeper perspective of the materials cause higher construction cost than the expected
factors causing cost variance for constructing wastewater pro- because of the loss of material during the implementation
jects, and provide guidance to projects and construction phase. This results from a lack of standards for materials
manag- ers for efficient solutions. The literature has identified and management systems [8]. Lack of ability to prevent cost
several factors causing cost variance for constructing overruns or to control construction costs, causes many
wastewater pro- jects that the author has explored in this study. construction companies to fail [9]. An effective cost man-
A lack of stable metrics makes it difficult to compare results of agement strategy is therefore necessary; this could be achieved
studies that inves- tigate factors causing cost variance. This through putting in a proactive cost management [10,11]. Kerz-
paper investigates fac- tors perceived to cause cost variance in ner [12] described cost management system as a process that
Egyptian wastewater project with respect to identifying and should be carried out throughout the life cycle of a project
ranking their relative importance. Building from the literature from the inception to final completion and final payment to
and with input from industry experts, this research develops a contractors. In the light of this, the timelines and cost
schematic model of factors causing cost variance for effective- ness of various operation and decision carried out
constructing wastewater pro- jects in Egypt and explores them will deter- mine, to an extent, the magnitude of cost that
by using statistical methods. The following sections present could be saved on the project. However Dissanayaka and
literature review, research meth- odology, results with Kum- aransammy [13] opined that time, cost and quality
discussions and conclusions with recommendations. targets as well as project satisfaction tend to be the most
important key to measure the overall performance of project
2. Literature review work. Fur- thermore, various research works have also
indicated that most project records cost or time overrun
Cost overrun can be simply defined as ‘‘when the final cost of during their tenure of execution [14]. Hanna et al. [15] opined
the project exceeds the original estimates [1]. Variation almost that 51% of average delay was experienced yearly, which
culminates in cost over- run. Alnuaimi et al. [16] found that
seven from eight of
 Factors causing cost variation for constructing wastewater projects in 5
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 of estimators in order to reduce personal bias, and the alterna-
factors that change the cost of the construction projects tive strategy costs are simulated on random-number basis, the
through time: values for each component being selected randomly within the
(1) Poor project management; (2) Design changes; (3) Unex- specified ranges. The computed median costs are therefore de-
pected ground conditions; (4) Inflation; (5) Shortages of mate- fined within stated reliability ranges enabling investment deci-
rials; (6) Change in exchange rates; (7) Inappropriate sions to be taken with higher degree of confidence [24]. Arain
contractors; (8) Funding problems; and (9) Force majeure. and Low [8] mentioned that Nonparametric Friedman Test
Okpala and Aniekwu [20] concerned an investigation into was performed to rank the effects of variations. The effects
the causes of high costs of construction in Nigeria. A prelimin- of variations were also categorized into the most frequent
ary survey involving all professionals in construction industry, one. The result of the research questionnaire showed that
identified delays and direct cost overruns of the project as the the: (1) Increase in project cost; (2) Additional payment to
principal factors leading to the high cost of construction. A con- tractor; (3) Increase in overhead expenses; (4)
questionnaire was then designed incorporating factors causing Completion schedule delay; and (5) Rework and demolition,
delays and cost overruns. It was distributed to engineers, archi- were consid- ered to be the top five most frequent effects of
tects; quantifying surveyors, contractors and others involved in variations for construction projects. Jergeas and Ruwanpura
construction. A method of analysis was formulated and carried [25] provided a definition of a ‘‘megaproject’’, illustrates the
out based on profession of respondents and on individual’s challenges in delivering megaprojects, and lists number of
role in the industry (i.e., client, consultant, and contractors) reasons for cost and schedule overruns. Serag et al. [26] stated
and on the nature of construction (civil works and building that the change orders are very common in almost every
works). Results indicate that: (1) High costs can be minimized construction project nowadays, often resulting in increases of
by minimizing lapses in the management of human and mate- 5–10% in the con- tract price. The model was based on data
rial resources; (2) Despite some slight differences, the profes- collected from 16 Florida projects with contract values that
sionals generally agreed that shortage of materials, methods 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
planning can contribute to the discrepancy of supply and de- retrospective or forward pricing of the change orders, and
mand. This leads to shortage of construction materials as the hence, allow the owner to estimate and utilize contingency
demand will exceed the supply, which in turn leads to an in- amounts. Arian and Low [3] stated that the project team should
crease in the cost of construction materials; this inevitably be able to take advantage of beneficial variations when the
gives rise to project cost overruns, with consequential effects opportunity arises. The need to make changes on a
on inflation and a decline on efficient activity in construction construction project may necessitate changes due to various
industry. They also found that (1) Size of the project; (2) Dif- factors. The variations can be minimized when the problem is
ference between lowest bid and engineer’s cost estimate; (3) studied collectively as early as possible, since the problems
Type of delivery method; (4) Level of competition; (5) Quality can be beneficial, varia- tions can be made. Project
of contract documents; and (6) Nature of interpersonal management teams must have the ability to recognize
potential effects of variations in order to
 5 Remon Fayek
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 were discussed. Furthermore, some recommendations were
Kuwait by Duaij et al. [28] showed that no construction suggested to cope up with these factors.
projects were completed without variation orders; only one
(1) project was completed with net omission in variation.
4. Research methodology
Most of the projects handled by the respondents have
variations as about 95% of the respondents have never
handled projects that have no vari- ations. This result is in line The methodology of this paper is listed as follows:
with most of the previous research- ers’ statements that no
projects can be completed without variations as discussed in A thorough literature review was done and also opinions
●
the previous chapters. Furthermore, all of the projects that the from industry experts were taken, through which a number
respondents handled have variation: net addition. This shows of cost variation factors were identified in the wastewater
that variations usually cause the construction cost to inflate due projects scenario. Totally 52 factors were finalized to be
to the additional works that are required to be carried out by part of the survey questionnaire.
the contractor. From the data, more than 60% of the projects Questionnaire consisting of two parts (A and B) was devel-
●
handled by the respondents resulted in net omissions. Osman et oped. In part (A): personal information of the respondent
al. [29] provided a comprehensive analysis of the poten- tial (e.g. work experience of wastewater projects, annual
effects of variation orders in construction projects in Malaysia, amount of work per Egyptian pound was collected. Part
which will be helpful for professionals in construction industry (B): aimed to obtain information about causes of cost
to assess and take proactive measures to mitigate the adverse variation for con- structing wastewater projects, it was
impacts of variation. It was achieved by carrying outa asked to rate those ini- tially identified 52 factors according
questionnaire survey to collect information on the potential to their frequency and the procedures that used to reduce or
effects of variations. Anal- ysis was done to the 33 responses terminate the difference between the actual and budgeted
collected from professionals working with the developers in cost of wastewater projects. A survey was conducted
●through personal interviews in which respondents were
Penang. From the results, the most frequent effects of variations
were: (1) Increase in project cost; (2) Additional payment for asked to rank and score these fac- tors according to their
contractor; (3) Increase in overhead ex- penses; (4) Completion experience. Totally 450 construction firms were surveyed
schedule delay; and (5) Rework and demo- lition. Arian and by questionnaires, total approached for these questionnaires
Low [3] found that the effects of variation orders on equal to 3500 out of which 2700 responses were received
institutional building projects contributed to increase construc- with response rate equal to 77.14%. Assessment of
●feedback from questionnaire survey was made. Analysis
tion project cost. The occurrence of variation orders has
indirect cost implications. Direct cost constitutes the additional was carried out for 2700 responses to iden- tify major cost
costs in- curred to perform the activities of the current variation contributing factors. Analysis is discussed in
variation orders. The direct costs associated with variation details, on the basis of which recommendations to construct
orders include the follow- ing: (1) Resources used including wastewater projects were made.
labor, material and plant to carry out the actual variation order;
(2) Increase in overheads related charges and professional fees; The approach to the research has been summarized as
(3) Cost of resources that were used to carry out the aborted or shown in Fig. 1 below.
substituted works; (4) Demolition cost of aborted or substituted
works; (5) Cost for resources lying idle be- fore the ordered task 5. The project development process
restarts; (6) Plant hire and paid time for labor loitering around
while waiting for instruction; (7) Loss of produc- tivity due to The development of construction projects is a complex and re-
interruption of works where the gang has to familiarize with source-intensive process. It is possible to analyze all projects
new working conditions, tools and materials; and (8) Cost for in term of common life-cycle which comprises a series of
redesign and administration of variation order. This research stages. These stages are listed below and illustrated in Fig. 2 as
will study the variation of cost for constructing wastewater fol- lows: (1) Project specification and feasibility; (2) Outline
projects and attempt to study the factors that are responsible de- sign; (3) Finance; (4) Consents and site acquisition; (5)
for cost var- iation, so as to identify them and proffer possible Detailed design; (6) Procurement of contractors; (7) The con-
ways of tack- ling the menace. struction contract; and (8) Project handover [19].

3. Research objective 6. Determinants of initial project costs

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

Problem identification

Literature review
Data/information source
Determine cost variation factors

Designing questionnaire/survey

Data collection
Analysis and discussions

Actual cost prediction Project specification feasibility

Results

Case study Outline design

Finance

Conclusions and recommendations

Consents and land acquisition

Further research options Detailed design

Figure 1 Research main activities/methodology.

Construction

Procurement of contractor

Figure 2 Project development

Handov 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,
costs than originally budgeted. Expressed as a percentage of
espe- cially in the construction industry, is a worldwide
estimated cost, this is often termed cost escalation, cost over-
phenome- non, and its consequences are normally a source
run or cost growth, and occurs as a result of many factors,
of friction among clients, consultants and contractors. Project
some of which are related to each other, but all are associated
cost varia- tions create a significant financial risk to clients.
with some forms of risks. Avots, Angelo and Reina [1,7]
However, in spite of the risks involved, the history of
differ- ent scholars defined project cost overrun in
construction industry
construction
 5 Remon Fayek
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
interchangeably. For the purpose of this research cost varia- 9. Questionnaire survey
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-
There are 52 factors that cause construction wastewater pro- mat. Special care also was done for phrasing the questions in a
ject cost variation, which are used in the paper, and grouped language that is easily understood by respondents. In anticipa-
by category in (Table 1) as follows: (1) Inadequate planning; tion that all respondents were not being fluent English readers
(2) Inflation; (3) Incessant variation order; (4) Change in pro- or speakers, an Arabic version of the questionnaire was
ject design; (5) Project complexity; (6) Shortening in project developed.
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
implementation consultants; (23) Inappropriate government causes correspond to ‘‘very often’’ whereas the least frequent
policies; (24) Poor financial control on site; (25) Absence of corre- spond to ‘‘never’’ which denies existence of the
construction cost data; (26) Inappropriate contractual proce- condition as a cause. Respondents were given a chance to add
dure; (27) Additional work; (28) Wrong method of cost other causes and rate them, a review of these causes and their
estima- tion; (29) Inaccurate cost estimation; (30) Poor effects is con- sidered. The questionnaire addresses the
relationship between manager and labors; (31) Stealing and normally adopted controls of cost variations for constructing
waste on site; wastewater projects and the administrative procedures set to
(32) Inadequate labor/skill availability; (33) Disputes on site;
minimize their im- pacts, a review of these controls is
(34) Adverse effect of weather; (35) Bureaucracy in bidding/
arranged. The design philos- ophy of the questionnaire was
tendering method; (36) Lowest bidding procurement method;
based on the fact that they had to be simple, clear and
(37) Litigation; (38) Numerous construction activities going
understandable for respondents, and at

Table 1 Categorized factors that cause construction wastewater project cost variation.
Category itemRelated factor ID
Owner originated1; 6; 10; 13; 20; 26; 27; 35; 36; 48; 50; and 51
Designer originated3; 4; 14; 22; 25; 28; 29; 39; 40; 42; and 44
Contractor originated7; 11; 12; 15; 16; 17; 18; 24; 30; 31; 32; 33; 37; 38; 41; 43; 45; 46; and 52
Miscellaneous2; 5; 8; 9; 19; 21; 23; 34; 47; and 49
 Factors causing cost variation for constructing wastewater projects in 5
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
52 factors were identified. The participants were required to more information with classifications of questionnaires
rate the factors in the way they affect cost variation for con- respondents 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’’ average effect; ‘‘Often = 3’’ high effect The studied target population includes consultants, managers,
and ‘‘Very Often = 4’’ very high effect according to the engineers and contractors. A systematic random sample was
degree of importance on cost variation for constructing selected to ensure a representative sample of all targeted
wastewater projects. The numbers assigned to the agreement respondents using Eq. (1) [31]:
scale (0, 1, 2, 3, 4) do not indicate that the intervals between m
n 1
the scales are equal, nor do they indicate absolute quantities. ¼m 1 ð
Þ— N
1þ
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 m ð2Þ
¼
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
Table 3 Respondents years of experience. Source: Research- er’s Field Survey Ana
and subsequent visit to firms and work sites, most of data were
collected by this method. Forms were given to respondents to
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 Responde nts 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

Table 6 Total respondents results of all cost variation factors. Source: Researcher’s Field Survey Analysis, 2012.

5
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
39 Scope changes occasioned by inadequate pre-contract study. 220 1379 1 300 800

Remon Fayek
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 5
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
Never

1287 error of the point estimate. Since the value of P is unknown,

2074
1699

1678
1001
497

996
654
=0
W1

Sincich et al. [32] 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 =
Seldo

2
62
1
18
6
38
7
39
m

00
m ð1:96Þ × 0:52 × ð1 — 0:5Þ385 2
¼ 0:05 ’ ð
Þ
Accordingly, the total number ‘‘N’’ of considered
classified contractors of construction companies in Egypt
(current mem- bers of the Egyptian Federation for
W3 = 2

Construction & Building Contractors [EFCBCs]) who have

Someti

valid memberships under the available seven grades for the

mes

category of integrated build- ing works is 19,779 as on 1st of

3
6
3
2
0
2
4
1

March, 2012. The sample size is statistically determined as was

shown in this Section. The re- sults have been achieved by
continuous follow-up and close personal contact with all
Often

participants. The sample was selected randomly from a

=3
W4

61
0
14
83
58
4
43
4

combination of the contractors under the top 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 to the
W5 = 4

statistically determined sample, size of contractors as was

often
Very

shown in this Section. The survey gathered data from

2
0
5

1
3
2
7
0

practitio- ners of building consultants, managers, engineers,

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

385 1
1þ
documents Inappropriate contractor’s policies

19;779
Inadequate quality/ambiguity of contract

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-
Unexpected ground conditions

panies were of all grades in the Egyptian Federation for

Construction & Building Contractors (EFCBCs). The sample
was selected randomly from a combination of contractors un-
Land acquisition costs

der all contractors’ grades. Researcher received, more than

contractors Funding

one completed questionnaire from each surveyed company

representing different levels of experience but including at
Force majeure
Cost variation

Inappropriate

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

problems

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 comprise the statistical data sample size that represents
(continu

con- sultants, managers, engineers and contractors.

9.5. Scoring
Table

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

6

4
44
54
64
74
84
95
05

for each selection per factor, for analyzing data, RIIi the
k
 6 Remon Fayek
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
This index was computed by using Eq. (3) [33]: deter- mined. The overall factors are classified under four
i 4 × ðn5Þþ 3 × ðn4Þþ 2 × ðn3Þþ 1 × ðn2Þþ 0 × ðn1Þ major cate- gories as follows: 12 factors, under the ‘‘Owner
Originated
RIIk 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
ð3Þ
Category’’ and 10, under the ‘‘Miscellaneous Category’’.
The relative
where RIIi (%) is the yearly experience percentage of Relative importance indices, rank within the corresponding category,
ImportancekIndex 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,
experience of grouped respondents; k is the number that repre- further- more, quantified; and a comparison among their
sents years of experience of grouped respondents (from first relevant importance is carried out. The Relative Importance
year of experience k = 1 to last year of experience k = K); and Indices of 00
n1; n2; n3; n4; and n5 are the numbers of each grouped all factors for each category are calculated using Eq. (1 ). Then,
respondents who selected: ‘‘Never (W1 = 0)’’ representing no the weighted average of each category is calculated using
effect; ‘‘Seldom (W2 = 1)’’ little effect; ‘‘Sometimes (W3 = prior- ity rule as shown in next subsections and Eq. (3).
2)’’ average effect; ‘‘Often (W4 = 3)’’ high effect and ‘‘Very
Often (W5 = 4)’’ very 00
9.6.1. Owner originated category
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 cost variation for constructing wastewater projects in Egypt in
weighted 00
this category, with a Relative Importance Index equals to
average by RIIi from Eq. (2 ).
k
"P k k
Xi¼4 i k¼K 70.37%. This top ranked factor is further ranked first in its ef-
k × RIIi
4 # P ðfect, among all explored factors, which indicates the
ORII ð i ×
significant
k¼
K
ðk
where ORII (%) is the Overall weighted average percentage of Relative Importance Index equals to 70.37% and last one
Relative Importance Index per factor; which is calculated ‘‘Shortening in project period’’ related to ‘‘Owner Originated
based upon all years of experiences of all grouped respondents Category’’ the less effect with Relative Importance Index
to- gether; k is the number that represents years of experience equals to 43.52% from top 20 factors only.
of grouped respondents (from first year of experience k = 1 to
last year of experience k = K); i is the type of grouped
respondents; and RIIi is the yearly experience percentage of
Relative Impor-
k tance Index of each factor; which is calculated
separately for corresponding year (k) of grouped respondents
experience and 00
calculated by Eq. (2 ).

9.6. Analysis and discussions

The factors causing cost variation for constructing wastewater

pro- jects in Egypt will be looked at from different perspectives.
It will examine the data provided by respondents and that will
be the basis for case selection. The Relative Important Index
will be calculated as final outlined results. These factors will be
ranked and catego- rized based on their Relative Importance
Index report. Table 7 lists the total results of responses per
factor causing cost varia- tion for constructing wastewater
projects in Egypt.
Table 7 declared that respondents’ rank the factor number
36 ‘‘Lowest bidding procurement method’’ as the prime cause
of cost variation for constructing wastewater projects in Egypt.
Therefore, it was ranked the 20 most factors with their related
category item, which cause cost variation for constructing
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-
lated to ‘‘Owner Originated Category’’ the most effect with
Factors causing cost variation for constructing wastewater projects in 6
structing wastewater projects in Egypt.

9.6.2. Designer originated category

The relative importance indices and ranks of the 11
factors that are classified under the ‘‘Designer Originated
Category’’ are shown in (Table 10). The surveyed
consultants, managers, engineers and contractors ranked the
‘‘Wrong method of cost estimation’’ factor as the most
important factor causing cost variation for constructing
wastewater projects in Egypt in this category, with a Relative
Importance Index equals to 68.51%. This top ranked factor is
further ranked 4th in its effect, among all explored factors,
which indicates the significant im- pact of this factor on the
cause of cost variation for construct- ing wastewater projects
in Egypt.

9.6.3. Contractor originated category

The relative importance indices and ranks of the 19 factors that
are classified under the ‘‘Contractor Originated Category’’ are
shown in (Table 11). The surveyed consultants, managers,
engineers and contractors ranked the ‘‘Inadequate site
investigation’’ factor as the most important factor causing cost
variation for constructing wastewater projects in Egypt in this
category, with a Relative Importance Index equals to 49.07%.
This top ranked factor is fur- ther ranked 15th in its effect,
among all explored factors, which indicates the significant
impact of this factor on the cause of cost variation for
constructing wastewater projects in Egypt.

9.6.4. Miscellaneous category

The relative importance indices and ranks of the 10
factors that are classified under the ‘‘Miscellaneous
Category’’ are shown in (Table 12). The surveyed
consultants, managers, engineers and contractors ranked the
‘‘Unexpected ground conditions’’ factor as the most
important factor causing cost
 6 Remon Fayek

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 n !
by the owner, designer, contractor or miscellaneous. This is ex- ERII ð n¼1 × ORIIn Þ ð5Þ
P
j%Þ¼
pected since each party is trying to blame the other for n¼N n
P Þð
n
Factors causing cost variation for constructing wastewater projects in 6

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

where ERIIj (%) is the Equivalent weighted average percent- Pj¼4 !

age of Relative Importance Index per category; ORII n (%) is CVC ¼ 1 j¼1 j j
ð6Þ
the Overall weighted average percentage of Relative Impor- þ Pj¼4 ERII
j¼1 ð
Þ
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 Importance Index per category; dj is the percentage of each
studied 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
 6 Remon Fayek

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
site investigation; (5) Lack of coordination between design 0:31 × 0:6056 þ 0:22 × 0:4925 þ 0:19 × 0:2949 þ 0:04 ×
team and general contractor; (6) Funding problems; (7) Work 0:4422
suspensions owing to conflicts; and (8) The drawings are not 0:6056 þ 0:4925 þ 0:2949 þ 0:4422
clear. Percentages of each category impact are: (1) ‘‘Owner ’ 1:2015
þ
00

Originated Category’’ equals to 31%; (2) ‘‘Designer ð6 Þ

Originated Category’’ equals to 22%; (3) ‘‘Contractors 00

Originated Cate- PAC ¼ 1:2015 × 3; 950; 000 ’ 4; 745; 900 EGP ð7 Þ

Factors causing cost variation for constructing wastewater projects in 6

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
To improve controlling of cost variation for constructing con- clusion listed above and the referring to findings of
wastewater projects in Egypt; one must identify and recognize previous studies discussed in the literature review, the
the influence of the main factors affecting it. This research has following recom- mendations are made: (1) Improve owner’s
identified and, based on the quantified relative importance project manage- ment procedures; (2) Include an appropriate
indices, determined the influence ranks of 52 factors causing contingency allowance in the pre-contract estimate; (3) Spend
cost variation for constructing wastewater projects in Egypt. more money on the design phase issued less cost variation; (4)
The explored factors were classified under the following four Select compe- tent and reliable contractor to carry out the work
primary classifications: (1) Owner originated category; (2) De- and hire supervision engineer to independently supervise work
signer originated category; (3) Contractor originated category; progress and ensure timely delivery of materials. All these
and (4) Miscellaneous category. To study the effect of partici- reduce the cost increase during the implementation phase; (5)
pants’ experience on the obtained results, the results were The estab- lishment of an appropriate set of rules, regulations
grouped under experience-based group of the participants and speci- fications concerning the qualifications of
and professional cadre of respondents. In this regard, it was construction firms is a pre-requisite to the elimination of unfit
found that the results are consistent. The results were com- contractors from the construction industry; (6) Ensure
pared by studying all participants to cope up with all the fac- adequate and available source of finance; (7) Perform a
tors that cause cost variation for constructing wastewater preconstruction planning of project tasks and resource needs;
projects in Egypt. This study reveals the importance of owner (8) Allocate sufficient time and money on the design phase; (9)
originated category on causes of cost variation for construct- An owner’s management of cost variation and claims must
ing wastewater projects over the other arranged three catego- also be anticipated and pro- vided for dispute prevention and
ries; designer originated, miscellaneous, and contractor dispute resolution processes from the outset; (10) Cost
originated respectively. The most predictable and significant estimators should be aware of prob- lems, but must not allow
factor identified by the obtained results is ‘‘Lowest bidding these to deflect them from their pri- mary tasks, which must
procurement method’’ related to ‘‘Owner Originated Cate- always use all data and time available to produce the best
gory’’ with Relative Importance Index RII equals to 70.37%; estimate possible; (11) Estimates, made with high degree of
the results showed that the most cost variation can also be confidence, will greatly assist the responsi- ble for any
made by the owner due to additional work and bureaucracy competitive pricing decision; (12) Good estimates improve the
effectiveness of cost budgets and resource sched-
 6 Remon Fayek
ules; (13) Bulk purchase of materials; (14) Study of project restudying prices every 6 months; (15) Changing the tendering
his- 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
tual conditions as well as technical details to spot unclear areas clear form in making the contract to avoid the
where conflict over its interpretation may arise. These matters misunderstanding; (21) To be accurate in choosing the
should be closed and resolved prior to the start of construc- subcontractor and putting cer- tain specifications to choose
tion; (18) To stabilize the cost of materials: increase of supply them by the general contractor;
of materials can be useful to break the monopoly of few sup- (22) The supervisor staff of the project should include
pliers controlling the supply chain of the market; (19) Through technical experts for the desired scope of work; (23) Dividing
estimation process for projects cost calculations, with vigilant the project between more than one contractor, everyone in
planning, keeping in view trends of inflation and depreciation his specialty;
factors, cost variation trends for constructing wastewater pro- (24) Using the local products in all projects as possible; (25)
jects which lead to smoother implementation and achievement Choosing the counseling offices which make designs accurately;
of desired cost control; and (20) The government should think (26) Evaluate the cost correctly and accurately; (27) Giving
of adopting, not just the conventional contracts but also the applying contractors the sufficient time to study and review
design–build contracts, direct negotiation contracts and other the designs and drawings accurately; (28) Formulating the
types of contracts. Alternative procurement strategies such as tech- nical specifications accurately and clearly to give
best value procurement should also be adopted in the projects contractors chance to study them accurately; and (29) Saving
undertaken by government. One type of competitive bid can be skilled labor in wastewater works and training them well.
the average-bid method, in which the winner is the contractor
whose bid satisfies a certain relationship with the average of
14. Future studies
all bids. The basic advantage of the average-bid method, from
an
owner0 s perspective, is that it safeguards against signing a con- Although the current research study was able to fully accom-
struction contract for an unrealistically low bid price that al- plish its objectives, a number of additional researches
most certainly will lead to adversarial relationships during directions have been identified during performing its main
construction, on the other hand, also safeguards contractors research tasks, including: (1) Determination and ranking the
to fall for their mistaken low amounts bids. factors causing the cost variation in all types of Egyptian
It will be mentioned that the controls of cost variation for construction projects; (2) Determination and ranking the
constructing wastewater projects in Egypt according to factors causing time delay in all types of Egyptian construction
respondents’ points of view are as follows: (1) Planning and projects; and (3) Proposed soft- ware to measure and predict
sufficiently studying the project and its benefits before the exactly time delay and cost varia- tion of all Egyptian
beginning of design works, and it is also the visits to project construction projects.
site; (2) Sufficient coordination and communication between
the designer and the contractor of the project to reach the best
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