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Construction : Guest Article | August 2015 | Source : CW-India

What Leads to Project Delays?

K SRINIVAS and B RAVINDER present the results of a study on causative factors for time and cost overruns in an infrastructure project by ANOVA.

Managing risks is a strategic tool to reap the full benefits of the critical initiatives implemented in any organisation. Organisations that have implemented good risk management practices tend to reap the maximum advantage. This paper focuses on the study carried out for an infrastructure project by considering six major causes in various phases of the project regarding cost and time overruns and tried to determine the factor responsible for the inordinate delay of the project. This study was carried out by considering various elements under each of the identified major causes; for each major cause, a hypothesis was assumed and subjected to single-factor Analysis of Variance (ANOVA) by using an SPSS tool. The results showed that each identified factor under a major cause was equally responsible for cost and time overruns and that all the factors were interdependent, ie, the effect of delay in a factor would have a chain effect on other factors too.

Introduction
Risk is a variable associated with the implementation of a specific project with the potential to adversely affect the implementation of a project or interest of stakeholders. An infrastructure project by its very nature is more prone to risks than ordinary industrial projects. A crucial aspect of a successful infrastructure project development is, therefore, suitable identification, assessment, monitoring and control of risks.

In the current environment, value of money is accorded top priority by many construction organisations. However, the required value from project investment is not being recovered owing to their inability to deliver the objectives of the project, the prime factors being cost and time overruns. While risk owing to internal factors can be foreseen and minimised, risks owing to external factors, which cannot be comprehended easily and for which there is no contingency planning, will have a debilitating effect on the viability of the project. A study conducted by KPMG-PMI in 2012 reported that organisations that consistently adopted effective risk management practices were much better equipped to face the risks and produced results much better than traditional cost control measures.

Methodology
Six major causes along with relevant elements that could be contributors to that cause were identified and distributed as a structured questionnaire to 250 respondents who were either stakeholders or had knowledge of the project. Responses were received from 100 respondents. The six causes and the grading given in the questionnaire for each cause is given in Table 1. Each of the seven identified causes along with relevant factors was subjected to a single-factor ANOVA test using SPSS tool. In all the seven cases, the null hypothesis was assumed, that there is no difference of means between the factors responsible for a major cause and alternate hypothesis was, there is difference of means between the factors. If the result gives value of F less than Fcritical, we accept the null hypothesis and the means of the populations are equal and in case, F is greater than Fcritical, alternate hypothesis is accepted, ie, there is difference of means of the population.

Conclusion

  • In all the six cases, the value of F was less than Fcritical, which implies that null hypothesis has been accepted, ie, there is no difference of means of the population (factors relevant to a cause).
  • The value of F was less than Fcritical, which implied that each factor had equal potential to cause the time or cost overrun and that all factors were dependent, ie, delay in one factor can have a chain effect on the factors, also leading to delay in project schedule.

About the Authors:
K Srinivas and Bonniga Ravinder are Assistant Professors at NICMAR, Hyderabad.

Table 1: THE CAUSES AND GRADING
Identifi ed cause Grading of responses
1) Factors susceptible to increase in cost High Moderate Low
2) Extent of impact on project schedule in execution and
closing phase
High impact Moderate impact Low impact
3) Cost overruns in pre-execution phase Strongly agree Agree Strongly disagree
4) Impact of risks on project delivery Most signifi cant Moderately signifi cant Least signifi cant
5) Issues faced in adopting schedule control strategies Strongly agree Agree Strongly disagree
6) Cost overrun in execution and closing phase Strongly agree Agree Strongly disagree


(a) Factors susceptible to increase in cost
Grade A B C D E
High 67 41 32 26 19
Medium 30 59 60 63 52
Low 4 0 8 11 22
A=Building material cost; B=Manpower cost; C=Borrowing cost; D=Equipment cost; E=Contractor/Subcontractor cost


Summary
Groups Count Sum Average Variance
Column A 3 100 33.33333 1002.333
Column B 3 100 33.33333 914.3333
Column C 3 100 33.33333 677.3333
Column D 3 100 33.33333 716.3333
Column E 3 100 33.33333 496.3333


ANOVA
Source of variation SS df df F
Between groups 0.266667 4 0.066667 8.76E-05
Within groups 7613.333 10 761.3333  
Total 7613.6 14    
Where SS=Sum of squares (for columns), df=degrees of freedom, MS = Mean square= SS/df and F is the ANOVA test value. Between groups means considering row-wise data hence 5-1=4 degrees of freedom and within groups means considering columns total 15 subtracting 1 for each column gives a value of 15-5=10 which is the degrees of freedom for columns (within groups).


(b) Extent of impact on project schedule in execution and closing phase
Impact A B C D E F G H I J K L M
High 48 41 41 38 34 31 28 28 24 24 17 17 14
Medium 28 41 17 41 17 55 41 55 48 45 41 31 32
Low 24 17 41 21 48 14 31 17 28 31 41 52 54
A=Geological surprises; B=Inadequate availability of skilled labour; C=Delay in approvals; D=Contractual
disputes; E=Unavailability of funds; F=Design change; G=Ineffective monitoring; H=Industrial relations;
I=Coordination issues with project team/vendors; J=Pre-commissioning teething problems; K=Ineffective
programme schedule; L=Lack of awareness of modern technology; M=Geographical challenges and cultural problems.


Summary
Groups Count Sum Average Variance
Column A 3 100 33.33333 165.3333
Column B 3 99 33 192
Column C 3 99 33 192
Column D 3 100 33.33333 116.3333
Column E 3 99 33 241
Column F 3 100 33.33333 424.3333
Column G 3 100 33.33333 46.33333
Column H 3 100 33.33333 382.3333
Column I 3 100 33.33333 165.3333
Column J 3 100 33.33333 114.3333
Column K 3 99 33 192
Column L 3 100 33.33333 310.3333
Column M 3 100 33.33333 401.3333


ANOVA
Source of variation SS df MS F P-value F crit
Between groups 0.923077 12 0.076923 0.00034 1 2.147926
Within groups 5,886 26 226.3846      
Total 5,886.923 38        
Here F< F Critical


c) Cost overrun in pre-execution phase
Grade A B C D E F
Strongly agree 22 26 15 11 15 8
Agree 48 41 70 81 69 64
Strongly disagree 30 33 15 8 16 28
A=Scope creep; B=Inadequate detailed project report; C=Acquisition of land at market price; D=High cost of environmental safeguards; E=Wrong selection of consultant; F=Ineffective R&R policies.


Summary
Groups Count Sum Average Variance
Column A 3 100 33.33333 177.3333
Column B 3 100 33.33333 56.33333
Column C 3 68 22.66667 176.3333
Column D 3 55 18.33333 265.3333
Column E 3 57 19 48
Column F 3 80 26.66667 325.3333


ANOVA
Source of variation SS df MS F P-value F crit
Between groups 685.2381 6 114.2063 0.514112 0.788165 2.847726
Within groups 3,110 14 222.1429      
Total 3,795.238 20        
Here F < F critical


d) Impact of risks on project delivery
Impact A B C D E
Most significant 685.2381 6 114.2063 0.514112 0.788165
Significant 3,110 14 222.1429    
Least significant 3,795.238 20      
A=Ineffective planning; B=Time and cost escalation owing to ineffective resources; C=Non-compliance with standards; D=Non-availability of skilled and resourceful personnel; E=Ineffective fi nancial management


Summary
Groups Count Sum Average Variance
Column A 3 100 33.33333 1,321.333
Column B 3 100 33.33333 880.3333
Column C 3 100 33.33333 265.3333
Column D 3 100 33.33333 166.3333
Column E 3 100 33.33333 89.33333


ANOVA
Source of
variation
SS df MS F P-value F crit
Between
groups
-1.8E-12 4 -4.5E-13 -8.4E-16 0.0003 3.47805
Within groups 5,445.333 10 544.5333      
Total 5,445.333 14        
Here also F < F critical


e) Issues faced in schedule control strategies
Grading A B C D E
Strongly agree 17 3 7 3 14
Agree 69 55 36 24 72
Strongly disagree 14 41 57 73 14
A=Government policies and procedures: B=Resistance to innovation by contractors: C= Delay in decision making: D=Delayed availability of funds: E=Incoherent project management team


Summary
Groups Count Sum Average Variance
Column A 4 100 25 915.3333
Column B 4 99 24.75 678.9167
Column C 4 100 25 296.6667
Column D 4 100 25 410
Column E 4 100 25 1,025.333


ANOVA
Source of variation SS df MS F P-value F crit
Between groups 0.2 4 0.05 7.52E-05 1 3.055568
Within groups 9,978.75 15 665.25      
Total 9,978.95 19        
Here also F < F critical


f) Cost overrun in execution and closing phase
Grading A B C D E F G H I J
Strongly agree 26 22 15 19 26 15 11 7 7 4
Agree 67 70 63 58 48 56 44 44 49 30
Strongly disagree 7 8 22 23 26 29 45 49 44 66
A=Material price rise escalation beyond projections; B=Escalation in labour costs; C=Changes in
design; D= Incremental fi nancial costs (foreign exchange, borrowing cost, etc); E=Location and
connectivity to site; F=Inadequate availability of skilled resources; G= Weak contract administration/
claims management; H=Improper procurement planning; I=Contractual disputes; J=Wrong/poor
selection of technology/equipment


Summary
Groups Count Sum Average Variance
Column A 4 100 25 904.6667
Column B 4 99 24.75 994.25
Column C 4 101 25.25 673.5833
Column D 4 100 25 534
Column E 4 100 25 326.6667
Column F 4 100 25 464.6667
Column G 4 99 24.75 341.5833
Column H 4 99 24.75 341.5833
Column I 4 99 24.75 495.5833
Column J 4 101 25.25 431.5833


ANOVA
Source of ariation SS df MS F P-value F crit
Between groups 1.4 9 0.155556 0.000282 1 2.210697
Within groups 1,6524.5 30 550.8167      
Total 1,6525.9 39        
Here also F < F critical
 
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